How the Fintech Payment Revolution Transforming Retail?

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If there's one quiet revolution that has gone unnoticed in the retail sector in recent years, it's the transformation of how customers pay. An explosion of so-called 'alternative payment' financial technology startups in recent years has allowed customers to explore new ways to pay, without the banks getting a cut.

In fact, it was recently calculated that banks stand to lose a staggering $280 billion in payments revenue to Fintech platforms such as PayPal and Venmo over the next five years as traditional cash, credit, and debit payments become redundant.

So what does this mean for the retail sector? For one, it means that the entire sector needs to adapt if they hope to survive, as outdated payment methods will likely become a major turn-off for customers in the coming years. Let's take a look at how Fintech is transforming the way people shop.

How Are People Paying?

Source: Pixabay

The first thing to do is look at the big players in the alternative payments market, to see how retailers should be adjusting their offerings. For mid-sized in-store purchases, it seems that platforms such as AliPay and Mondo are on the rise, whilst smaller purchases such as coffee and food are also favoured by these, with a particular focus on instant mobile payment methods including PayPal and Revolut.

In the online realm, the number of Fintech payment methods is considerably more diverse. People want security when shopping online, so this has become a key selling point for a number of platforms. Secure transactions in the Canadian online casino market, for example, are key, with providers offering ultra-secure digital payment methods such as PaySafeCard, Skrill, and Trustly, to give consumers peace of mind. The same is true for other online vendors, such as retailers and app stores, which place security at the front and centre of their offerings. Cashless, Convenient, and Secure are the key aspects for retailers to consider. 

How the Retail Industry Can Adapt

The rise of the Fintech giants can't just be explained by a desire for instant, convenient payments. It is illustrative of an evolving customer dynamic, in which discerning consumers are developing a new set of expectations and demands. Only retailers that understand what these are and adapt accordingly will thrive.

People expect technology to provide them with more personal, customer-friendly payment experiences. That's why the restaurant giants Wahaca and Byron Burger recently rolled out a chat-bot payment system that allows customers to pay via Facebook Messenger. Within a few months of being rolled out, the method accounted for a quarter of all payments. It's not just about novelty, it's about improving the experience for the customer. Hospitality and tech can go hand-in-hand.

Another key priority for retailers in the years ahead should be to streamline the payment process by removing the checkout stage altogether. Amazon stores and supermarkets, for instance, now utilize Amazon Go, which allows customers to scan all of their items in-store via their phone and pay instantly as they leave the premises. This removes the need for standing in line or having to deal with any awkward encounters at the checkout.

This is just the beginning. Other FinTech providers are looking to adding whole new dimensions to the shopping experience, which all savvy retailers need to be aware of. For example, the Australian startup Safe2Pay, which allows shoppers to pay both in-store and online with a single text, has introduced a new feature which allows customers to wipe their shopping and browsing data after purchase. In a world where data privacy concerns are at the forefront over people's minds like never before, retailers will need to be able to promise complete data security to win over customers in the future.

Finally, and perhaps most importantly, efficient and cheap cross-border payments will need to become the norm among retailers. Consumers are fed up with paying exorbitant exchange fees to banks, preferring to use platforms like Transferwise to send and receive money without any fees attached. Retailers dealing with international customers will need to adapt to this changing financial landscape, or risking losing those customers for good.

Whilst the Fintech payment revolution may seem intimidating and disruptive at first, it is really something that should be embraced by all retailers who care about their customer's shopping experience.