Digital payments continue to dominate the marketplace. A recent study estimated that total transaction value in the digital payments segment would reach $9.46 trillion in 2023. The entire digital payments market is predicted to grow to $14.78 trillion by 2027, which is a CAGR of 11.8% between 2023 and 2027.
As the payments landscape evolves, enterprise businesses face new challenges in delivering seamless and convenient payment experiences to their customers. In response, many organisations have adopted either multichannel or omnichannel payment strategies to address these challenges. While these terms are often used interchangeably, they represent distinct approaches to managing payment channels and customer interactions.
In this article, we will explore the differences between multichannel and omnichannel payment strategies and provide guidance on how to determine which approach is best suited for your organisation. Whether you are new to payment strategy development or looking to optimise your existing approach, insights presented here will help you make informed decisions that drive better business outcomes.
Traditional Versus Next-gen Approach
When it comes to managing payment channels and customer interactions, businesses have traditionally employed multichannel strategies. These strategies involve offering customers multiple ways to interact and transact, such as through a website, mobile app, or physical store. While this approach can be effective in expanding reach and accessibility, it often results in siloed customer experiences and data. In contrast, omnichannel strategies aim to create a seamless, integrated experience across all channels, where customers can pick up where they left off, regardless of the touchpoint. This approach allows for deeper customer engagement and more effective use of data to drive business insights. By understanding the differences between these two approaches, businesses can better tailor their payment strategies to meet the evolving needs of their customers and drive growth.
What is a Multichannel Strategy?
A multichannel payment strategy is an approach that involves offering customers multiple channels to interact and transact with a business. These channels may include physical stores, websites, mobile apps, call centres, and other touchpoints. By providing customers with a choice of channels, businesses can expand their reach and cater to different preferences. However, while multichannel strategies can be effective in expanding a business's presence, they often result in siloed customer experiences and data.
Examples of Multichannel Strategies in Action:
A common example of a legacy business using a multichannel strategy is when a merchant offers multiple payment channels, such as online, mobile app, and in-store, but each channel operates independently and doesn't share data or information with the others. This can result in a disjointed customer experience, with customers having to start over if they switch channels or having different information displayed depending on the channel they use.
Pros and Cons of Multichannel Strategies:
While multichannel payment strategies can increase sales and improve customer satisfaction by offering greater choice when it comes to payment channels, there are potential downsides to consider. Maintaining consistency across multiple channels can be challenging, leading to a disjointed customer experience. Furthermore, data generated across channels may be siloed, making it difficult to gain a comprehensive understanding of customer behaviour, thus leaving potential revenue generating opportunities on the table.
What is an Omnichannel Strategy?
An omnichannel payment strategy is an approach that aims to create a seamless, integrated experience across all channels. Rather than offering customers a choice of channels, an omnichannel strategy seeks to provide a consistent experience across all touchpoints. This means that customers can start a transaction on one channel and complete it on another, without experiencing any disruption or inconsistency. By breaking down silos and connecting all channels, businesses can create a more engaging and personalised customer experience.
Examples of Successful Omnichannel Strategies:
Many of merchants have successfully implemented omnichannel payment strategies in recent years. For example, Restaurant Brands International (Burger King, Popeyes & Tim Hortons) needed a provider capable of streamlining and future-proofing the payment services for three restaurant brands across EMEA, North America, and LATAM. Carat from Fiserv delivered several capabilities, including omnichannel integration across both on-premises and eCommerce platforms. This integration enabled a seamless customer experience across all channels. In addition, the provider offered a single, speedy point of entry, allowing brands in any market to get connected quickly. To ensure a smooth and efficient rollout, the provider also supplied local expert consultation, offering expertise on POS expansion plans, local regulations, and franchisee boarding. These capabilities allowed Restaurant Brands International to improve its payment services across all regions while streamlining operations and enhancing customer experience.
Pros and Cons of Omnichannel Strategies:
Omnichannel payment strategies offer several advantages to businesses. By providing a consistent, seamless experience across all channels, businesses can improve customer satisfaction and loyalty. Omnichannel strategies enable businesses to leverage data more effectively across channels, gaining a deeper understanding of customer behaviour and preferences. However, implementing an omnichannel strategy can be complex and resource-intensive, requiring significant investment in technology and infrastructure. Additionally, ensuring consistency across all channels can be challenging, and businesses must be prepared to continually monitor and adjust their approach to maintain the desired customer experience.
Key Differences Between Multichannel and Omnichannel Strategies
Why an Omnichannel Strategy is More Than Just Multichannel:
While both multichannel and omnichannel payment strategies offer customers multiple ways to interact and transact, there are key differences between the two approaches. Multichannel strategies involve offering customers a choice of channels, while omnichannel strategies expand on that approach, aiming to create a seamless, integrated experience across all channels. An omnichannel approach also requires a more comprehensive integration of data and technology than a multichannel approach. This means that while a multichannel strategy may be a good starting point, it should not be confused with an omnichannel approach, which requires more comprehensive integration.
The Importance of a Seamless Customer Experience:
One of the primary goals of an omnichannel payment strategy is to provide customers with a seamless, integrated experience across all channels. This means that customers can switch between channels without experiencing any disruption or inconsistency in their purchasing experience. By creating a smooth and efficient buying experience, businesses can improve customer satisfaction, loyalty, and retention. Additionally, businesses can leverage the data from the entire shopping life-cycle, employing analytics to gain a clearer picture of the entire customer journey, which can then be used to identify areas for improvement. Data and analytics can enable businesses to personalise customer experiences more effectively and drive deeper engagement.
Omnichannel vs Multichannel: Which Strategy is Right for Your Business?
Factors to Consider When Choosing a Strategy:
When choosing between a multichannel or omnichannel payment strategy, there are several factors that businesses should consider. First, businesses should assess their customers' preferences and behaviours to determine which channels they are most likely to use. They should also consider their own capabilities and resources, as implementing an omnichannel payment strategy requires significant investment in technology and infrastructure. Additionally, businesses should consider their overall objectives, as well as their timelines.
Success Stories - Multichannel and Omnichannel Strategies in Action:
There are many use cases of businesses that have successfully implemented multichannel and omnichannel payment strategies. An example of a multichannel strategy can be found in a bank that offers customers the ability to deposit a check using a mobile app, an ATM, or in-branch, while ensuring that all channels are integrated and consistent. In the case of an omnichannel payment strategy, an online retailer enables customers to browse products on their website, allowing them to make a purchase via their mobile app, and then pick up the item in-store - all in a seamless way. By examining these and other use cases, businesses can gain insights into the benefits and challenges of different payment strategies, which can help in making more informed decisions.
The Benefits of Choosing the Right Strategy for Your Business
Choosing the right payment strategy can have a significant impact on a business's success. A well-designed payment strategy can improve customer satisfaction and loyalty, increase revenue, and drive growth. In choosing between a multichannel and omnichannel payment strategy, businesses should determine which approach is best suited to their unique needs and objectives. Ultimately, the right payment strategy will depend on a variety of factors, including customer preferences, business capabilities, and overall objectives.
Final Thoughts on Multichannel vs Omnichannel Strategies:
In today's rapidly evolving payment landscape, businesses must be able to offer customers a variety of channels to interact and transact. While multichannel and omnichannel payment strategies offer similar benefits, there are key differences between the two approaches. Multichannel strategies provide customers with a choice of channels, while omnichannel strategies create a seamless, integrated experience across all channels. To succeed in a constantly evolving marketplace, businesses must carefully assess their needs, along with those of their customers. By harnessing data and analytics, businesses can take the approach that best suits their market strategy and positions the merchant for success today and well into the future.
As a global leader in omnichannel commerce, Carat from Fiserv understands the importance of keeping up with the latest omnichannel trends and best practices.
To find out more about how Carat from Fiserv’s omnichannel payments experience can benefit your organisation, get in touch today.