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November 11, 2016
Developing an agile payments strategy for the digital age
By: Evan Davies

In today’s world of continuous payments innovation, a clear payments strategy is critical for retailers not only to maintain competitive advantage, but to safeguard against reputational damage. Although price point is frequently quoted as an important driver for customers’ choice of fuelling station, customers also demand a fluid, frictionless and seamless payment experience. Having a highly effective payments strategy can help improve the choice, service and experience that is demanded in convenience and fuels retailing.

Maintain trust with secure payment systems

Irrespective of the type of payment (card, cash, digital) the first priority for any retailer should be processing payments in a safe and secure manner in order to avoid becoming the next case study in what not to do with customer information. Strict adherence to Payment Card Industry Data Security Standards and exhaustive threat assessments are an absolute minimum in verifying compliance in payment processing. In addition, the advent of tokenisation (replacement of sensitive data with non-sensitive equivalents) and point-to-point encryption provide new secure options for payments processing.  

Traditionally business-to-business (B2B) fuel cards have failed to keep pace with security innovations seen in business-to-consumer (B2C) payments technology, with many fuel card issuers having been slow to adopt basic card security measures such as PIN checking or Europay Mastercard Visa (EMV) standards. In the UK, mass adoption of B2C EMV technology reduced counterfeit-card fraud from £170 million in 2008 to £81 million in 2009, eventually stabilising at around £45 million by 2015.1 These statistics demonstrate potential financial benefits in adopting secure technology, and provide a real incentive for fuel card issuers to embrace secure payment methods – both in terms of reducing issuer fraud exposure and limiting potential reputational damage due to exposed security flaws.

Improve reliability with stable infrastructure

Full redundancy and high availability of communications are fundamental in verifying that payments processing is a reliable experience for the consumer. Accenture research indicates that whereas 67 percent of consumers used cash regularly in 2015, only 60 percent did so in 2016. This downward trend is set to continue, with only 56 percent of consumers expecting to use cash regularly by 2020.2 As we see a greater trend away from traditional payment mechanisms, and consumers come to rely more and more on electronic payments, it is essential for retailers to maintain a stable, reliable and quick payments infrastructure to avoid long queue times, failed payments and customer dissatisfaction. Fuels retailers simply cannot afford to provide an unreliable payments infrastructure if they wish to retain customers and deliver to rapidly evolving expectations of acceptable time-to-serve.

Enhance flexibility to capitalize on change

Where innovation is ever present in the market and consumers demand choice and variation in their retail experience, having the flexibility to bring to market new payment methods at speed is crucial for retailers to maintain a differentiated and relevant offering. Consumer awareness of digital payment methods is on the rise, with 56 percent of consumers now “extremely aware” of digital payment methods (up from 41 percent in 2012), and users expecting to use digital payments 50 percent more often in 2020 that they do today.2 Fuels retailers will only be able to capitalise on innovations around digital payments methods and connected cars by promoting an agenda of adaptability to change and digital adoption in their payments strategy. Payments-as-a-service (aaS) offerings are becoming more prevalent, with aaS models allowing greater speed to market and much lower up front cost and investment than traditional high-capex project based investments. Innovations around connected car, pay in car and pay at pump offer a more seamless experience for consumers, and fuels retailers with a strong digital focus are in prime position to leverage these developments and provide a modern and flexible service to customers.

From a B2B fuel card perspective, Application Programming Interface (API) management platforms offer potential for new revenue streams and business models through monetisation of card platforms. By incorporating API management into payments strategy as a business enabler rather than a technical process there are opportunities to make fuelling a more rewarding experience for commercial drivers and fleet managers, as well as for fuels retailers.

The combination of changing customer expectation with regards to payments, the constant evolution of digital payments, and the increasing criticality of data and payment security, means that it is now imperative to have a clear and evolving payments strategy in order to succeed in both today’s and tomorrow’s market.



Footnotes:

1 FRAUD THE FACTS 2016, Katy Worobec, 2016, Financial Fraud Action UK Ltd, 2 Thomas More Square, London E1W 1YN 2016.Via FACTIVA https://www.financialfraudaction.org.uk/fraudfacts16/

2 ‘The Edge of a New Frontier’, 2016 North America Consumer Digital Payments Survey, Copyright © 2016 Accenture, All rights reserved

https://www.accenture.com/t20161013T024052__w__/us-en/_acnmedia/PDF-34/Accenture-2016-North-America-Consumer-Digital-Payments-Survey.pdf#zoom=50

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