Payment analytics critical to completing the customer experience

Payment analytics critical to completing the customer experience

Retailers using data analytics often overlook the checkout and payment experience. An unpleasant one can lead to them losing the purchase as well as the entire potential lifetime value of that customer.

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Our lives are now subjected to more statistical analysis than ever before. There are interesting and well-known examples, with Netflix – which use big data analytics to understand user behaviour and create targeted promotions – as an example of an ideal user experience many expect.

The value of data goes beyond user experience though. For example, the local tourism board in Singapore quickly adapted to the impact of the pandemic by creating a centralised data and insights platform to help the country’s tourism ecosystem move into the digital age with Adobe.

While data has tremendous potential, the real value does not come from information collection; but rather the ability to use that information to uncover new insights that enable better business decisions.

Singapore is home to a small yet highly competitive market, and running a successful eCommerce business out of the country is no simple task. Leveraging advanced data analytics is imperative to success; it allows companies to predict sales, manage stocks and improve margins.  

There are a few key areas in which retailers typically employ analytics, including how shoppers find the products they are looking for, how many potential customers leave without adding items to their basket, and how many abandon their shopping cart. The insights are used to optimise the customer journey as they move through the shopping funnel.

However, there is one often neglected stage of the customer journey: payments. Retailers know how many shoppers enter the checkout process while completing their payments. But how many are analysing the payment process itself to understand what lies behind it?

Benefits of payment analytics

Retailers know so much about their business, and place significant focus on improving customer experience, maximising basket sizes, and optimising conversions. However, the payment step is still viewed in isolation, even though each individual transaction provides a treasure trove of insights that could help increase profitability.

Improvement in customer payment acceptance cannot be achieved just by seeing the volume of approved and declined payments. It’s the “why” that’s the most crucial part of the checkout and payment process.

That’s where payment analytics comes in, providing the statistics to deliver answers to the “why” and identify patterns such as how well each payment method performs against each other – and if that varies by card types, digital alternatives, or other factors.

Maybe customers in certain circumstances need to be encouraged to use different payment methods to receive loyalty rebates and discounts. Maybe banks or fintech players are more sensitive to fraud risks. Maybe the usage of domestic credit cards will have lower transaction costs compared to an international choice.

Maybe it’s some or all these things and perhaps even a combination – or just none. Retailers may have a hunch, but accurate decisions are underpinned by evidence. Effective payment analytics can help find the problem and help address the situation, turning hypothesis into fact.

But it’s important to note that eCommerce payments are no fairytale story, where one size fits all. ACI Worldwide’s Real-Time Goes Mainstream report revealed that payment preferences still range across the country, regionally and globally – from  bank transfers, debit and credit cards, digital alternatives or eWallets.

Though there is a clear trend that real-time payments usage is growing quickly. Bear in mind though that even cash on delivery is still prevalent for eCommerce transactions in those markets where consumers don’t trust online payments or the fulfilment process.

There is also a dire need to move from just using data for detecting, to proactively preventing payment failures, especially false declines (where one study showed that losses due to false declines were projected to reach $443 billion in 2021—nearly 70 times more than losses from fraud itself).

This can reduce checkout abandonment and orchestrate better customer journeys, especially when supported by machine learning solutions that can analyse large amounts of complex data to identify fraudulent behaviours.

If a poor checkout system impacts the overall experience, the retailer will lose that single purchase and the entire potential lifetime value of that customer. The checkout experience must be quick and intuitive, offering multiple payment methods – beyond just traditional card payments – to appeal to local and regional shoppers. In particular, eCommerce retailers need to have the ability to quickly accept new payment types, connect to their acquirers of choice and deliver a fast and seamless experience in a secure environment.

How to improve the checkout and payments experience

There’s much more that can be analysed about payments: do more card payments get rejected before typical end-of-month paydays? Will promoting Buy-Now-Pay-Later (BNPL) schemes make a material difference to payment acceptance? Which cardholders paying in-store only do so when there is a promotion? 

These questions can only be answered when payment analytics can do the following: 

  • Combine payments data from different channels – instore, online, and mobile 
  • Present a holistic picture of your payments environment 
  • Drill down, slice, and dice data to focus and highlight specific areas of business 

Payment analytics is an essential investment for retailers to achieve a competitive advantage, maximise sales, reduce the cost of operation and drive customer retention. They already have data at their disposal – it is about ensuring that they implement an appropriate payment analytics system (ideally, as a part of their omnichannel platform) that can handle analysing all the data, present it in a meaningful way and transform it into profitable opportunities.

To reduce complexity, retailers should adopt a unified payments platform that provides a single customer view, reduces costs, and ensures an optimal shopping experience across all target geographies. The most successful merchants will be those who understand how a smooth customer journey and optimised checkout experience make a huge difference to conversion rates and, therefore, to the bottom line and long-term growth. Achieving this will be challenging, but for those that can achieve payment experiences that are smart, simple, flexible, and secure, the rewards will be massive.


Leslie Choo is Managing Director – Asia, ACI Worldwide

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