INSTANT PAYMENTS

Peter Paine
Peter Paine

Head of Strategic Partnerships - Retail, the Americas

Payments are at the heart of the e-commerce success story. The development of innovative fintech platforms and streamlined transaction processes have helped meet rising consumer expectations to drive new growth opportunities for online retailers around the world. Seamless cross-border trade is now business-as-usual. Yet how do e-commerce players continue to differentiate and grow?

Smart insurance offerings deliver a new opportunity to add value for customers. But prospective partnerships should be entered into carefully: only those providers capable of offering instant claims payments will be able to add true value in this new customer-centric world.

The answer is to focus on the customer experience. Modern shoppers want seamless, engaging, omnichannel experiences that are trustworthy, unique and personalized. This is where tailored insurance can be the online retailer’s secret weapon.

Payments means business

Payments are a sometimes overlooked part of the e-commerce journey. That’s because, when done right, they are effortless – allowing the consumer to send digital funds safely and securely to complete their order in just a few clicks. Yet in reality, the growth of digital payments has been fundamental to the success of e-commerce, helping sales soar to over $3 trillion in 2017 with a projected figure of double that by 2022, according to McKinsey.

In parallel, the share of global transactions made in cash has fallen from 89 to 77% over the past five years thanks to surging online sales, real-time payments and an evolving regulatory focus, the report claims. Mobile internet sales, including in-app and mobile browser payments, are a key factor in the growth of e-commerce thanks to rising smartphone adoption and bandwidth improvements – accounting for 48% total e-sales globally in 2017 and predicted to reach 70% by 2022. Use of digital wallets is expected to result in $400bn of transactions by 2022 as increasing numbers of consumers benefit from their flexibility, security and ultra-convenience.

A huge amount of this trade is cross-border. E-commerce sales across jurisdictions totalled $300bn in 2015 and are expected to pass $900bn by 2020, an impressive growth rate of 25%. The most successful companies in the sector are unanimously global by default.

Instant benefits

In short, consumer expectations today are of fast, seamless, cross-border payment experiences from their e-commerce provider. So what happens when e-tailers want to add more value for these customers by integrating insurance offerings at point of purchase? The 20-days-to-payment model for claims common across much of the insurance industry is simply no longer acceptable to the modern digital customer. Any insurance offering based on these terms could negatively impact the e-commerce brand rather than enhance it.

Fortunately, more flexible, digital-centric platforms are now emerging to take advantage of payment innovations and remove the friction that has plagued legacy processes. These platforms offer AI-powered capabilities to reduce the time it takes to handle claims from end-to-end, and are based on new architectures to offer instant payments. A microservices approach knits the various disparate elements needed to deliver the latter – including customer communications, payment delivery, interface and notifications – via APIs to hide complexity from the user. The end result is a consumer experience that could push net promoter scores (NPS) up well beyond the industry average, by as much as 75 points.

Partnering for success

Smarter insurance offerings like this can offer a huge value-add for e-commerce providers looking to differentiate and grow. But not all insurance platforms are created equal. To offer maximum value they need not only to offer seamless, instant payments but to deliver these in the chosen currency of the user and a variety of payment methods to suit their requirements.

The end result is a consumer experience that could push net promoter scores (NPS) up well beyond the industry average, by as much as 75 points.

Making a claim can also often be one of extreme stress for the policyholder. They may have been pick-pocketed, or lost a valuable computing device. They may be traveling alone in a foreign country. A seamless claims experience won’t undo the damage, but it can enhance your brand – building trust and loyalty.

Continuing this theme of customer-centricity, e-commerce players should look for insurance offerings that slot neatly into their platform. Messaging needs to be clear, concise, tailored and consistent with the rest of the experience associated with your brand, to have maximum impact on sales. It’s all about meeting consumer expectations for instantaneous solutions delivered to the palm of their hand, wherever they are, at any time. It takes just a few clicks to purchase a

laptop online, but if that item is lost, stolen or broken, consumers expect to be refunded just as quickly and easily.

For those that find an insurance platform with these capabilities, the benefits are clear: market differentiation; a new revenue stream; and improved NPS scores for more loyal customers, organic referrals and higher profits.

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