By Jason Howard, Executive Vice President, Ethoca
The Fintech space has seen some major changes over the past few years as technology continues to evolve to meet new demands—for online or in-store purchases, and everything in between.
We’ve seen this in the continued rise of contactless payments and the rise of diverse buy-now-pay-later (BNPL) options. Businesses need to stay up to date with these and other emerging innovations. Although advantageous to business, this continuous evolution widens the path merchants need to walk to ensure they provide the right customer experience. Keeping a pulse on the developments in fintech, and what they mean for merchants and the customer experience, is important for any business looking to stay ahead of the competitive curve.
Instead of complementing in-person banking, digital services like banking apps are now taking over as the primary—and sometimes only—interaction point. This provides merchants a unique opportunity to engage with their customers directly in the banking apps they use while minimizing transaction confusion. Providing digital receipts directly in the app, for example, gives customers greater levels of information about their transactions, while extending a merchant’s brand presence. Merchants need to think about their total customer experience—including the post-transaction experience, which is often where cardholders review their purchase history online.
We have also seen digital-first challenger banks go from niche to normalized within a few years. To remain competitive, traditional banks have increased the scope of their own digital offerings and made their banking apps the center of their customer experience. It’s becoming increasingly rare for banking customers to find that they have to go into a bank branch or call a customer service line.
QR Code Payments
QR codes have become increasingly popular over the last two years, enabling easy contactless service in industries like hospitality and dining. In fact, in a recent poll, 51 percent of consumers said they planned to use QR code payments, and research predicts that QR codes will become “the most used digital commerce mechanism in terms of volume” over the next two years.
The attraction to QR codes as a payment method is obvious. While they allow retailers to accept payments digitally, they also offer a blended experience between physical and digital. At its most basic, QR codes can be used to allow customers at a restaurant to easily pay their tab without a staff member needing to be involved. However, more creatively, businesses can also use them to facilitate more in-depth digital checkout experiences that can incorporate loyalty and reward programs or additional discounts.
No matter how they’re used, QR code payments are often card-not-present (CNP) payments in which customers do not present physical cards to staff, and therefore an understanding of CNP fraud is needed to help reduce chargebacks. It’s important that merchants balance both the customer experience and their fraud and chargeback strategies when adopting QR payments.
The pandemic has accelerated the shift to digital shopping by as much as five years. Considering this trend, renewed focus has been put on mobile commerce, especially where it offers the potential to bring the in-store experience into customer’s homes. This has given rise to augmented reality (AR)—letting consumers see what a sofa, flooring or paint color will look like in their living room before they make a purchase.
Augmented shopping has the potential to reduce chargebacks and refunds as AR can help customers better visualize what they’re buying and help reduce cases of “this is not what I expected” that often lead to returns or even service-related chargebacks.
Today’s smart speaker type devices are becoming an increasingly common way to shop—a trend that is only expected to accelerate. One report projects that 75 percent of U.S. households will have one by 2025.
Voice recognition interactions are focused on simple commands currently, but the technology behind them is improving daily. As voice-activated shopping increases in popularity, companies will have to develop “skills” for these platforms. While convenient and quick, current voice-recognition technology often allows other household members like children to download music or other items without asking permission first.
While voice-activated shopping can give customers another easy way to make purchases, it could also potentially increase the number of chargeback requests.
Knowing the Implications
The rapid acceleration of digital transformation that we are likely to see this year and beyond means merchants can’t risk falling behind. They must be digital-ready and embrace technologies that provide the customer experience that people want and expect.
At the core of this is that each new technology changes the customer experience and fraud strategy for businesses. When adopting new models, merchants must understand the implications that these models create. This will enable them to choose the right tools that will adapt and scale to help keep their experience seamless, and fraud and chargebacks low.
About the author
Jason Howard is executive vice president at Ethoca, a provider of collaboration-based intelligence and technology solutions that empower businesses around the world to fight fraud, prevent disputes and improve the customer experience. Jason is responsible for the overall strategy and leadership of Ethoca, working across the business to further drive Ethoca's leading collaborative technologies that aim to minimize chargebacks, friendly fraud and build better digital customer experiences.