Dive Brief:
- Over half of retailers completed a major payments modernization program within the past year, a KPMG modernizing payments report found. For most retailers, the work is not over: 4 in 5 will once again update their payments infrastructure or plan to do so,
- Almost 3 in 5 retailers in North America report changing customer expectations as the top factor triggering payment modernizations. The findings are based on a survey by KPMG International of 810 financial institutions and 690 retailers.
- A seamless payment experience is critical to customer satisfaction, according to a statement from Duleep Rodrigo, national sector leader of consumer and retail at KPMG U.S. The right delivery can improve operational efficiency and help provide insights into customer behavior, Rodrigo said.
Dive Insight:
As digital payments become more mainstream for consumers, retailers are trying to keep up with the payment methods they accept. Retailers need to make significant investments to navigate legacy systems, data security and privacy concerns, KPMG found.
When modernizing their payments, 3 in 5 retailers are working to upgrade and implement digital payments, KPMG found. Nearly the same number are working to add new payment options.
“Implementing and integrating new payments platforms can be complex and time-consuming,” Courtney Trimble, lead of global payments at KPMG, said in the report. “Despite these challenges, executives recognize the benefits of payment modernization as a catalyst for growth and innovation.”
One of the biggest roadblocks is cost. Nearly two-thirds of respondents said the top challenge when creating a modern payments program for retail is the cost of implementing new technologies. For over half of respondents, training staff from old to new systems is also a challenge.
Rodrigo said that younger generations of consumers increasingly gravitate to contactless payments, mobile wallets and other digital solutions compared to cash and credit cards. In support of digital efforts, three-fifths of retailers surveyed already offer an app or plan to launch one.
Though Gen Z in particular enjoys in-person shopping, their preferred methods of payment lean digital.
However, frictionless payments come with its pros and cons. While contactless methods of paying can cut transaction times, improve data security and boost customer satisfaction, they are still more vulnerable to certain privacy risks. Bad actors can exploit consumer behavior information for purposes like unauthorized purchases.