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Bad payment experience can cost both digital natives and newbies

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Retailers shouldn’t be looking to reinvent consumers. The first generation of digital natives, by age or attitude, are the consumers of today. They are reshaping the world in their own image.

Customers want customization. Done correctly, it’s a win-win. Customers report higher satisfaction. Merchants report higher sales. Sometimes the experience will be entirely digital. Other times it will involve a digital element. Or be entirely analogue.

Customers have different considerations and needs when they buy their morning coffee, pay their gas bill or order takeout. Commerce is contextual. How and why people buy depends on so many factors. How and why they pay depends on a whole host more.
Our research reveals that 67% of U.K. consumers have abandoned an online retail site simply due to the payment process. Just over a fifth of these left because the process was too complicated, while a similar number didn’t complete the purchase as the merchant didn’t offer their preferred payment option.

Localizing payments can be a Catch-22 situation for retailers. Greater customization and simplification on the front end often equals greater complexity on the back end.

Banks and payment providers must help retailers to make customer journeys smoother and increase reach. After all, digital consumers and merchants are born as well as made. Payments play a key role in driving simpler, smarter and more customized experiences.

"Born digital" refers to materials that originate in a digital form. It also applies to people and businesses who came of age never having known a time before the internet. This cannot but affect how consumers, retailers, banks and payment providers interact and transact.

Digital natives never had to watch television at the time of transmission to see their favorite programs. Or call a place, usually a home or office landline, to speak to a person. Similarly, almost every industry — retail, finance, entertainment — seemed slower, simpler and more store-based before the internet. The balance was tilted in favor of the suppliers.

Consumers didn’t know any different. They didn’t expect any better. Somewhere along the way, Jeff Bezos and others like him pioneered online shops. If they offered more choice online at lower prices, with the convenience of home delivery, it might catch on, they thought.

They were right. It wasn’t merely the sales channel, but the rejection of either/or thinking that caught on. What Amazon offered was both low-priced and convenient; fast and good quality. There were no trade-offs. Consumers did not have to settle for less. They expected more. And they bought more online.

Twenty-three years after launching its first web shop selling books, Amazon is valued at more than $950 billion. Global retail e-commerce sales stood at $2.8 trillion in 2018, or 12% of global retail sales, according to Statista.

Internet-enabled digitization and disruption has created brand-new business models, including search, apps and cloud computing. It has also turbocharged traditional models, such as advertising, affiliate marketing and marketplaces. So, is the move to digital commerce consumer-push or retailer-pull?

It’s probably a combination of the two. Businesses that have grown up digital think differently as well as digitally. This mindset change is as powerful as any technology change, perhaps more so. Digital is not merely a new way to automate old processes to cut costs, or a new channel to distribute old products. It’s driving new thinking about commerce.

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