# Why payment technology will be the backbone of the UK’s retail recovery
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-05-04
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Retail Revolution: Adapting Payment Methods to Thrive
Meta Description: Discover how the retail sector has evolved in the past year and the importance of adapting payment methods to meet changing consumer demands. Learn more now!
URL: https://financedigest.com/why-payment-technology-will-be-the-backbone-of-the-uks-retail-recoveryhtml

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_By **Andrew Howell,** Global Marketing Director, K3_

In just twelve months the retail sector has changed beyond recognition. Consumers have balanced shopping requirements with safety, meaning buying behaviours have been reshaped. As a result, [online retail](https://www.ons.gov.uk/businessindustryandtrade/retailindustry/timeseries/j4mc/drsi) spend rose from 20% of all sales in January 2020 to 36% of all sales in November 2020. We also saw a shift towards self-service and contactless options within [bricks and mortar](https://www.financedigest.com/35-days-after-the-brexit-vote-uk-bricks-mortar-are-far-from-crumbling.html "35 days after the Brexit vote, UK bricks & mortar are far from crumbling") stores. For example, contactless payments have [increased by 30%](https://www.paymentsjournal.com/contactless-and-covid-19/) since the outbreak of the pandemic.

But the UK is unlocking; non-essential shops have reopened and are trying to capture footfall. To be successful, they need to recognise that payment [options are critical to winning back](https://www.financedigest.com/3-options-to-consider-when-you-owe-the-irs-back-taxes.html "3 Options to Consider When You Owe The IRS Back Taxes") the hearts and wallets of shoppers. Recent [K3 research](https://www.k3btg.com/whitepaper/adapt-or-fail-meeting-customer-needs-in-the-now-ty/) shows that, if the right payment mechanisms are not in place, people will take their custom elsewhere. So how do retailers get payments right?

[**Payment preferences have changed**](https://www.financedigest.com/open-banking-the-real-step-change-for-the-global-payments-industry.html "Open banking: The real step change for the global payments industry")

The availability of preferred [payment methods has become](https://www.financedigest.com/2022-the-year-future-payment-trends-become-reality.html "2022 – the year ‘future payment trends’ become reality?") non-negotiable for many shoppers. For example, according to [K3 research](https://www.k3btg.com/whitepaper/adapt-or-fail-meeting-customer-needs-in-the-now-ty/), one in 10 consumers would avoid a store if they couldn’t make a contactless payment. This is something that retailers need to take seriously if they want to [avoid losing](https://www.financedigest.com/in-planning-for-today-dont-lose-sight-of-tomorrow-avoiding-short-termism.html "In planning for today, don’t lose sight of tomorrow – avoiding short-termism") a significant chunk of their customer base.

However, this is just the tip of the iceberg when it comes to demand for new [payment methods](https://www.financedigest.com/freelancer-payments-methods-what-you-should-know.html "Freelancer Payments Methods: What You Should Know"). With more than half of shoppers (51%) avoiding interaction with staff when visiting a store, there is a growing demand for self-service options. In fact, the K3 research found that 2 in 5 people (41%) would like to [see more self-service tills introduced and another 16% of shoppers](https://www.financedigest.com/jd-sports-sees-bills-free-young-shoppers-boosting-profits.html "JD Sports sees bills-free young shoppers boosting profits") want the introduction of checkout-free stores like Amazon Go.

There is no doubt that COVID-19 has accelerated a trend towards minimal contact experiences and [retailers need to take action if they don’t want to see](https://www.financedigest.com/uk-retailers-see-40-jump-in-boxing-day-shoppers-springboard.html "UK retailers see 40% jump in Boxing Day shoppers -Springboard") customers walk away. This is especially important because we’re unlikely to see this preference reverse post lockdown. There are factors other than the pandemic driving this shift. Most notably, shoppers are demanding greater convenience and new retail services. Payments are an important facilitating factor for both.

**[Payments can boost](https://www.financedigest.com/how-the-epa-plans-to-boost-confidence-in-the-uk-payments-industry-post-brexit.html "How the EPA plans to boost confidence in the UK payments industry post Brexit") convenience**

Convenience is important to shoppers. So much so, that 56% of shoppers admit to using Amazon more during the pandemic because of the convenience factor. However, even before the COVID-19 outbreak, retailers were under pressure to [deliver on customer](https://www.financedigest.com/how-partnerships-fuel-fintech-innovation-and-help-banks-deliver-a-better-customer-experience.html "How Partnerships Fuel Fintech Innovation and Help Banks Deliver a Better Customer Experience") expectations around convenience. The brands that have done this well have thrived; think ASOS and Boohoo with seamless browsing, payment and returns options. Others, including high street stalwarts Topshop and Debenhams, have failed to [keep pace](https://www.financedigest.com/winning-the-security-race-how-financial-services-can-keep-pace-with-cybercriminals.html "Winning the security race: how financial services can keep pace with cybercriminals").

When it comes to convenience, the in-store experience is currently found lacking. Almost a third (31%) of shoppers state that their top frustration is long queues; an issue that is driving them to shop with competitors. However, this is an issue that can be alleviated with smarter [payment technology](https://www.financedigest.com/technology-is-a-tonic-for-late-business-payments.html "TECHNOLOGY IS A TONIC FOR LATE BUSINESS PAYMENTS"). For example, the widespread installation of self-service tills or smartphone-based ‘mobile checkout’ services as rolled out by M&S.

This type of mobile service is a key critical area where retailers [need to focus if they want to win back](https://www.financedigest.com/if-the-nation-backs-fintech-we-need-to-address-a-few-things.html "If the nation backs FinTech, we need to address a few things") and retain customers via increased convenience. Physical stores used to be digital black holes. You could use your [phone ahead of visiting a store to create wish lists and fill a digital](https://www.financedigest.com/snap-happy-79-of-brits-ditch-digital-cameras-in-favour-of-phone-photos.html "Snap Happy: 79% of Brits ditch digital cameras in favour of phone photos") basket. But once in store all of these digital touch points were rendered irrelevant. However, with new demand for [mobile payments](https://www.financedigest.com/what-is-the-optimum-mobile-payment-mix.html "What is the optimum mobile payment mix?"), retailers have the opportunity to capture a single. digital view of shopper behavior. This enables them to create bespoke, omnichannel offers that offer convenient and compelling shopper engagement.

Finally, retailers should also be linking these digitised payments to a loyalty scheme. 30% of customers don’t feel enough retailers are offering these schemes which is a huge oversight. Ending the shopper journey at the point of purchase ignores the [fact that the majority of retail revenue comes from returning](https://www.financedigest.com/factbox-five-facts-about-returning-ubs-ceo-sergio-ermotti.html "Factbox-Five facts about returning UBS CEO Sergio Ermotti") customers. By rewarding purchases and payments through loyalty programmes, retailers can nurture long-term relationships with shoppers.

[**Payments power new services**](https://www.financedigest.com/igtbs-payments-services-hub-faq.html "iGTB’s Payments Services Hub – FAQ")

In addition to boosting convenience and loyalty, [payments can also be key](https://www.financedigest.com/leading-payment-platform-appoints-new-key-positions-to-help-with-growth.html "Leading Payment Platform Appoints New Key Positions to Help With Growth") to creating more enticing purchasing options for shoppers. For example, online [brands such as ASOS have been quick to adopt buy](https://www.financedigest.com/loreal-buys-luxury-brand-aesop-with-eye-on-china.html "L’Oreal buys luxury brand Aesop with eye on China") now, pay later technology such as Klarna. This investment was a smart move with over [7 million](https://www.klarna.com/international/press/klarna-uk-hits-7-million-customers-and-16-million-app-downloads/) consumers having used Klarna to date in the UK. The K3 research found that 15% of shoppers want to see more of these buy now, pay later [options which should be a wake-up call for retailers](https://www.financedigest.com/analysis-u-s-retail-traders-pile-back-into-options-as-meme-stock-mania-flares.html "Analysis-U.S. retail traders pile back into options as meme-stock mania flares"), both online and in-store.

[Payment technology](https://www.financedigest.com/from-the-experts-5-payment-technology-trends-to-look-out-for-in-2016.html "FROM THE EXPERTS: 5 PAYMENT TECHNOLOGY TRENDS TO LOOK OUT FOR IN 2016") has become so critical that it can make or break a retailer’s fortunes as we ease out of lockdown. However, this does not mean that retailers should look at payments in silo. Used smartly, payment [technology has the potential to enable the convenience and new experiences](https://www.financedigest.com/how-is-modern-technology-shaping-our-in-store-experience.html "How Is Modern Technology Shaping Our In Store Experience?") that will keep customers coming back. But retailers need to act fast, they only have one chance to get their recovery strategy right.


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