Digital and online technology is having a major impact on the retail sector, making the payment for goods more efficient and convenient. And, as more retailers provide new ways for customers to use digital services, the need for physical cash is decreasing.
Walmart, the largest retailer in the world, recently announced it would enable customers to pay for goods in store using a PayPal Cash Mastercard. The retailer will integrate the payment provider’s cash in and cash out service, allowing customers to withdraw money and load money into their account at Walmart stores using the PayPal mobile app.
In October, Swedish payments startup Klarna secured $20 million in funding from fashion retailer H&M to build an omnichannel payments service spanning H&M’s physical and online storefronts. The deal covers ‘frictionless’ in-store, mobile and online payments, a better delivery and return process, and more flexible payment options.
And a cashless way of doing business is becoming increasingly accessible for smaller retailers, thanks to the availability of cost-effective in-store card payment technology, such as that provided by iZettle, the Swedish payments company acquired by PayPal for $2.2 billion earlier this year.
As the above examples show, much of the change around payments in the retail sector is being driven by the online and digital payments technology utilised by virtual banks. But virtual banking is changing retail – particularly for smaller businesses – in more fundamental ways beyond these innovative partnerships.
For example, virtual banking improves security in customer-facing retail environments by supporting a cashless way of doing business. Through card and mobile payments, virtual banks can help remove the need for physical cash from brick-and-mortar shops.
With little or no cash on the premises, retailers don’t need to worry about handling and storing physical money, or opening themselves to the risk and hassle of taking cash to be deposited at a physical bank branch. By just using electronic channels, it becomes easier to keep track of money going in and out of the business and also reduces the time staff need to spend on managing cash, whether it’s from customer payments or maintaining a float.
Using these cashless payment methods, retailers are also becoming more efficient at processing transactions at point of sale. The main benefit is time saved, as placing a card or phone next to a payment device takes considerably less time than customers counting out coins, or for cashiers to provide the correct change.
This may seem a small benefit for individual payments, but during busy periods, such as Christmas, being able to process customers more quickly will have a significant impact on reducing queues and increasing revenue.
The other way virtual banking can help small retailers is by providing a straightforward way for them to start selling goods via their website. By simply adding a payment button for their chosen virtual banking provider, businesses can make the buying process simpler and customers can simply select their payment details with a click of a button, log into their payment account and complete the transaction with their account or a prepaid card. Retailers then benefit by receiving prompt payment directly from marketplaces and clients, wherever they are in the world.
Virtual banks also support different currencies, meaning payments can be received in the local currency of each individual customer. And e-commerce businesses can place goods on global marketplaces and receive payments without any fees.
Virtual banking supports the increasing preference from customers to pay without using physical money, but it also provides a means for smaller retailers to streamline their processes and drive growth. And as the examples form Walmart and H&M show, virtual banking also provides the foundation on which to build innovative new retail services that go beyond payment.