February 24, 2017

What does real-time P2P payments mean for retailers?

Patrik Centellini

Senior Business Consultant Payments, Tieto

If you could reboot how payments are done in your store what would you do? Likely you’d want them digital, instant and seamlessly integrated into the shopping experience. With Siirto, this is becoming a reality in Finland. Patrik Centellini shares what’s next within payments for retailers.

Payments in retail are undergoing tremendous change. Digitisation is making the distinction between online and in-store payments irrelevant and the user experience is moving from something separate to something integrated and invisible. At the end of 2016, Amazon announced a trial for a store that allows shoppers to grab groceries without having to scan and pay for them at store. In a sense, we see the contours of the perfect payment experience – the one that feels like shoplifting. 

Challenges in retail payments today

At the same time, many of the existing payment “innovations” are really just digital “add-ons” built into payment infrastructure from the 60’s and 70’s. This infrastructure was designed for a non-digital and silo-oriented world where banks controlled everything from plastic to processing.

A wave of real-time payment infrastructures across the world is changing this. If not instantly, so at a big batch. Currently there are more than 30 of those implemented or under implementation globally. Combined with the open access to accounts, accelerated in Europe by PSD2, a new breeding ground for innovation in retail payments is materialising. 

With the emergence of solutions like Swish in Sweden and Siirto in Finland, the old payment silos are slowly dissolving and we see new customer behaviour quickly taking hold when consumers pay online and in-store.

Siirto redefines the customer journey

Siirto is taking another important step as the first real-time payment infrastructure that is natively built for an open and API driven market. If you think about it, this means that for the first time, payment solutions can be developed with the mobile and digital experience as a starting point – not just as a digital add-on to old legacy infrastructure.

Combining these two key components - instant and open - will provide retailers with ways to (re-)define how payments are used along the consumer journey. Several questions become relevant in this scenario:

  • At what step in the journey should payments be integrated?
  • Can we redesign a journey that improves the conversion rate and the user experience?
  • What does it mean if anyone in my staff can accept a payment at any place in the store?
  • Can we eliminate the shopping line all-together?

Cost-savings and back-end advantages with Siirto

Not only front-end experiences will see benefits of an instant and open payment infrastructure. Equal potential lies in the cost savings from automation of the back-end processes of the retailer, such as inventory, cash management and logistics that can be tightly connected to real-time order management and liquidity optimization. For instance, managing working capital and cash management in real-time, low inventory levels and access to finance can be managed in a “just-in-time” approach.

For decades, retail payments have been a one-size-fits-all affair with merchants having to cope with a number of new technologies and not being able to truly digitise the retail environment. With open and instant payment infrastructures being implemented globally, a true reboot of payments has begun. And the retailers that start capturing this today will come out as the clear winners. 

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Read more about Siirto and payment ecosystems here >>>

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