Contact us
June 25th 2020

The Changing Pace of Payments: Keeping Up With the New Retail Environment

Throughout the pandemic, the world of retail payments has changed drastically. Within a very short period, we’ve seen fundamental changes to the way customers shop and how they pay.


Many of these changes are expected to last well beyond the pandemic itself, and merchants must be proactive in reviewing their holistic payments strategy to ensure they don’t fall behind their peers – keeping costs minimized, revenues maximized, and customers satisfied.

Over the past few weeks, in our ‘The Changing Pace of Payments’ webinar series, we explored how the trends we were already seeing in payments have accelerated during the pandemic and the unexpected dynamics and complexities that an increasingly online world has presented to retailers.

Throughout the series, we delivered practical guidance and unique insights into the retail payments industry to some of the biggest retailers across the globe: you can check out the highlights below, or request the full webinar recording for free by contacting

The New Payments Mix:

Merchants have seen significant changes to the payments mix. Mastercard has indicated that contactless transactions have soared by around 40% worldwide; while this presents a number of benefits and opportunities for both merchants and consumers alike, the sudden uplift in contactless transactions has certain ramifications for the U.S. market. Not only could we see the decline of cash volumes accelerated even further – simultaneously increasing the relative cost of cash and reducing competition to cards – but contactless transactions cannot be routed in the same way as a PIN debit payment. As a result, merchants could see costs rise as they attract higher fees and lose the competitive tension between networks in the debit space.

Additionally, with many consumers looking to improve their personal cashflow at a time of high unemployment, credit card transactions have risen considerably in most retail industries. Since credit cards are significantly more expensive to process than debit card transactions – with higher interchange and network fees – this trend is resulting in higher costs for many merchants.

The Shift to Online:

Merchants across the U.S. have also seen a massive increase in online transactions, with some processing over four times the volume on their ecommerce channels – this an inevitable outcome of the widespread store closures at the peak of lockdown. However, as stores reopen across several states, online volumes are expected to remain high in the months ahead.

With the cost of online card payments far exceeding the cost of Card Present transactions, including both interchange and network fees, merchants must review their current arrangements now to ensure their costs and processes can accommodate this change to the payments mix. The set-up you had before the pandemic is unlikely to still be optimal considering these significant changes to the payments mix – a full review can ensure your costs are truly minimized in the months ahead.

Lost Sales & Fraud:

Since ecommerce volumes are likely to remain high, falsely declined transactions, chargebacks and friendly fraud are becoming increasingly prevalent – and potentially damaging – issues for retailers.

Customers can’t verify a transaction as easily online, with only 85% of online transactions being approved, compared to 97% in-store – according to CMSPI data. For the transactions that are turned away, over 50% of customers will take their business to a competitor. As many retailers now look to recover the revenue lost throughout the pandemic, this loss of sales has the potential to be detrimental to retailers’ top lines.

Fraud rates are also higher online, including for friendly fraud – which occurs when a consumer makes an online purchase, then requests a chargeback from their issuing bank after receiving the goods. Merchants must balance their fraud against approval rates to ensure they accept the maximum amount of genuine transactions without attracting increased fraud: however, this can be an extremely complex exercise, and merchants should look to benchmark their arrangements and engage collaboratively with their supply chains to ensure they’re not missing out on vital sales.

Your Payments Strategy is Your Retail Strategy:

While battling to keep costs low and not lose out on sales, retailers also need to consider the final piece of the payments puzzle: the customer experience.

Market-leading merchants have long acknowledged the possibilities in payments. Leveraging your payments set-up to attract and retain customers is more crucial than ever – and by offering the payment methods your customers want, via the right channels, retailers can drive additional revenue by enhancing the shopping experience.

However, as Alternative Payment Methods become ever more popular and new solutions continuously emerge in the market, identifying which payment solutions are right for your business and customers – and ensuring a strong ROI – can be challenging. At a time when many retailers are recovering from severe damage caused by the pandemic, your payments arrangements could be the difference between surviving and thriving in the post-pandemic world.

Ultimately, the retailers who prove the most successful over the next few months will view their payments strategy as being synonymous with their retail strategy, uniting the two to drive customer loyalty.

Key Takeaways

Merchants must act now to ensure they get the right payments set up in place to carry them through the challenging months ahead, ensuring they succeed in the new retail environment. Through a holistic review of their end-to-end payments supply chain and overarching strategy, merchants can expect to reduce costs, drive revenue, and retain customers – while those who ignore the potential value of retail payments are likely to see both their bottom and top lines damaged.

The areas of specific focus will vary from business to business, depending on your payments profile and priorities. However, there are 5 key areas to consider in a review:

  • Negotiation of fees – with the right insights and benchmarking analysis, many of your costs may be negotiable – including switch and processor fees
  • PIN debit routing – there are several complex variables involved in routing down the most-cost effective network. Merchants must also ensure their suppliers are truly acting in their best interest to keep costs low
  • Balancing approvals against fraud – merchants should engage with their supply chains and undertake a rigorous benchmarking process to ensure their online arrangements are market-leading
  • Customer experience – your POS should offer a seamless experience that suits your customers’ needs, with a thorough business case to substantiate new payment methods and solutions
  • Engage your supply chain – working collaboratively with your supply chain, ensuring they’re modelling your solution for future impacts to ecommerce and identifying inefficiencies, is essential to achieving all of the above. With the right approach and payments partners in place, merchants can create a payments set-up that works for both you and your customers

Webinars available:

  • The Ecommerce Catalyst: Adapting Your Payments for an Online World
  • The Contactless Catalyst: Managing Costs in a New Payments Landscape
  • The Power of Payments: Retailing Anytime, Anywhere, in Any Way