Payment processes play an increasingly integral role in the success of any business model. With business strategies planned around consumer behaviour, business owners are left with a challenge: are you delivering the payment experience that your customers really want? If not, they might walk away.
If you’re not investing in a painless payment experience for your customers, you might see them moving to your competitors.
On top of that, Australians are moving towards bank debit as their preferred payment option. Businesses looking to improve their relationships with customers need to ensure they include this method of payment or risk losing customers.
Those are just some of the key messages contained in a new piece of research conducted by GoCardless, a specialist payments provider. The study found 25% of Australians are “very likely” to use bank debit for household bills, compared to just 20% who opted for a credit card.
The research highlights exactly why Australian businesses would do well to invest in payment experiences, with 77% of organisations saying the payment experience is “important” to overall customer satisfaction.
In a world where businesses are moving towards long term relationships with customers – where recurring revenue and subscription models are a must – why does the payment experience serve such an important service?
“It’s all about friction,” says Ian Boyd, head of financial services at online accounting software provider, Xero. “I think of the gym I signed up with recently — it’s all a fully paper process, and you need someone there to make sure it gets done.”
“If they aren’t, you throw it in the “too hard” basket, so you’re missing out on the sale entirely or delaying the sale.”
GoCardless Australian and New Zealand general manager Carolyn Breeze says in a future where even cars are owned on a subscription model, such as Carbar, the entire payment experience needs to operate in the background — for everything from major life purchases to everyday expenses.
“Utilitywater on the Sunshine Coast…they’ve moved to electronic invoicing, and more than 50% of their customers chose this in the first 12 months which is unheard of,” she says. The company has also added a bill smoothing feature ‘Smoothpay’, allowing customers to break their payments up into small bite-size pieces more frequently like fortnightly or monthly.
This ‘smoothing’ out of payments is starting to become a consumer expectation and is driving purchase behaviour and frequency across many verticals, not just every day spend.
Both Breeze and Boyd agree that a shift to recurring payment models requires Australian businesses to offer multiple payment services. Both point to Uber – and Breeze to Utilitywater – as standards for frictionless payments, though Boyd notes businesses will need to make key investment decisions based on this expectation.
“The friction is in getting those details from the customers, and although the tech infrastructure is simple…businesses want to know they’re getting paid quickly.”
This is why GoCardless has created a platform allowing businesses to offer bank debit – the preferred method of payment for 52% of consumers – alongside other more expensive options such as, credit card.
“Customers feel safe with bank direct debit. In most cases processing bank direct debit is more cost-effective than credit cards, therefore business don’t need to surcharge. As technology evolves, real-time payments will see the benefits of bank direct debit also and online will shift over time too,” Breeze says.
“I think you’re going to see a shift away from credit cards.”
Ultimately, Boyd says, technology like the New Payments Platform in Australia, and entrants like Apple Pay or Google Wallet, are raising the expectations of consumers overall. Businesses need to find the best way to meet those expectations, and can’t put off that investment any longer – especially when it comes to bank debit, he says.
“Coming back to that friction point, previously with bank debit you have a bit of paper you have to scan and email…but having everything encased in one piece of kit online, it just gives me more confidence as a consumer…and you’re beating customer expectations.”
GoCardless technology has given businesses the ability to offer bank direct debit in the same frictionless way they do credit card, side by side, removing the friction associated with traditional paper forms.
GoCardless is a global leader in recurring payments. Our global payments network and technology platform takes the pain out of getting paid for more than 50,000 businesses worldwide, from multinational corporations to SMBs.