Changing customer habits, technological innovation and fierce competition are profoundly changing payments, at a speed never seen before. This is particularly true with alternative payment methods such as contactless as both the industry and customers come to recognise the benefits involved.
When granting or opening a new franchise, installing an appropriate payment system might not be a priority for franchisors and franchisees. However, paying is an important part of the overall customer experience, so making it as quick and easy as possible is vital.
The latest Card Expenditure Statistics from The UK Card Association show that card spending amounted to £47 billion in June, up £0.2 billion on May. These numbers confirm that there is a growing trend for plastic in everyday transactions. Additionally, the lower average transaction values shown in the statistics reflect the increasing use of contactless payments.
Almost every franchise accepts card payments, and more and more businesses are taking contactless payments too. Some have been reluctant to pay fees for card transactions, ignoring the issue that accepting cash carries a cost of its own. Cash payments still require a secure till point and a member of staff to take the cash to the bank, plus it is susceptible to staff theft in a way that card payments are not.
With customers increasingly eager to pay by card or even contactless, franchises should investigate alternative payment methods. They offer a flexible, simple and quick way to pay, whilst increasing profitability and improving the customer experience.
Contactless is well suited to those businesses that sell low-value cash items and work in a high-turnover environment, such as cafés, sandwich shops and takeaways, as transactions can be processed in less than a second. Queues can be minimised and a greater number of customers can be served. This does not only improve customer experience and relieves heavy customer flow during peak-hours, but increases revenue too.
Contactless is a secure way to pay as it benefits from the same range of advanced security features found on a standard chip and PIN card, with transactions processed through the same secure network.
Contactless payments have more business potential than speed alone as the readers do not just accept cards, but also near-field communication (NFC) enabled mobile payments. Mobile payments are not yet widespread in the UK. However, the recent launch of several payment apps, in particular Apple’s recent announcement that it has added NFC technology to its iPhone 6, has the potential for a swift and widespread adoption, incentivising both franchisors and franchisees to engage with alternative payments.
Once the technology is more widely adopted, it will be significantly more likely to gain traction if customers already feel comfortable making payments via contactless cards. Therefore, it is in businesses’ interests to prompt their customers to try contactless at the till and to raise awareness of the method more broadly.
The most likely area of development is the use of digital wallets stored on smartphones. In the future, paying with a mobile phone will potentially be integrated with loyalty apps on the device, which will allow businesses to capture individual customers’ purchase histories and preferences. This customer insight will enable franchises and franchisees to design new marketing strategies targeted at 'audiences of one', for example by rewarding frequent customers with vouchers or loyalty offers.