Payment Pulse – Ep. 9

Payment Pulse: The Power of Social Proof: Learn how influencer endorsements, online reviews, and peer behavior shape our buying habits.

Status Spending and Luxury Psychology: Understand why consumers use high-end payment methods to signal prestige and how brands capitalize on the “Keeping up with the Joneses” mentality.

FOMO and Impulse Purchases: Explore the role of limited-time offers and BNPL services in reducing purchase friction and triggering rapid spending.

Digital Trends on Social Media: See how platforms like Instagram, TikTok, and YouTube are revolutionizing product discovery and checkout experiences.

Cultural Influences on Spending: Discover how global payment preferences vary and why adapting to local norms is key for businesses expanding into new markets.

Also Listen On:

Episode Transcript

Steve Bell: Welcome back to Payment Pulse, a podcast by Clearent by Xplor, where our goal is to humanize and simplify the complex world of payments. My name is Steve, and as always, I’m here with my co-host, max. Max. How are we doing today and what exactly are we’re be talking about in today’s episode?

Max Kent: I’ll go Steve. Today’s topic is one that all merchants, platform providers and software partners need to hear about that is the true cost of a poor payment experience.

Steve Bell: we all know a smooth, seamless checkout builds loyalty and revenue, but also, what happens when it breaks or maybe it’s not up to par with, with the competition.

today we’re unpack the hidden expenses, customer fallout and long-term impacts of a subpar payments journey. And then we’re dive into how, modern platforms and technology can turn those OP or those costs into opportunities. let’s set the stage max, what can you provide from a data perspective that is highlight the importance of this topic?

Max Kent: the number speaks themselves. As of July, [00:01:00] 2024, eight months ago, 74% of online shopping carts, were abandoned before a purchase. That’s a roughly 70% increase from a year earlier. At the same time, in store digital payment adoption in the US grew from 19% in 2019 to 28% in 2024, a 9% increase.

Over five years. when nearly three quarters of potential online sales slip away and about one, and on the flip side, one third of in-store shoppers use digital payment, methods. Any friction, whether it’s online or offline, costs a merchant or a payment provider dearly. where does this all take us?

actually going wrong, in a payment journey? Steve, do you want to elaborate on how this all happens? leads to some of this friction.

Steve Bell: a poor payment experience often stems from legacy systems that struggle with today’s diverse payment methods leading to more transaction failures, delays, manual interventions, each trans, each failed transaction or exemption triggers a customer service interaction.

Manual refunds also, returning, or returns on processing, all of which drive up operational, operational overhead and slow down, that, that cash flow. So take a, listeners, take a pause here. And think about your own personal experiences, what frustrates you most in a payments experience.

Drop a comment if you’re watching this on YouTube, or you can always go over to our social channels, which are always in the link, the description below. And, let us know. I think that’d be great feedback for us to get some insights and again, open up this conversation between, you and us.

For me personally, as an example, it’s, the lack of ease between completing a transaction or the lack of speed in completing that transaction. I’ve said it before and I’ll say it again. The payment experience is critical overall for your customer and user experience. It’s seems like it’s not, but it’s the last step.

It’s common thought that it’s not, but it is that last step before someone commits to making a purchase. And, it can be the make or break for a completed sale. So definitely something to pay attention to. Yeah.

Max Kent: Yeah. for example I can think of a handful of apps where, I know when I step into that app, or when I go into a certain type of store, it’s going to be easy to transact.

And that’s, that makes all the difference, whether it’s one click pay flow online. Or me stepping up to a terminal and or a POS system and knowing that my phone’s gonna be accepted, is huge. from a consumer standpoint it’s why I want, I know to look out for certain stores or certain merchants.

And I also don’t worry about my transact my transaction ever failing. So that’s a big part.

Steve Bell: Yeah, when a payment can’t be completed seamlessly, every workaround for businesses is going to add complexity and costs, both in staff, the time that it takes, which ultimately is a, a monetary expense obviously as well.

it really diminishes the customer satisfaction, as you mentioned. When you have the places that, that it works well, you continue to go back to them for, various reasons. The payment piece is also one of them, especially if you’re dealing with, one, one business that sells the similar product as another business.

That payment experience does matter in the, the customer satisfaction overall.

Max Kent: Steve, let’s quantify it, what are the real world impacts on both an operations team and from a, from both an operations standpoint, and a customer loyalty standpoint, for a bad transaction experience?

Steve Bell: Yeah. on the operational side, let’s think about a CH, right?

a CH returns alone can add huge amounts of delay, whether that be days or weeks, working on chasing down those funds. Reconciling accounts as well and keeping, updated records. And then you start layering things like chargebacks, manual refunds, and, potentially higher call volumes to your support teams or to your business.

And those costs can, really quickly multiply.

Max Kent: What about the consumer side? What about what the actual consumer goes through? Tell me about that.

Steve Bell: Yeah, in this rapid world that we live in and the expectation for, for fast transactions and really fast everything, consumers expect that.

And the payments flow is effortless as you know. That one click payment checkout, as you mentioned earlier, and when you’re starting to fall short on that, even if it’s a mobile wallet hiccup, you start to see. Abandoned carts, potentially people walking out of your in-store location as well.

And that reduces, repeat business and ultimately increases higher churn as well. And, the industry data suggests that up to 20% of customers may never return after a bad payment experience.

Max Kent: And it’s a lot of life lifetime value. Lost, for a customer. And from the point of view of, from a finance point of view, if you’re a small business owner, your whole, for a lot of, for a lot of small businesses out there, those listening, they know that having a lifetime value customer, and trying to extend that lifetime value as far and as long as possible is huge and paramount.

So any, negative word of mouth, can really put a squeeze on that lifetime value of your customers. And if it’s something as simple as implementing payment technology that works and that is seamless, it’s well worth it. It seems the ROI is quite high. So let’s flip the script a bit.

How should listeners, build a modern payments. Ecosystem and what should they look for in a payments partner so they can avoid these types of hiccups.

Steve Bell: Yeah, I think, first and foremost it’s reliability. a platform built for high availability and seamless failover ensures that, payments go through whenever the customer is ready to buy.

And that’s a critical one. You want your solution to be up and running at all times and not have the ability to miss a sale because your terminal stopped working or something with your website, isn’t allowing that transaction to go through.

Max Kent: And what role does convenience play?

if any? We talked about how important is it that the system’s reliable, but, is convenience also part of that equation?

Steve Bell: Yeah, absolutely. consolidating all of those preferred methods that we as consumers, have our personal preferences towards is critical. And so having that all in one integration means, you’re never going to miss that sale because the options are there.

And you can, accept or you can, yeah, you can accept payments based on the preference of the, of the consumer.

Max Kent: And, one thing that, that small businesses and any business really has to deal with, is the exceptional cases, right? where there’s, we, you have to adjust how you do business to, to manage a customer.

Tell me a little bit about that piece.

Steve Bell: Yeah, automated exception workflows, and self-service tools, especially the self-service tools can cut down on that manual intervention. By as much as 40%. And that saves, a lot of time, again, from an operational perspective because that’s where, you’re going to feel a lot of this impact is the employees trying to, solve and solution for these problems.

But having those, those automated flows in all capacities of your business, not just payments, but that’s going to, save on that headcount and operational expense and speeds up the resolution.

Max Kent: Awesome. Awesome. So. Let’s wrap up, what are, a few must haves for long-term success there?

Steve, we covered a lot. We got into the details, but bring us back up to the four components that, that, we have to keep in mind.

Steve Bell: Yeah, I think there’s two major ones grouped up together, that come to mind and it’s stability and uptime.

Again, we mentioned that a little bit, but the payment system has to work. It has to work for you, be able to accept payment and ultimately collect money. It’s that simple. So skill or stability, reliability and uptime grouped all into one. You want that solution to work when it needs to work.

And then we look at omnichannel optimization as well. And so that’s, again, providing flexible mobile first flows that meet the customers where they are. And you’re, you’re providing methods of, payment acceptance that, again, is going to meet the preferences, and the desires of, of the consumer that you’re targeting or working with.

Max Kent: Awesome. That’s awesome. Well, let’s. That’s a great final spot. Any last thoughts, to keep this tight and short?

Steve Bell: Yeah. Again, just to summarize it here the cost of a poor ma poor payment experience goes well beyond just the loss of a single sale. it taxes your operations.

It really tarnishes your brand reputation as well and getting people to, continue to build relationships with you and be long-term customers. we know how hard it is to get. A customer as opposed to keep them long term. And so it’s critical that you can make that best first impression, if you will, by investing in a modern, reliable platform that, it’s not just operational, but it’s an essential piece of your business.

Max Kent: Awesome. So, if you’re a merchant, if you’re a software provider, we’ve covered a lot of just do’s and don’ts. But if you’re ready to take that next jump, if you’re ready to lower, total cost of acceptance, delight, your customers, all that jazz, visit Clearent by Xplor at clearent.com.

We have plenty of people who are ready to discuss how we can be of service, whether you’re a merchant, whether you’re a payments provider, whether you’re a. Software provider. There’s, there are people, there are experts in our house that can, absolutely guide you towards the right solution. In the meantime, thanks for listening.

Tuning in, Steve. Good one today. Good stuff. I certainly learned a lot, and catch you next time. Steve Bell: Appreciate it Max. Catch you next time. Thanks for listening to Payment Pulse. We’ll see you next week