Vid Sukumar, GM EMEA at Signifyd

The relationship between payments and retail has never been stronger or more crucial than now. Although there’s been a lot of chatter around people cutting back on purchases, estimates indicate that e-commerce will continue to grow steadily through 2025. Despite concerns that consumers have tightened their belts, standards have not fallen. They still expect to be able to purchase whatever they want, whenever they want, from wherever offers the best deals.

The ability to access merchants “on-demand” combined with consumer efforts to stretch their money further means one simple thing: businesses can no longer rely on customer loyalty to drive sales. Data shows that 53% of consumers are willing to switch brands they were previously loyal to in order to save money, when previously customer loyalty remained high.

In today’s economy, merchants cannot afford to leave money on the table or miss out on this increasingly competitive market. Critical to maximising these opportunities is a retailer’s payments stack which allows merchants must safeguard their bottom line through Payment Orchestration.

Balancing regulation and experience

With PSD2 (soon to be PSD3) and Strong Customer Authentication (SCA) rules in place, retailers now have to strike a balance between customer experience (CX) and security, which hasn’t always been simple. Managing payments, adhering to regulatory frameworks, and maintaining a positive user experience must be balanced to provide a smooth and safe customer journey.

To help find this balance, partnerships with companies who can eliminate pointless friction, safeguard money, and take on risk are a good solution. Although SCA has offered effective Fraud protection, deployment has occasionally led to purchase abandonment at shops (5% greater in Europe than internationally). Businesses need to fix this while still taking advantage of the protection provided by SCA, which calls for careful attention to exemption management. Since 74% of customers base their purchasing decisions solely on CX, increasing the amount of qualifying orders that may be routed around SCA reduces friction, enhances experience, and boosts conversion rate.

While regulation like SCA has played its role in reducing online card fraud, it has also put pressure on other aspects of CX and caused fraud to migrate to other touchpoints like account takeover (ATO), return fraud, or delivery abuse. Online fraud is one of the only types of fraud that is increasing, according to the ONS (up 25% since 2020 despite other types of crime declining).

Choosing the right tools

Further, despite SCA increasing the security of online payments, it has also made shopping challenging for customers due to multi-factor authentication, which has decreased conversions and added friction across the user journey.

To combat this, payment orchestration providers can call on analytics tools to provide the foundational infrastructure needed to more effectively use data with insight. As a result, CX is improved while the tediousness of more manual authentication methods is diminished. It also reduces the organisational risk involved in approving transactions and gives retailers access to tools and methods for determining which purchases are real and which are not. This translates to stronger brand loyalty, better conversion rates, fewer abandoned shopping carts, and better authentication.

Although the economy remains shaky, it appears that customers are still looking to spend. In essence, they want to obtain more value for their money, which increases competition among retailers for new and repeat customers. It is more important than ever to understand the intricacies of consumer motives and loyalty.

Merchants can’t afford to miss any opportunity to drive sales and incentivise repeat customers. Developing strategies to keep customers coming back time and time again means having a solid tech stack with payment orchestration at its core. Only then can they worry less about conversions, risk, and hassle.

The post Using payments orchestration to prevent FOMO appeared first on Finance Derivative.