The digital age has given rise to a multitude of new payment and monetisation products and services for retailers.
MCV speaks to experts in the sector about the latest methods on offer
It goes without saying that getting paid is without a doubt the most important thing for any retailer looking to maintain a successful business. But failing to offer the right payment options can as easily lose sales among consumers as poor customer service or the wrong product offering.
So, with consumers demanding more and more accessibility and variety in the ways that they pay, what methods should retailers be implementing?
MONEY ON THE MOVE
Michelle Whiteman of the UK Payments Council tells MCV that mobile payment should be a priority for firms, as more consumers begin to embrace paying through their smartphones.
“Worldwide the UK presents a key growth area in the uptake of mobile payment,” she states. “Businesses should be planning now, or risk falling behind consumer demand.
“For consumers it will bring convenience and choice far greater than we have known until now. Undeniably these new technologies will transform the way we manage our finances and the way we pay over the next decade.”
Massimiliano Silenzi, head of payment service Onebip at mobile commerce firm Neomobile, agrees, highlighting the importance of mobile payments for games retailers specifically.
“Mobile billing is one of the most important payment and monetisation channels for games retailers because it enables un-banked and un-carded users to make game or in-game purchases,” he says. “From games retailers’ points of view, it allows them to address user segments that would not otherwise be able to buy their products online. These user segments include younger age groups, gamers from emerging markets and those that don’t trust using credit cards or other payment methods online.
“The other advantage of mobile billing for games retailers is its frictionless payment system, which helps to boost impulse and repeated purchases.”
He adds that retailers looking to promote specific games should consider suitable forms of payment for the target demographic.
“The type of payment method commonly used by gamers depends on the market and the business model,” he says. “Mobile billing can be a great monetisation booster for free-to-play and subscription-based games. Also, markets where credit card penetration is low and where there’s a young and tech-savvy population will thrive with mobile billing.”
"Businesses should be planning to implement mobile payment uptake now, or risk falling behind consumer demand."
Michelle Whiteman, Payments Council
HOUSE OF CARDS
As the digital age rolls on, physical tender is becoming more and more a thing of the past, with payment cards replacing cash.
Whiteman observes: “The landscape of consumer payments has changed substantially over the last ten years.
“Most striking is the marked increase in the number of payments made by debit card as consumers have migrated transactions away from cash and cheque. Over 90 per cent of consumers have a debit card and in 2012 60 per cent used them at least once per week to make payments.
“Alongside the growing consumer preference to spend by debit card, increased card acceptance and the shift in commerce onto the internet and mobile phones have all boosted use. There were 7.5 billion payments made by consumers with debit cards during 2013, compared with three billion in 2002.”
However, despite the shift from cash to card, there are still plenty of gamers who are too young to own a debit card. One popular payment option for these card-less consumers is pre-paid gift cards, which can also help to avoid the danger of entering details online.
Simon Osgood, vice president of global strategy and development at pre-paid card specialist Incomm, similarly notes the correlation between the youth of consumers and the popularity of pre-paid cards.
“The retail presence of cards has ballooned since five years ago, with more and more retailers selling third-party pre-paid and gift cards,” he tells MCV. “The most noticeable change is that there is now simply no age barrier.
“Five years ago, leading pre-paid products were accessible predominately through PC and the entry level was probably nine year olds; I would strongly suggest that, with the development of smart devices, this age entry is now as low as four years old.
“Pre-paid cards can appeal to the younger demographic converting their pocket money to access content and, at the other end of the spectrum, casual content users who are middle-aged females picking up cards in their grocery shopping.”
Osgood comments that the thriving digital market is actually benefitting physical pre-paid cards, with brick and mortar stores stocking these products in order to piggyback on the popularity of online-only games.
“The pre-paid model provides the ability to monetise and bridge the gap between ‘clicks and bricks’,” he muses. “It allows the retailer to monetise online and digital gaming in-store – a revenue that on the whole has been bypassed by online and credit payment mechanisms.”
"The pre-paid model bridges the gap between 'clicks and bricks'."
Simon Osgood, Incomm
So, how can the uninitiated get involved, without undermining tried and tested payment platforms?
Regarding pre-paid cards, Osgood says little special effort needs to be made.
“Treat pre-paid cards as a product and allocate the appropriate marketing, point of sale and space as you would do with any other product,” he advises. “The product dynamics lean effectively to utilising potential areas in-store that have historically been under-capitalised upon or allocated to products simply due to space restrictions.”
Silenzi offers some guidance surrounding the risk posed to existing payment platforms.
“When introducing a new payment channel there can be a concern about the cannabilisation effect on the other payment systems that already exist,” he admits. “Retailers can and should test the cannibalisation effect on less expensive channels first, and then address their pricing and channel promotion strategy accordingly.”
He concludes: “Successful retailers design their payment platforms to rapidly respond to the deployment of new payment channels and to test their channels for conversion and profitability.”
GAME ON THE GO
High Street retailer GAME has been working to make paying for purchases easy with its new GAME Wallet app.
It collects customers’ reward points with their vouchers and trade-in credit. These can then be used to purchase goods in store. It can also tell you how much your old games and tech are worth with a quick scan of a barcode, too.
And consumers seem to love it – the app has been downloaded by over 1m people since it launched.
“We’re always looking at ways to make it simpler and easier for our customers to access and pay for the games they want, when they want, where they want,” explains GAME insight and reward director Fred Prego.
“GAME Wallet is an exciting next step in that evolution - providing a card-less and cash-less way of paying as well as helping our customers keep track of all their gaming purchases, rewards points, gift cards and trade-in/top-up credit in a single place within the app.
“The growth of smartphone usage will change the way consumers interact with retailers in the future. Usage of payment solutions like GAME Wallet will grow and we will be at the forefront of that change. But at the same time we need to find solutions that meet all our customer types and demographics, especially the cash customers, which Game Wallet addresses.”