Omnichannel payments: a guide

In the fast-paced era of digital and social commerce, the number of ways to accept payments is continuously growing.

It's no longer sufficient for businesses to offer just a few payment methods. They need to consistently innovate to keep up with customer's payment expectations and simplify the payment experience.

Fintech companies are at the forefront of this. One way they do this is by providing omnichannel payment solutions.

What are omnichannel payments?

Omnichannel payments refers to comprehensive payment processing systems that unify multiple payment options at different customer touch-points.

They can also track and store customers' payment information and purchase histories. This makes it easier for companies to tailor personalized offers.

Omnichannel payments essentially allow companies to offer the same level of seamless payment and shopping experiences across in-store, mobile, online payments and phone or mail orders.

Forward-thinking brands like IKEA, H&M and Starbucks already collaborate with omnichannel platforms in order to improve customer satisfaction and increase loyalty.

How do omnichannel payments work?

Main features and functions

Omnichannel payments work via third-party platforms. Once they have set the platform up, companies can add a variety of payment methods and begin receiving comprehensive sales reports.

This process simplifies the traditional multi-channel payment system, where companies employ different providers for each type of payment, i.e., one provider for card payments, another for in-app payments, etc.

Omnichannel platforms bring together different payment providers' solutions in a single digital environment. This centralizes payments, customer records, and transaction histories at all points of engagement and functions as an all-in-one payment gateway.

In short, it allows companies to accept all forms of payments on multiple channels while providing useful analytics to increase sales.

Processing channels

Processing channels are the channels (or methods) customers conduct their transactions on. These include:

• Online: including via apps, websites or email
• Offline: through points-of-sale or service kiosks
• Direct billing: directly from bank accounts without the need for cash or card transactions

Payment methods

Payment methods refers to the way that customers pay. This covers multiple payment methods, including the following.

1. Card payments

Card payments are the most common online and offline payment methods.

Almost all e-commerce platforms accept credit or debit card payments, including Visa or Mastercard. And in some countries, like Sweden for example, card payments are the only method accepted in certain retail stores.

2. Digital wallets

Digital wallets are virtual systems for storing payment information that enable electronic transactions. They are the most common alternative to online card payments.

PayPal is perhaps the best-known digital wallet.

3. Mobile wallets

Mobile Wallets are a popular type of digital wallet. Unlike some digital wallets, they allow for contactless payments at many brick and mortar stores.

Mobile payments are still categorized as card-present transactions. They are simply supported through mobile wallet apps and near-field communication (NFC) technology instead of physical cards.

They are convenient for consumers, who do not need to carry their physical cards all the time. Well-known examples include Apple Pay, Google Pay and Samsung Pay.

4. Card-not-present (CNP) transactions

As the name suggests, card-not-present transactions occur without the card or payment terminal being physically present.

They fall into three main categories:

• Remote payments (including online payments)
• Recurring billing (including subscription services)
• Phone or mail order

5. Other payment methods

There are many different payment methods. Some examples include: QR codes, cheques, bank transfers, wire transfers, gift cards, cryptocurrencies, and more.

Advantages of omnichannel payments

1. Improves customer experience

Consumers increasingly expect unique interactions and personalized offers based on their purchase history. Omnichannel payments help businesses meet these expectations.

And by centralizing all data into a single dashboard, companies can better analyze consumer preferences. This even applies to purchases completed via different channels and payment methods.

For example, analysis can be done around how consumers pay online vs how they pay in-store. Or how users of loyalty apps prefer to make payments.

2. Increases sales

Customers are more inclined to buy from a brand they are already familiar with, especially if they had a good experience. So, personalized customer experiences are aimed at achieving better sales and brand loyalty.

An omnichannel payment processor might increase revenue by reducing cart abandonment. Many studies suggest that the average eCommerce cart abandonment rate in the US is about 70%. In Canada this may be as high as 84%.

The same principle applies to in real world sales, too. Some companies with a brick-and-mortar store presence in Europe have already started to introduce self-service kiosks that accept payments via PayPal or Venmo.

3. Optimizes operations (reduces costs)

Unlike multi-channel solutions, omnichannel payment processing operates via a single platform. This enables companies to work with multiple service providers, manage multiple business relationships, and gather different sets of data.

This will alleviate the need to burden of pay multiple fees, which can save the company money. This is especially useful in cases where service providers charge high payment processing fees for small sales volumes.

Having a better overview of operations helps improve them. It can serve as the basis for future business development and strategy plans.

Business considerations when implementing omnichannel payments

1. Choosing the right platform

Each omnichannel payments solution or platform varies in exactly which providers they integrate with. Businesses need to ensure that a given platform can accept payments from its customers' preferred providers.

The scale and region of businesses matters, too. This can impact a number of areas, from multi-currency processing to payment security and compliance protocols.

2. Data analytics

The reality of data analytics in payment processing is complex. Companies often work with multiple service providers and receive different sets of data. And some data may not be comprehensive enough, which can prevent a business from understanding its market.

So, it is important that companies conduct a comprehensive overview of their customer data before choosing an omnichannel platform.

3. Analyze your capacities

Companies need to know whether or not they can manage increased sales volumes. Increases sales that simultaneously negatively impact shopping experience and/or deliveries are not useful.

Conclusion

With the innovations brought by fintech, businesses can now offer a seamless payments experience across online, in-store, and mobile platforms.

Omnichannel payment processing refers to the system of unifying payment across different channels.

These solutions are rapidly becoming a game-changer in the fast-paced era of digital and social commerce.

They do not only drive sales and improve customer satisfaction, but they also satisfy the consumer demand for a more personalized shopping experience.

Companies employing omnichannel solutions can also save money and streamline their operations, ensuring a successful and thriving future in the payments industry.

In order to successfully implement a harmonized system of omnichannel payments, a business must first analyze its capacities and understand its customers' preferred payment method.

This will allow it to choose the right payment platform that aligns with its business development plans and needs.