For merchants, offering a broad range of payment methods must be a 2023 priority.
“We’re living through a fairly tumultuous economic climate at the moment,” Paul Fletcher, head of payments at Co-op, told PYMNTS. But beyond the macro pressures, merchants must satisfy one key desire on the part of consumers: They want a broad range of payments choice.
Specifically for Co-op, one of the U.K’s biggest food retailers and one of the world’s largest consumer co-operatives with around 2,500 food stores and over 800 funeral homes — as a member-owned organization, “we have to consider every pound that we invest.”
The conversation came against the backdrop this past fall, when Co-op talked about its focus on convenience and commitment to offer greater value, led by a major 37 million pounds price investment (about $45 million) with more than 100 own-branded products reduced in price.
Additionally, technology investments proceed apace, as the company said it would seek to increase scale with capital-light operations, including its franchise stores, and continue to expand its eCommerce business, which will include additional payment methods underpinned by microservices and APIs.
Fletcher pointed to the Pay in Aisle app launched in 2019 — which lets consumers pay with their phone rather than at the register, powered by ACI Worldwide’s technology — as a critical driver and template for Co-op’s payments strategy moving forward.
“Contactless is now about 80% of our transactions,” he said, noting that the average basket size in the brick-and-mortar setting is about $15 equivalent. “And it’s incredibly convenient, fast and reliable.”
Contactless payments are primed to get a further boost as EMVco has released a new spec (the contactless kernel specification) to help merchants and other stakeholders make the leap to biometrics.
Moving Beyond Contactless
“There’s a real opportunity, industry-wide, to use that new standard to innovate, and ‘push on’ beyond ‘simple’ contactless transactions,” Fletcher said.
And, when asked about Co-op’s own payments strategy moving forward, he said, “we’ll support all of the digital wallets — Google Pay and Apple Pay among them — that are booming, particularly in eCommerce.” Single-click functionality will be vital in retaining customers in the current spending environment. At the moment, crypto is not on the payments roadmap as volatility reigns.
Click to Pay, he said, represents a new avenue of growth. Co-op will be working with PSPs and acquirers to bring Secure Remote Commerce (SRC) to market in the U.K.
“SRC will become ubiquitous as a payment method, because it’s a card on file, done correctly, at a payments scheme level with the appropriate tokenization,” Fletcher said.
Real-time payments also exists on the near-term horizon and longer term as a key area for investment and adoption. PYMNTS/ACI joint research found that 43% of U.K. and 33% of U.S. retailers plan to add real-time payments soon.
But for now, banks and acquirers still some work to do to help RTP reach ubiquity, Fletcher said. B2B payments will likely take the lead in bringing RTP to the forefront of commerce as buyers and suppliers embrace greater speed, transparency and cash flow visibility.
“I’m keeping an eye on it, but we’re not jumping in right now,” he said.
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