Retail payments systems losing revenue for retailers, research shows

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 More than half (58%) of retail businesses are currently losing revenue due to shortcomings with their payment gateway. And two thirds (66%) of payments professionals within these retailers report that they are coming under increasing pressure from senior leaders to improve payments performance as a matter of urgency.

Global research from emerchantpay reveals that two thirds (68%) of payments leaders within the retail sector believe they need to make significant improvements in payments performance over the next 12 months in order to avoid losing significant numbers of customers and revenue.

The Performance Pulse white paper reports that the current lack of optimisation within payments is largely driven by a need to prioritise innovation and a lack of understanding and support from senior leadership. Only 39% of payments leaders feel that the wider business fully recognises the value of optimising payments performance, and only 35% believe that business stakeholders fully understand the benefits of an agile payment infrastructure.

The research indicates that senior leaders within the retail sector are more interested in innovation and transformation within payments, rather than looking at current systems and delivery. More than three quarters (76%) of payments leaders report that innovation is more important that maintaining high levels of performance in payments within their retail organisation. 

Where payments teams are attempting to improve performance across their payments eco-system, they are hampered by a lack of data and insight to make decisions and optimise processes. Three quarters (79%) of retail payments leaders report that analysing payments data is a challenge within their organisation, a higher proportion than in any other sector. The majority of retailers are failing to review and optimise performance on a monthly basis in areas such as analysing decline codes, domestic routing, Merchant Identification Number set-up and processing through the payment gateway. 

The research finds that there is not a single area of payments where a majority of payments leaders are happy with their current performance. Less than a quarter (16%) of retail payments leaders are fully satisfied with their ability to analyse decline codes, and only 24% are fully satisfied in their ability to analyse fraud data to set better rules. 

Worryingly, given the associated risks, only 26% of payments leaders in the retail sector are fully satisfied with their current ability to monitor fraud in real-time.

Jonas Reynisson, CEO of emerchantpay, said: “This research proves that too many retailers are ‘leaving money on the table’ by not offering their customers the fastest, easiest, most personalised payment experiences possible and by not fully understanding, detecting and preventing fraud. In an ever more competitive market, these retailers are risking customer loyalty and brand reputation by neglecting performance. Retailers have to start providing payments leaders with the tools, skills and support to do their jobs effectively and to deliver real value to the organisation. The opportunity for businesses that can put in place the processes, technologies and behaviours necessary to optimise payments performance are huge.”

Other barriers to improving payments performance in retail are the burden of regulation and compliance obligations which are becoming an increasing drain on resources (44%), lack of budget or cost issues (36%), finding appropriate partners / vendors (31%) and outdated technology and tools (25%).

51% of payments leaders within retail report that Brexit and the associated foreign exchange risks are adding uncertainty to their payment strategy.

The most common areas where retailers are currently driving optimal performance are ensuring that payments infrastructure is flexible and agile, delivering efficient processing through the payment gateway and putting in place a sophisticated approach to Merchant Identification Numbers (MIDs). 

Reynisson concluded: “Retailers need to ensure they have access to the data they need across all areas of their payments infrastructure and the dedicated resources and skills to translate this data into meaningful and actionable insight. Payments professionals within retail should be working with their partners to develop robust businesses cases for investment in this area, which prove the commercial value of increased performance, in terms of enhanced customer experience, increased revenue and higher margins.”