The retail payments transformation and how it affects you – Banking blog

Retail payments is undergoing a profound and ground-breaking transformation in Switzerland, which is having a significant impact on consumers, merchants and corporates as well as on banks and payment service providers.

From transaction commodity…

Retail payments are payments made by consumers when purchasing products and services from merchants and corporates.

 Cash has long been the undisputed number one means of payment in daily use as well as in the form of foreign currencies for travel and payments abroad. Credit cards were mostly used by consumers for travel activities and were not very popular with merchants due to high commission costs.

Making retail payments was a static and inflexible activity carried out at the end of every purchase.

… to customer centricity

Not any longer!

Retail payments are undergoing a profound and ground-breaking transformation, which has a significant impact on consumers, merchants and corporates as well as on banks and payment service providers.

 Digitalisation has taken us into a new era in retail payments, with new payment solutions from payment service providers and changes in consumer behaviour. This has resulted in a dynamic retail payments ecosystem.

Consumers are buying more and more products and services online or via a mobile device or contactless payment. In addition to credit and debit cards, there are alternative, non-card payment methods such as PayPal, TWINT and Klarna.

Contactless payments by card became well-established during the COVID-19 pandemic, especially among consumers who had previously paid by cash.

‘Mobile first’ (retail payments that are made with or on a mobile phone, tablet or smartwatch) is also popular and 15.8%* of all purchases and payment transactions are now carried out via mobile devices. This includes both peer-to-peer as well as business to consumer payments.

New methods for retail payments are not just an issue for merchants, but also for corporates such as insurance companies that take money from customers. A perfect fusion in the purchase process is defined as embedded payments or in-app payments, the payment process that can be processed directly in the app of the merchant or corporate.  

Consumers today expect flexibility in the ways that they shop and pay for purchases, whether in-store or online, but they want payments to be fast and simple.

Retail payments are becoming customer-centric, and consumers decide where, when and how they want to pay. Accordingly, retailers and corporates are aligning the shopping and payment experience with what consumers expect.

What now?

Merchants or corporates who receive retail payments and payment service providers need to ensure that their payments systems are modernised to meet current and developing demand from consumers for digital payments.

Due to the growth of retail payments, the cost structure for merchants and corporates has become more dominant as before. Hence, for merchants this is the best moment to consider the future Interchange++ cost structure of retail payments.

*Swisspaymentsmonitor.ch

Sergio Cruz, Partner, Consulting

Sergio is the lead Partner of Deloitte’s Business Operations practice in Zurich and has more than 25 year of experience in Consulting. He focuses on large scale front-to-back digitalisation programs in financial services and has worked on several large assignments both in Switzerland and abroad, covering the implementation of regulatory requirements and the definition as well as implementation of target operating models and process optimisations.

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David Frei, Director, Consulting

David is Deloitte Switzerland’s Payments Lead and a Director in the Business Operations Consulting practice in Zurich, with global experience gained in Consultancy and the Banking industry. He has vast experience and a macro view across retail and banking payments, financial service products, consumer, payments costs, regulations and systems as well as detailed knowledge of key processes in Acquiring, PSP and omni-channel/e-commerce payments. He has advised large clients through impactful payments transformation and digital payments projects in Switzerland and Europe.

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Leonel Carlen, Business Operations Consultant

Leonel is a Consultant within the Business Operations team at Deloitte Switzerland with a broad educational background ranging from machine learning and statistics to engineering and management complemented by research in a variety of fields. His professional experience includes product management at a leading global technology company and business development in start-ups. He enjoyed experiencing both, the technical and the business sides of a company which gives him two different, yet complementary, perspectives to successfully perform business operation transformations.

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