It’s time for retail CFOs to think about why they pay for payments

| January 31, 2020 | By

In the beginning was the Age of Payment Acceptance...In the 1960s, something monumental occured in the world of payments. For the first time we moved beyond physical cash when Diners Club issued a charge card.

Today’s more commonly known Visa went on to introduce the first point-of-sale terminal for merchants in 1979 – the Age of Payment Acceptance in the UK was born.

Fast forward 40 years and card usage at the checkout is now the most popular form of payment, with the BRC reporting that spending by card accounts for nearly 80% of transactions in the UK.

While multiple backend players have been involved in a card transaction, for a long time retail CFOs had to choose between a small number of acquirers and/or processors to provide customers with the ability to pay by card in-store (think Barclays, WorldPay, and/or First Data).

Nothing changed for a long time, simply because the proposition worked. Retailers now had customers who could spend directly from their bank accounts as opposed to being limited to what they carried in their wallet.

Then came the Age of Payment Automation...

Suddenly ecommerce came along, and with it the birth of online payment solutions like Paypal (launched in 1998). 

Over the next decade and a half, ecommerce and digital POS solutions began to spring up all over the place (think Adyen, Stripe, Shopify, Square, Clover, etc) to compete in a global payments industry worth more than $100 trillion.

Driven by NFC and one-click commerce online, the Age of Payment Automation had well and truly arrived – strengthened even more so when Apple Pay et al entered the payments market in 2014. 

Not only did Apple Pay, Samsung Pay, Google Pay, etc, legitimise the idea of mobile payments in the eyes of retailers and consumers alike, they began to blend the worlds of physical and digital by closing the payment experience gap between in-store and online.Now, 50% percent of customers say they will abandon a purchase if they can’t use their prefered payment method (source: CustomerThink). The choice to pay by cash, card, contactless or mobile is no longer considered added value by customers, but a minimum expectation. 

And with payment solutions now so heavily-regulated, fees have become more competitive, with companies scrambling to offer “differentiating” services to keep merchants on board. 

As a direct result, a more savvy breed of payment innovation companies are emerging, which are beginning to accept the inevitable…

…Retail CFOs no longer want to attribute cost to a service they consider should now be free. 

Enter the Age of Value-Added Payment...

You, your CEO and your CMO all know that customer experience is taking centre stage when it comes to the future of retail.

With more choice at their fingertips, it’s no surprise that customers currently see more value in fast, convenient and personalised experiences over price (source: PwC).

It’s also the reason why we are witnessing a move into an Age of Value-Added Payment, with spend on payment facilitation set to be replaced by services that can deliver measurable ROI to a retailer and their customers.

We could go for the usual Amazon example, with its focus on fast delivery and personalised recommendations, but take a look at a more recent entry to the payments scene…

Klarna Yoyo

Popular amongst fashion retailers, Klarna (launched 2015) enables a customer to order items, try them on, and send back the things they don’t want before being charged. 

A combined payment and marketing mechanism that is incentivising customers to make purchases they otherwise wouldn’t have, it’s a concept that’s resulting in 50,000 new customers for Klarna each and every week. 

The Sweden-based company, which is currently valued at $5.5 billion, is rumoured to charge retailers between 3-4% for each transaction. Higher than traditional payment processors indeed, but as one of its retail partners put it:

“Klarna is more than a payment method tool, but a great marketing partner that acknowledges the importance of public relations and social marketing, which is at the core of our business model.”

Financial Services and Marketing are converging...

Processing fees are on a downward trajectory and it’s forcing payment companies to add incremental value to what is now a core commodity.

Just look at Visa and Mastercard, both of which still control more than 60% of the UK card market between them. 

These long-established rivals are now investing billions of dollars in new players like Vocalink / Pay by Bank (Mastercard) and Plaid (Visa), as they strive to expand their services beyond mere card and payment acceptance.

Below, Mastercard SVP Jonathan Wood talks to Yoyo CEO Michael Rolph about the payment giant’s latest plans to enable more than 10 million consumers to pay directly through their mobile banking apps:

(You can see the full interview here)

Only last month, Visa president Ryan McInerney said “fintechs are clearly reshaping financial services”, as he handed over $5.3 billion for Plaid (which enables consumers to connect their bank accounts to other apps).

The reality is setting in amongst even the biggest payment companies – retail CFOs will no longer continue to pay at a rate of 150 – 200 bps just to accept payment.

What Klarna has done for fashion, Yoyo is doing for retail as a whole. 

We’ve taken electronic payment, another commodity in today’s experience-driven retail market, and transformed it into a driver of enhanced customer experience and actionable marketing insight – delivered in a single moment at the point-of-sale.

For the first time, retailers can dynamically segment and personally market to customers by utilizing the holy grail that is transaction data.

Defined as a Payments CRM platform, Yoyo:

Enables a retailer to provide a unique combination of experience-enhancing products via a customer-facing, branded app used at a point-of-sale.

At the same time, we extract unique, granular payment data from the point-of-sale to reveal where, when and what a customer buys from your shop – whether it’s a physical or online store.

We then channel this payment data into an AI-led CRM platform to reveal in-depth purchase and product preference behaviour.

Retailers can then dynamically segment customers based on hundreds of these purchase behaviour-based data points (i.e. spend frequency, prefered purchase day / time, ATV, first purchase, power customers, lifecycle stage, CLV).


They then build and send automated mobile-led rewards and/or marketing campaigns that specifically targets these dynamically segmented customer groups.


Yoyo’s Payments CRM platform then measures campaign success by comparing revenue, visit and trigger metrics against app customers who do and don’t convert to a sale during the campaign…

…And reveals a dedicated insights dashboard that shows real-time business performance and campaign uplift on a local, regional and national level. 


In 2020, payment providers need to deliver so much more than just automated payment acceptance – and they know this all too well.

To deliver the experiences customers now demand, you need the right data that can reveal who each of your customers are, as well as when, where and what they buy.

Check out this handy How To Guide by Yoyo CRO Marcus Oulds, which reveals just how retail businesses can get their hands on the right customer data:

How CMOs can identify what their customers want from an in-store experience

When you have the right customer data, it can then be translated into added value insight that monitors existing lines, detects customer behaviour patterns and predicts the success of future product innovations.

The question to be asked: Are you getting real value out of your payments provider?

In essence, a retail CFO needs to think about whether they are currently paying for a FIAT when they could have a Ferrari for much the same investment in the long term.

If you’ve got this far, be sure to download our latest report on what the future looks like for high street retail…

Customer Experience the new battleground for high street retailers

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