Consumers demand more payment options than they did before the COVID-19 pandemic. Customers are decidedly omnichannel, shopping, interacting with merchants, and paying in a variety of ways. To provide the types of experiences their customers expect, merchants launched new processes, reengineered old ones – and turned to the channel for the payment solutions to make it happen.
Justin Zeigler, Director of Product at Datacap Systems, says, “The pandemic forced an immediate transition to alternative payment methods. Virtually overnight, solution providers were scrambling to move commerce from traditional in-person payments to e-commerce alternatives.”
Shifts in consumer behaviors include accelerated digital payments adoption, less cash use, greater use of contactless solutions such as tap-to-pay and digital wallets, and increased demand for e-commerce solutions.
Solutions providers also saw changes in the types of solutions in demand in typically card-present environments, such as veterinary and healthcare businesses. These businesses may represent an even bigger opportunity for solutions providers, requesting a wide range of hardware, such as Bluetooth, Wi-Fi, and mobile payment terminals as well as payment technology, including QR code, text to pay, and in-app payments for on-premises purchases.
Why the Pandemic was the Start of a New Era for Payment Solutions Providers
Zeigler anticipates that the widespread adoption of new payment processing services will continue. “Now that consumers have tasted the ambrosia that is frictionless payments, saved and automated ordering and integrated loyalty, many will expect this functionality as a baseline going forward,” he says.
The pandemic initiated sweeping and rapid changes, for example, a shift from the industry and technology to the consumer as the main driver of payment changes. It’s created new opportunities, but also new challenges.
The immediate challenge is to meet the immediate demand for technology while supply chain slowdowns and the chip shortage continue. Your payment partners’ flexibility is pivotal to your ability to deliver solutions now – and will give you an edge as you help your clients plan for the future.
Continued Change Ahead
Zeigler says that although the payments industry has changed more in the last five years than in the previous 20, expect even more change. “Prepare for payment alternatives on the horizon like ACH/FedNow and cryptocurrency to materialize and evolve,” he says.
Keep an eye on trends, such as person-to-person (P2P) and person-to-business (P2B) payments, buy now, pay later (BNPL), and tap-to-phone payments, which your clients may want to deploy in the not-so-distant future.
Also, work with your payments partner to provide your clients with seamless experiences both in-store and online in addition to ensuring consistency and security across all transactions.
Advice for Solution Providers
Zeigler says changes in consumer behaviors are creating new opportunities for VARs and ISOs. “Solution providers no longer have to sell the concept of alternative payment methods because the benefits to both the merchant and consumer are clear thanks to the paradigm shift brought on by COVID-19.” The most successful solutions providers will consolidate in-store, above-store and alternative payments through the same processing platform to avoid unnecessary complexity for the merchant.
VARs, MSPs, and other payment solution providers will also find greater success when:
- Knowing your product stack and offerings so you can assist your customers through this transition
- Finding a payment provider that can assist you through equipment subsidies, technology, and additional revenue streams
- Upgrading all of your customers with the latest technology—or the competition will do it for you
- Understanding that the change cycle will accelerate and clients will insist on a faster time to market.
Lenz says to bear in mind that reducing time to market will be critical since the change cycle is faster and will continue to shorten.
Additionally, payment solutions providers, now, more than ever, need to be trusted business advisors, especially in the SMB space. Without your guidance, your small and medium-sized business clients may not be able to keep up with rapidly shifting trends – or their competition.
Zeigler says that it’s vital to evolve along payments and your market to give your business the best opportunities for success. “In an industry where solution providers are competing against direct-to-merchant POS-in-a-box offerings from processors, the channel needs to redefine its role,” he says.
“There is no longer a place for providers who are content to be ‘order-takers,’” Zeigler says. “Partner with vendors who are forward-thinking and with staying power, get educated on what functionality is currently available and what’s in the pipeline and get in front of the merchant’s needs before they ask,” he says.
He advises staying informed, conducting proactive needs assessments for merchants and making recommendations that include novel solutions that will save the merchant money or grow their revenue via new business – or both.