The Transformation of Payments: A Flashpoint of Innovation

For any brand or company, the payment experience must be considered part of the sale. Think about the last time you went to a store and left because the line to pay was too long. Or the last time you went online to pay for something and the checkout process made you so uncomfortable that you just gave up. This shows how important the payment experience is to a brand.

Online paymentFor any brand or company, the payment experience must be considered part of the sale. Think about the last time you went to a store and left because the line to pay was too long. Or the last time you went online to pay for something and the checkout process made you so uncomfortable that you just gave up. This shows how important the payment experience is to a brand.

Technology in the payments field has gone through a huge transformation in the last three years. Let’s look at how this has transformed the lives of consumers.

1. Point-of-Sale (POS) Technology

POS technologies available to brands have exploded. Let’s take Square as an example. How does a consumer pay for a magician for their child’s birthday party without pulling out cash or writing a check? Square is the answer. This technology works with iOS and Android devices to accept payments anywhere by using an attachment for the mobile phone.

Other new POS devices include Poynt and Clover. These devices are able to accept EMV payments, gather data on the customer and provide personalized offers. The technology works outside the hardware, so it can be implemented by companies of all sizes — from Amazing-the-Magician to Zoe’s Fashion Bracelets.

2. Mobile Payments

Another key element of new payment technology is mobile payments. This includes mobile wallets available, like Apple Pay and Samsung Pay. According to a National Retail Federation (NRF) study conducted by Forrester® Research (The State of Retail Payments, 2016), 68 percent of retailers said they planned to implement at least one digital payment feature in the coming year.

But with new payment methods, we’re really looking for consumer adoption. According to a Synchrony Financial 2016 Digital Study, 81 percent of consumers surveyed were aware of mobile wallets, but only 9 percent said they plan to use the technology regularly.

Why isn’t mobile wallet usage taking off? After trying the mobile wallet one time, consumers indicated they just don’t perceive the need, and are not sure if it is safe and secure. Most are satisfied with the payment methods they currently use. But, the tide is turning toward increased mobile wallet usage.

According to the same Forrester study, 63 percent of retailers believe consumers will use mobile payments when more features become available. This includes coupons, offers and loyalty programs tied to the wallet. As a result of these increased value propositions, and the increased number of retailers who adopt the technology, the use of mobile wallets is likely to grow in the future.

3. Mobile App

Enabling payments right in the mobile app is an extremely convenient new innovation. A perfect example of this is Uber: When taking an Uber to the airport, the payment experience is almost non-existent. You just get out of the car and go catch your plane. Why is this significant? Think about other mobile apps that could use this seamless integration. Checking out makeup at your favorite cosmetics retailer? Get the eye shadow instantly.

Synchrony Financial has implemented this payment method with an app plug-in called SyPI. Once the customer is in the retailer’s mobile app, the entire purchase experience is executed directly within the app. No digging into your wallet for your credit card each time you want to buy something — no wondering if you have enough credit line for that new sweater. This technology is gaining traction with many brands who want to create a seamless purchase experience.

4. Person-to-Person (P-to-P) Mobile Payments

P-to-P mobile payments have been taking off in recent years. Your local babysitters don’t have the Square attachment to their smartphones? You can still pay them by using other mobile apps. Examples of these are Venmo, Popmoney and Square Cash. These apps allow the transfer of money to an individual from a person’s credit card or bank account.

Many banks have developed their own P-to-P technology to keep customers connected and engaged. As Millennials reduce their time spent interacting with banking institutions, innovative payment technologies are created to keep them engaged and loyal to the bank.

The payments field has gone through an explosion in technology. And with this advent of new technology are new start-ups that create even faster and more seamless experiences. With the rapid pace of change, the end of 2017 may look very different from today in the payment experience for both consumers and brands. Is your brand ready to take advantage of these new ways to grow your business and keep your customer engaged?

Note: The views expressed in this blog are those of the blogger and not necessarily of Synchrony Financial. All references to consumers and population refer to the survey respondents.

3 Consumer Trends to Watch in 2017

As we launch into a brand new year, we look to connect with consumers and make our brands shine. The surveys and insights we gathered over the past year reveal certain learnings that caught our eye and were quite a revelation. Below are some insights from consumer surveys and ways brands can tap into these insights to delight customers in the new year.

Marketing to MillennialsConsumers Are Inclined to Spend More on Experiences

In survey after survey, consumers have told us that they value experiences over things. According to a Synchrony Financial 2016 consumer survey, 68 percent of the population said enjoying experiences are more important than owning things, and over 60 percent said they will pay a premium for experiences they feel are valuable. These categories include travel, leisure, entertainment and dining out.

According to a study by Lightspeed GMI/Mintel, the top three categories consumers say they increased spending on since 2013 are: leisure and entertainment (+12 percent), dining out (+11 percent) and vacations (+10 percent).

Implications for retailers: What are retailers doing to take advantage of this trend? Quite a lot, actually. Many retailers are creating restaurants right in their stores. For instance, Barnes and Noble has put full restaurants in several of their stores, complete with waiter service and Urban Outfitters has several stores with bars. Toys”R”Us has unveiled plans to create a prototype store that will include a play space and interactive technology to engage kids and parents alike. Add that to cooking demonstrations at Williams-Sonoma and rock climbing at REI, and we have a trend that is taking hold.

online shoppingDigital Shopping Grew Tremendously in 2016

The Synchrony Financial 6th Annual Digital Study showed dramatic increases in using digital technology for almost all shopping related tasks. About two-thirds of survey respondents stated that they have performed some kind of shopping related task on their mobile phones, up from 45 percent a year ago. And 40 percent of the population say they are more likely to increase online shopping over the next 12 months. Not only are they engaging with retailers via digital, consumers are also driven by digital offers. More than half (55 percent) say they would shop at a store more often if they were sent relevant offers to their mobile device, up from 35 percent only a year ago.

Implications for retailers: Since digital shopping is widespread, many retailers have invested in technology to make the digital experience seamless. This includes creating shopping apps with high functionality that provide access to everything related to the shopping experience — from rewards to checkout. Location-based services and beacons have also become commonplace, as two out of three consumers tell us they check in at retailers to get points, special offers and discounts.

FSnews_071513_mobile_imageMobile Payments Are on the Rise

According to the Digital Study referenced above, 81 percent of the U.S. population is now aware of mobile wallets, up from only about half a year ago. However, regular usage is fairly low. Consumers expressed concern about security and the lack of additional value as their reasons. And at this point, many retailers do not accept mobile payments. But according to a recent study by Forrester, 75 percent of retailers say they plan on accepting ApplePay by the end of 2017. And 46 percent of non-users say they are likely to try mobile payments if they receive an offer. So, as the technology becomes ubiquitous across retailers and there is added value for consumers, mobile payments are expected to increase.

Implications for retailers: Payments are an extremely important part of the shopping experience. For some retailers, the payment process is the only interaction they have with the customer. Think of the last time the line at the register was too long and the customer just walked out without buying. If the payment experience is seamless, the customer is happy; if not, the result could be lost sales. This is the reason mobile wallet technology is an imperative for the retail industry and so many retailers are making big investments in it. As shoppers expect to be able to check out using their smartphones, the retail experience must match this expectation.

As we look ahead to the coming year, we know for certain there will be some elements of predictability in what we will see, and some things will surprise us. But, the closer we track the sentiment of consumers, the better we will be at delighting them.

Note: The views expressed in this blog are those of the blogger and not necessarily Synchrony Financial. All references to consumers and population refer to the survey respondents.

WAM! 3 Consumer Segments That Drive Growth

With consumer spend hitting sporadic highs and lows, marketers are looking for segments of the population that show promise. And, who can blame them? There is news of consumer confidence that paints a choppy picture of consumer sentiment. But the U.S. is full of segments and sub-segments that can be drivers of success for any given brand. The entire population is made up of consumers, after all.

With consumer spend hitting sporadic highs and lows, marketers are looking for segments of the population that show promise. And, who can blame them? There is news of consumer confidence that paints a choppy picture of consumer sentiment. But the U.S. is full of segments and sub-segments that can be drivers of success for any given brand. The entire population is made up of consumers, after all.

There are three segments that all brands should take a close look at. These segments may not immediately come to mind, and companies may respond that their segmentation strategy is different from others. Even though this is true, there are three segments that all consumer brands should consider specific strategies for: women, the affluent and millennials. Or WAM, for those who like catchy acronyms.

Let’s look at the numbers. The important ones are: 85 percent, 47 percent and 34 percent.

black-women-shoppingSegment No. 1: Women

Women are the purchasing officers of the household and the chief investment officer when it comes to the majority of purchases. Many brands already have this information, but how many of them truly delve into the experiences of women in order to adjust products and the buying experiences to them?

According to Pew Research’s “The American Family Today,“ 40 percent of women with children under 18 at home say they are the main income earner in the family. Along with this comes a busy lifestyle. If they have kids and a full-time job, how much time can they really spend on shopping? At a recent conference, I heard that consumers are now saying that convenience is as important as price in deciding where to shop.

As a result, brands who cater to this can expect a loyal following. What are the priorities of a busy mom? Reasonable prices, healthy items/safety, a quick shopping experience and some understanding. How many times have you had a sleeping child in the car and needed to buy milk, detergent or anything without getting out of the car? The ones who are nodding at their screens right now are busy moms. And, there are a lot of them out there. Brands who cater to the female customer and really know her needs and challenges can expect a loyal following.

AffluentSegment No. 2: The Affluent

According to a study by Pew Research, the affluent have seven times the income than the middle income segment, and their income has grown by 47 percent in the last 30 years. This reflects upward mobility, as middle class households attain greater incomes and rise to the affluent segment. As a result, affluents have a significant amount of purchase power.

What do they buy? They are not very likely to buy only luxury brands, and just as likely as non-affluents to shop at stores like Gap and Macy’s, per the February 2016 Synchrony Financial Affluent Study. In terms of future spend, they say they intend to spend more money on experiences, rather than things, and they intend to increase their spend on travel. As a result, brands who reflect these needs may tap into this growth trend.

Millennial vacationers

Segment No. 3: Millennials

There has been a great deal of focus on millennials — they have been analyzed, debated, probed, viewed and quoted a great deal. A very great deal. A Google search on “millennial” yields about 18 million hits. That’s a lot of analysis. Well, they are a huge generation, and they are going to be coming into a good deal of discretionary income.

As they grow older, their incomes will outpace their student loan burden, and that means they will have money to spend. But their shopping habits are very different than past generations. They are all digital all the time. They are completely comfortable with digital shopping and becoming more interested in mobile payments. Social media drives a great deal of their spend, particularly for the younger millennial. According to a June 2016 Synchrony Financial Digital Study, about 75 percent of millennials say they have purchased something as a result of social media. As a result, marketers must look at this growing population and put strategies in place to attract them with digital technology and social media content.

This country is a beautiful combination of many segments and sub-segments. It is impossible to identify any one segment that will lead to success for any retailer. However, keep in mind WAM — women, affluents and millennials — as segments to watch, for future successful strategies.

Note: The views expressed in this blog are those of the blogger and not necessarily Synchrony Financial.