Charmaine: Advances in payment solutions have not only revolutionized how consumers shop, they've also brought advantages for companies that were unattainable just a decade ago. In this episode, our experts will look at these advantages and explain how APAC brands are leveraging payments as a strategic growth enabler to boost revenue, inform business decisions, and grow loyalty. We'll also discuss why having an innovative payments provider makes scaling a business easier and how to pick the right partner for your ambitions. The right payment solution works optimally for the consumer, as well as for the brand from which they are buying.
Josh: We make burritos, right, we didn't know anything about technology really, or payment gateways and stuff. So we go to the experts and we've seen a 30% increase in revenue, we've seen much happier customers. We've seen 30% improvement in the speed of transactions, and that just wasn't possible in the past.
Charmaine: Welcome to Behind the Figures, the show that goes beyond the data to explore trends shaping the retail, restaurant, and hospitality sectors, and share expert advice about how to leverage the latest technology and innovation to make the most of it. I'm your host, Charmaine Yee. In this episode, we're looking at how payments, when done right, can help businesses in APAC grow. Enabling customers to pay however and whenever they want brings a wealth of opportunities for brands. However, many businesses in APAC are still lagging when it comes to their payment solutions. The Adyen Retail Report found that one-third of consumers in APAC have left a store without making a purchase because the retailer wouldn't let them pay the way they prefer. More than 50% of customers in APAC prefer brands that remember their preferences, to create a more tailored shopping experience. However, less than a third of brands use payments data to build a clearer picture of their customers, understanding when or how they like to shop or pay, for example, in order to improve the customer experience. When it comes to payments, then, many companies can do better, and they should says Amber Bienfait, Adyen's Global Commercial Lead for Digital, because leveraging payments data is a crucial way to enable growth.
Amber: With the shift in how people buy and consumers taking more control in the way that they interact with your brand, it is more important than ever, for brands to have the customer insights to inform their business decisions and also provide good customer experience to their customers. And combining online data with data offline gives you more insights. What we saw, for instance, with a lot of the retailers that we work with is that they see that when a customer buys online, and in the store, they spend more, and that is an insight that they would not have without the payments data adding to their own data in their system. That is really interesting information, because you could inform your marketing tools based on that and really target those customers that are spending more with you. The data helps you inform your business decisions to really facilitate the superior customer experience.
Charmaine: Additionally, there are other ways in which the right payment solutions can help to generate extra revenue.
Amber: If a customer is trying to make a payment and a payment doesn't go through for whatever reason, they're likely to abandon their purchase. Customers do not tolerate any friction in the process. And in the backend of a payment, there's a lot of things that can go wrong. If a customer has made it to the checkout or willing to make the purchase, there are a lot of technical reasons in the backend why a payment doesn't go through. And what you see is that on average out of 100 payments, ten payments fail. And that can be due to several reasons. Think of when you do card payments, and you're prompted with an authentication that often is a redirect to the issuing bank or the issuing bank is not ready to handle that authentication, that could already be a drop off moment. Then there are multiple other reasons that are way too technical. There's also a lot happening in the background that can help you drive revenue. Let's say if a customer decides to pay, they've chosen their payment methods. But then the payment could fail for many different reasons. Therefore, authorization rates for businesses are super important because you don't want to be in a situation where you've spent all that effort, marketing budgets, building your beautiful website, making them come to the checkout, have them willing to pay, and then something fails due to a technical issue. Therefore, authorization rates again are super important. You can imagine also, if you lose a customer for once, you might lose them forever. And this remains a big challenge for businesses. Because we have a full stack solution, we get raw data back from the issuing banks. Data that normally would get lost because of all the different systems that are involved in processing of payments across the full payment lifecycle. Through this data on our single platform, we build revenue optimization functionality and products at the heart of our platform, and they use machine learning to help customers get as much revenue, to get higher authorization rates and therefore increased revenue. A good payment setup helps you to maximize your conversion and acceptance rates. But at the same time, if you think of maximizing your acceptance and conversion rates, always you should ask yourself the question: against what cost? And having a good payments partner helps you to maximize the acceptance rates while minimizing your risks and costs associated.
Charmaine: The right payments solution can lower lost sales from 10% of the total potential transactions to just 5%. That enhances the customer experience and delivers superior customer journeys with a smooth shopping experience. It's also a revenue boost. Josh Bell, Principal at quick service and casual dining chain, Guzman y Gomez in Singapore, says that when it comes to customers of quick service restaurants or QSRs, the payments process is crucial. These customers, he points out, want a painless and seamless experience.
Josh: Such a simple visualization for anyone in any industry to think about: you're going to IKEA, you're going to McDonald's, you're going to GYG, you're going anywhere – you just want to get out of there, once you've got the product, right? You just want to get out there as fast as you can, and you're happy with it, that checkout process or that gateway experience, it just has to be simple and fast. We always find that in our restaurants, people are very happy to wait for their food once they've ordered, but they will not wait to order. They will not wait to pay in a QSR experience. So when there's a big queue at the point of sale, we just see people spilling off into other restaurants and we lose them and the customers are gone. But once they've ordered, once they've checked out, obviously they get their phones out, they're on Instagram, they start relaxing, and they know the food's coming.
Charmaine: When Guzman y Gomez in Singapore formulated its payment strategy, it had to weigh the sheer number of payment methods available to its wide customer base.
Josh: Our strategy in Singapore, such a busy market from a revenue perspective. So there's so many digital wallets, there's QR codes everywhere, delivery channels everywhere. From a strategy perspective, we wanted to have our product on every channel possible. We wanted a customer that's a 60 year old auntie that has been using legacy wallet that has been around for a long time. Or you've been using foodpanda, that's the longest serving delivery provider in Singapore that we wanted her to be super happy with, how she engaged with us. Then fast forward, we want the 16 year old technology guru kid, that's a complete genius with tech, who wants to use whatever solution they've analyzed to be perfect for them. We wanted them to be comfortable engaging with that solution and our product. Again, it just sits behind that platform. We needed to have a dynamic point of sale system, we needed to have a very secure, dynamic gateway solution so that wherever we go, wherever we engage with the customer is a seamless process. So yeah, we have 25 revenue channels, from delivery to QRs, to dining experiences, to digital wallets, to all kinds of stuff. Building that up and setting that up can be painful, but then it just runs smoothly. You get back to business and focus on more important things like the burritos.
Charmaine: For Scott Meneilly, the former CEO of franchises, Sushi Sushi and Retail Zoo, the right payment solution provides value in numerous ways.
Scott: First of all, the value that it provides is the ability to actually get cash into your business. That's first and foremost. That's what it's about for us, as retailers. We're looking for all those opportunities to make it a really seamless and easy process to get the revenue and that's what it is that we need to be able to pay bills and continue to grow. But you also want to make sure that it's a seamless, easy customer experience. I think there is a tremendous value in there for the consumer. One of the interesting things that I experienced myself is that I might be lying in bed scrolling through Instagram, I'll get attracted by something that pops up. And I'll think you know what, I will actually buy that. I'm in there, I'm exploring what it is that they're offering to me. I've looked at this a few times, I'm going to take the plunge and I'm going to buy it, I follow it all the way through, and now I gotta get my credit card. So for me to then get my credit card, I've got to get out of bed, go downstairs, get my wallet, I'm not going to do that. It's 11 o'clock at night, I say I'll do it tomorrow. I don't do it tomorrow, transaction lost. If there was another way for me to be able to do that, if there was another option for me to go, just double click the right hand side button, then, you know, transaction would actually take place. So, you know, I think you can lose critical sales if you don't have your payment plan worked out.
Charmaine: That brings up a key point. What are the top considerations businesses should keep in mind when selecting a payments provider? Here are three to get you started. Firstly, is your provider reliable? Secondly, can they help you improve authorization rates? And thirdly, do they have strong global coverage and offer a range of local payment methods? Here to explain more is Tracy-Maree McGrath, Manager of Product Management and Global Payment Strategy at Oracle Hospitality.
Tracy-Maree: I think that it's important to offer as many payment types as possible, that'll help you bring in more sales. If you've got a guest that can only accept a UnionPay card, they're not going to come to your hotel if you don't accept UnionPay. So it's important to have as many as you can. Certainly, we see this shift to digital payment methods as well. So Apple Pay, Samsung Pay, Alipay, WeChat, you're starting to see that shift as well. Being able to accept those as well broadens the amount of people that will be willing to stay with you. But that seamless, frictionless payment processing just ensures customers process a payment and then come back. So I think that that's an important part of the journey. That payment process is seamless and frictionless. Because if there's any issues in that journey, they'll just walk away and not come back. From a payment strategy perspective, making sure that you've got a payment solution that covers your whole business in the way that you want to manage it. So you're making sure that if you want the same provider for ecommerce as well as property level, or do you have a payment provider that can actually do both those things, and get it to you in a way that is easy to reconcile because it's the same provider? So those are the sorts of things that I think having a solid payment strategy to help, make sure that you're addressing the needs of your business.
Charmaine: Tracy-Maree says the wrong payment solution can damage a hotel's reputation. And she adds, more hotels should pay attention to security issues around credit cards. While these can seem boring, security is a critical area that the best payment solutions address.
Tracy-Maree: It's a very well known fact that there have been credit card breaches through hotels. So I think that we would want to make sure that the payment solution being used is secure. And the way to do that is to support tokenization of card data. So it's a really good reason to take a look at what providers are out there that can support tokenization so that your payment solution is not just seamless and working, but also secure. And that security is just peace of mind, peace of mind for the consumer too, they know that their cards are secure when they stay with you.
Charmaine: Being able to tokenize card data rather than storing these details on a hotel's system, which could be vulnerable to attack, is central to Oracle's approach. Also key to boosting revenue is the ability to offer dynamic currency conversion for customers paying with foreign cards, as is the solution that allows for integrated payments.
Tracy-Maree: That's a process where the consumer gets to pay the bill in their local currency or their home currency, where the hotel has the record in the hotel's base currency. So that currency conversion can be really easy for a guest to understand their bill in their home currency. It's easy to understand and easy to process it. But that conversion actually gives revenue back to the hotel, there's a commission process for using it and it's a good customer service experience as well. So it's you know, it's a win-win there. But on the other side, integration can really help with saving you money. So you know, when you don't have integrated payments, you have to do a lot of double handling. We enter the payment into the payment device and then we re-enter it into the hotel system. It leaves a margin for error, human error, by manually typing things in between two systems. When we integrate those things, the hotel system will automatically calculate the amount due, it will send it to the device. The guests swipes and accepts their card, payment is processed. There was no handling there, no one entered an amount, no one had to reenter card data anywhere, so it becomes a much easier journey and faster because you're not double handling. You'll also have the added benefit of less errors. So you've got labor saves on both, you know the payment itself, and any errors later.
Charmaine: In short, an integrated payment system that connects to other parts of your business's operations, like inventory management or supply chain monitoring provides the perfect opportunity to save time and boost efficiencies. That brings us back to the need to remove friction in the payments process. Customers, says Amber at Adyen, demand a frictionless experience when they checkout with an online retailer. And while online retailers are continuously seeking to improve conversions by removing hurdles, challenges remain.
Amber: One of the key challenges that online retailers still need to solve for, is the guest checkouts. They're getting pretty good in solving for a returning shopper because you can easily store the address details and the payment details. But in guest checkouts, you always need to ask for the address details, which imposes friction immediately. And what you see is that a lot of wallet payment methods like Google Pay, Apple Pay, but also WeChat pay, and Alipay, they're playing into this by enabling express checkout options. PayPal is also good example. We are, again, working with these payment methods to make these express checkout options available for online retailers. So that's when they come to the websites, they only have to click on the button, and they're immediately checked out. And I think that is a really nice, new way of technology enabling to remove further friction.
Charmaine: As Adyen's Retail Report notes, a sizable number of APAC businesses are looking for ways to improve their future offerings. What does this mean for future developments in the payments space? When it comes to hospitality, Oracle's Tracy-Maree envisions a world that has moved away from having payments systems on the front desk. Instead, she says customers will be able to pay digitally before their stay or upon arrival. Tokenization of card details will make this transition even easier.
Tracy-Maree: If you can pre-pay for things, or you've got tokenized cards on file, so that you can process a payment with the tokens that you have on file, rather than having to have cards' data floating around, and just eliminate that need for card machine to be there at all, I think would be a really great step forward. I think people are very comfortable with using digital payment methods these days. And so I think we're slowly heading that way. And I would like to see us get away from the need to have so much stuff on the front desk. And anyone that's ever been behind the front desk of a hotel knows that there's a lot of stuff going on back there. There's you know, machines for cutting keys, there's radios to contact the staff in-house, there's just a lot of devices necessary behind the front desk to run a hotel. So removing one of those devices, I think, would be a huge win for most hotels. You write a lot of data within hotels, and I wouldn't say it's being used all that well, just yet. I think part of the key to that is just making sure that you're collecting the right information to start with, collecting the right data. And then trying to use that data to offer things like loyalty and offering customers things they actually want. I haven't really seen that occur yet. I think I'm on every hotel mailing list in the world. And I don't get targeted marketing. I tend to really get things that are more generic, like, "Oh, we've got a sale here, we've got a sale there." So I think that there's definitely more that could be done that is targeted. And if you were to tie that in with payments, those payment cards have all sorts of interesting data that can be used together with the information they already have in hotels. I mean hotels, they know where you stay, they know why you were there, was it business or leisure? You know, they know your age group because they know your information. So putting that together with "oh, you happen to be a cardholder from this part of the world. Oh, okay, well, that's interesting." And we can offer you X or Y, there's definitely more that could be done there.
Charmaine: When it comes to the data that is being collected, companies need to ensure that they keep it protected, says May Lam, Asia Pacific Payments Leader for EY.
May: I think there's an internal education. I think everyone in the company, no matter what roles you play, you have the duty to look after your customers' data. So that's a cultural and education perspective. But when it comes to the operation as well, I would say, be humble in understanding what you know, what you don't know. For the operation, I would say that find the right partners. That's their technology, their capability to help you to be compliant, and help you to monitor, help you to send you the alerts.
Charmaine: Looking ahead, brands and in particular, platform businesses, could enjoy significant opportunities with what is known as embedded payments and embedded finance. This is a new area that EY projects will be worth more than 4 trillion USD of the 7 trillion dollars payments market by 2030.
May: Embedded finance, in the very simple term, is that non-financial services come into the market, to provide financial services for their customers. So for example, embedded lending, embedded insurance, embedded payments. And everything start with the payment first, because payment is more so as being invisible. Consumer paying without knowing that they're paying, they just browsing and needed those services and product, and payment come with it. So it is a great opportunity for merchant to think about how do you create a new revenue stream by leveraging the payment? So having the payment already embedded in your customer journey, then you can think about – can they really afford it? Do they need insurance of what they purchased? So that's embedded insurance. If they can't afford it, can a partner with other lending, or if you have a very healthy balance sheet, that you can lend on it as well? Can you have your own buy now, pay later product for example? So there's a lot of a new revenue stream that you can create by having the payments being embedded in your customer journey. Having the embedded finance is a great opportunity. At the same time that people do spread words and trust, once that you have built your trusted brand, then you can grow your "rice bowl" (a Chinese expression meaning an important source of revenue) as well through that.
Charmaine: As we've heard the right payment solution provides a seamless experience for customers, generates valuable data insights for brands, and opens up new opportunities for companies to grow. It adds to the bottom line and also boosts customer loyalty. Also important is choosing a provider with strong global coverage, reliability with minimal downtime, and the ability to increase authorization rates. In other words, the right payment solution is a win-win for both businesses and customers. I hope you've enjoyed this episode of Behind the figures. Don't forget to check out our other episodes covering topics like the importance of creating a more sustainable business and the benefits of Unified Commerce.