Lehan Le Grange, Chief Finance Officer at Ecentric
Payments are still mostly seen as a budget line item by most retailers. It’s a necessary annoyance that needs to be negotiated with a bank or provider and a set of terminals that needs to be as cost-effective as possible. But this misses an incredible opportunity while quietly costing retailers money.
Take a moment to analyse what happens in front of the till. Look at the queue, take in what is happening in the aisle: It is clear that payments are not just a cost of doing business. How many customers can be assisted with checkout at once? How many retries happen at checkout? How many customers am I losing who are browsing but undecided, so they never make it to checkout? If retailers design payments properly, they can become a profit optimising mechanism. Modern payments should drive higher revenue, protect margin, and build loyalty.
Business as usual is expensive. How often does one hear phrases such as “devices freeze sometimes – it is what it is”, or “we only had about 1 or 2 days’ downtime this year”? Most retailers keep a cupboard with spare card machines in each store… “just in case”.
There is a risk the sale could be lost every time a device freezes mid-transaction. This is never a threat during off-peak, but if you are a retailer dealing with low margins this could be a business killer over the festive season. When queues stretch down aisles and around the store, some customers simply abandon their carts and walk out. If this happens once, people barely notice. But when it happens more regularly across dozens of stores, the cumulative loss is substantial. The opportunity cost is immense when considering the stock is on the shelf, the marketing has clearly worked, the customer arrived in person and was willing to pay – but the payments partner is failing to support the requisite customer throughput in the stores.
It is imperative to plan for the high-volume periods ahead of time, and engage a payment service provider to understand how they can help you with queue-busting solutions, in-aisle checkouts as well as optimising transaction approval rates in-store.
Beyond the actual devices, another leakage that can wreak havoc with the numbers is transactions that don’t go through. Sometimes it is unavoidable: A transaction is declined because of insufficient funds or an incorrect PIN. That’s the customer side. Another significant share of payments not going through depends on how resilient, or not, the payments infrastructure is. A drop in just a single percentage in the approval base across a store network will translate into significant revenue loss. For a large retailer this could be hundreds of millions of rands over a year.
Same stores, same stock, same footfall, but a percentage of failed payments racks up the leakage. It adds up. When payments are treated as plumbing and not a performance lever, billions of rands across market segments are left on the table. Retailers simply must find partners that obsesses about these leakages like they do.
This is because modern payment technology can address the leakage head-on. Using Android‑based mobile payment devices, staff are no longer chained to a fixed till. They quite literally can:
- Walk along the queues and take payments before customers reach the counter. This eases the pressure when it matters most.
- Complete the entire sale in the aisle, advising the customer in the moment without them needing to wait in queues or walk to the front of the store.
- Alternate between different POS systems and computers: Many devices can be linked to one or more POS computers, so there is no need to wait for a payment device to become available. In a setup that runs different POS systems (for example filling stations with restaurants and shops), devices can be interoperable between those POS systems.
This isn’t theoretical. Retailers such as Yuppiechef and Poetry already use in‑aisle payments to turn staff into mobile cashiers. It isn’t just about a smoother customer experience, which it is and which builds loyalty; it is also about fewer abandoned baskets and more completed sales per hour. It relegates queues to the past.
The humble payment device has grown up
A traditional checkout lane is a cluttered hive of hardware: A PC, a card terminal, a scanner, specialised cabling, a local server in-store and spare devices. That’s a lot of moving parts, and it requires costly maintenance. It also has a knack of failing at the worst possible time. Every single one of us has experienced this.
Today there is no longer a need to rely on “dumb” terminals. Payment devices are effectively small computers capable of taking over many traditional till functions. Ecentric analysis found that consolidating hardware into a single payment device can save retailers in the region of about R600,000 per store over five years in the form of equipment, cabling, networking and support that is no longer needed. Multiply that figure across an entire retail chain and the numbers do the talking.
But beyond the savings, fewer, simpler but smarter devices mean fewer points of failure, which in turn means there are fewer technical faults coming between a willing customer and a completed sale.
One store, many journeys
Progressive retailers have come to understand that there is no “best” or “right” way to accept payments. A pensioner may prefer a traditional counter and a till slip. A business executive in a hurry in a fashion store may prefer a quick payment on the floor with a digital receipt. A tech-savvy Gen Z may prefer self-checkout.
Retailers no longer have to hedge their bets on one way only. Payments technology has evolved from a grudge-purchase to being an important part of the customer journey, and is now limited only to the imagination of the retail executive. They have an opportunity to support all those journeys in a single environment. This is where payments stop being clunky plumbing and start shaping customer experience, loyalty and long-term value.
From line item to lever
Retail conversations about payments have traditionally centred on cost: interchange, device rentals and connectivity. This was out of necessity but incomplete today.
Successful retailers would do well to ask these important questions:
- How many more transactions would we be able to approve with better infrastructure?
- If our queues moved twice as fast, how many abandoned baskets would we save?
- If we consolidated onto smarter, software-driven devices, how much would we save in support and maintenance costs?
- In a hyper-competitive environment, which payment experiences will make our customers choose us over our competitors?
When payments are treated as a strategic profit lever and not a grudge expense, the answers to those questions will go straight to the bottom line.