2016 IBM Payments Merchant Study · Nearly all merchants have online consumer payment acceptance...

IBM Payments Merchant Study

IBM Payments Merchant Study. All rights reserved. ©2016. ibmcommerce.com - vansonbourne.com

This study covers interactions with consumer-focused digital commerce organizations in the US, UK, Germany and France

23%France

23%Germany

23%UnitedKingdom

31%UnitedStates

2


Our respondents represent a wide range of merchant & billing payments business and IT leaders across industries

Respondent Industries

Automotive

Consumer Services

Healthcare

Retail & Distribution

Media & Entertainment

Telecommunications

Energy & Utilities

Travel & Transportation

18%

17%

13%

13%

9%

7%

8%

14%

325interviews

All respondents have a minimum of 500 employees3


Agenda

Introducing the 2016 IBM Payments Merchant Study• Merchant viewpoint on consumer payments influence on growth

• Challenges merchants face when expanding payment capabilities

• Capabilities merchants desire most within payment acceptance solutions

What’s Next• Key data points and findings from the study

4


The majority of merchants have multiple gateways or point-to-point integrations to processors and banks

28%

32%Utilize Multiple Gateways

Utilize Single Gateway

Utilize Gateway and Point-to-Point Integrations

Utilize Point-to-Point Connections

22%

18%

72%Of respondents are managing multiple

integrations today for payments processing

5


Nearly all merchants have online consumer payment acceptance needs and most have in-store requirements

18%Online Only

72%Online & In-Store

4%In-Store Only

300%more requireonline thanoffline only

Respondents made it clear that the need to take online payments is the standard today, far more than in-store only payments.

6


Online sales are growing as fast or faster than in-store sales for most participants in the study

of participants see online digital sales growing significantly faster than in-store sales.

Online sales growing slightly faster

Online sales growing at same rate as in-store

Online sales growing slightly slower than in-store

Online sales growing significantly slower than in-store

Online sales growing significantly faster 35%

21%

19%

14%

10%

1/3

7


The ability to accept more payment types is almost universally seen as beneficial

47%Slightly More

42%Significantly More

2%Unknown

9%Not Beneficial

89%of respondents think the ability to accept

more payment types would be beneficial to

their business

709%more believe

increased payment types is beneficial than those who do

not

8


Both IT and business leaders see customer-related impacts as primary benefits of accepting more payment types

of business leaders feel offering more payment types creates fewer barriers to buying for their customers

51%

56%

66%

53%

44%

57%

Fewer barriers to buying for customers

Reduced cart abandonment

Expansion to new geographies / regions

Greater sales in existing geographies / regions 47%

71% 5%more

IT Decision MakerBusiness Decision Maker

1%more

2%more

-3%less

Other / unknown -1%less

1%

2%

71%

9


For merchants who feel it is not beneficial to add more payment types -reconciliation, cost and security concerns are top reasons

Merchants in the retail industry in particular are highly affected by operations and deployment costs

Retail IndustryAll Consumer Industries

Too difficult to reconcile & settle multiple payment sources

Time to market windows not viable

Deployment & maintenance costs

Security risks

Requires contracting external supplier(s)

33% 50%

40% 67%

3%0%

27% 33%

17% 27%

27%gap]17%gap]-10%gap]6%

gap]3%gap]

Other / unknown3%0%

gap] 3%10


The vast majority of respondents agree that accepting a larger variety of payment types would lead to more completed sales

The US was the region with the highest agreement with 95%

514%more think variety

leads to more sales

45%Slightly agree

41%Significantly agree

2%Slightly disagree

8%Neither agree or disagree

1%Unknown

3%Significantly disagree

1620%more agree than

disagree

11


Most merchants have to manage at least three different payment acceptance solutions across their global footprint

17%26%

12%

86%must manage 3 or

more payment acceptance

solutions

24%

18%

1%1%

is the average number of acceptance solutions merchants must manage. The highest response was

4

15 Four

One

Two

Three

Five

Between Six and Ten

More than Ten

12


Nearly all merchants accept payments via the web – mobile is offered by most

Other

Website payment option 89%

2%

Mobile payment option 66%

Other payment options supported included checking account debit, checks, gift card, in-store and call center

13


Online cart abandonment at checkout, while trending lower, is still a significant issue to merchants

Between 20% and 60% of total cart abandonments occur during checkout for half the respondents

Today12 months ago

Between 0% and 20% of cart abandonment at checkout





23% 32%

25% 31%

14%8%

17% 24%

6%increase]9%

increase]-7%decrease]- 6%decrease]1%increase]

Other / unknownincrease] 1%

6% 7%

7% 8%

14


The majority of respondents indicated an intent to accept alternative payment types within the next two years

Of merchants to accept alternative payments within

a year

14%

15%

37%2/3

33%

1%

Currently

In next 12 months

In next 24 months

No plans to

Unknown

Alternative payments defined as not being credit or debit cards, checks or cash in any form

France leads the way with nearly 80% of merchants accepting alternative payment forms within next 12 months.

15


For merchants who feel it is not beneficial to accept alternative payment types - reconciliation and security concerns are high

Merchants with<1000 employees feel customers are less inclined to want alternative payment types and struggle less with reconciliation

All merchant sizes500 to 1000 employees

Security risks


Too difficult to reconcile & settle multiple payment

sources

Do not feel customers want alternative payment methods


38%25%

38%

13%

25% 27%

38% 63%

0%gap]-13%gap]25%gap]-2%gap]0%gap]

Other / unknown0% 11%

gap] 11%16


Having to keep up with security mandates and regulations prevents most organizations from offering more payment types

45%Slightly agree

41%Significantly agree

2%Unknown

18%Do not agree

86%feel security

mandates affect payment options

Media & entertainment merchants feel the highest level of impact due to security regulations – they responded at a 94% level

17


A resounding number of respondents still maintain consumer payment data within their corporate systems

Yes

No

Don’t know

4%

25%

71%

The UK was the most progressive region where only 56% of organizations were still keeping consumer payment data on corporate systems

18


Yet, nearly every merchant is concerned about the possibility of breach or exposure of consumer payments data

Very Concerned

Slightly Concerned

Not Concerned

35%

23%

7%

30% have diminished levels of concern

35%

ExtremelyConcerned

70% have elevated levels of concern

19


The majority of merchants currently utilize on-premise payment acceptance solutions but most would prefer some cloud-based capability

Would prefer using

Currently usingUnknown

Both on-premise and cloud-based solutions 30%

4%

Cloud – based solution

On – premise solution 40%

26%

19%

30%

47%

3%

of merchants would like to utilize a cloud solution as part of their payments acceptance solution

77%

20


The personnel burden for managing and auditing the financial settlement of consumer payments is significant for most organizations

21%

14%

9%

8%

2%

16%

26 – 30 employees

6 – 10 employees

11 – 15 employees

21 – 25 employees

1 – 5 employees

> 30 employees

Unknown

26%

3%

16 – 20 employeesIs the average number of employees managing reconciliation and settlement. The highest response was

21

50021


Most respondents felt that the additional financial overhead prevented them from adding more payment options for customers

Respondents made it clear that their organizations were limited in offering more payment types due to the additional burden of settlement & reconciliation adds.

145%more were

impacted by overhead

49%Slightly

22%Significantly

5%Unknown

24%Not Affected

22


- 16%gap]7%

gap]-3%gap]6%

gap]0%gap]

gap] 1%

For merchants who feel they are limited by financial overhead – higher security, higher abandonment rates and fewer sales are byproducts

Merchants in travel & transportation reported being more affected than any other industry

Travel & Transportation IndustryAll Consumer Industries

Too difficult to reconcile & settle multiple payment sources



Security risks

Requires contracting external supplier(s)

53% 60%

56%

0%

27% 33%

30% 33%

Other / unknown1%

40%

23


The majority of respondents either has fraud protections in place or plans to soon

Germany as a region led all respondents where 98% of respondents will have fraud protection within two years

96%will have some fraud protection within 2 years

28%Next Year

54%Today

3%No Plans

12%Next Two Years

3%No Plans

24


Most merchants see the benefit in access to predictive analytics and forecasting of potential risk scenarios, payment trends or preferences

merchants see the value of payments analytics

14%

9% 8/10

78% Yes

No

Unknown

The value of analytics and forecasting is still unknown to nearly 1 in 7 merchants across all regions

25


For merchants who feel it is beneficial to utilize predictive analytics and forecasting in payments see risk, cost and time as the primary benefits

62%

38%

54%

Reducing cost

Saving time

Improving customer experience

80%Reducing risk

26


Most merchants would like to receive additional capabilities when deploying a payment acceptance solution – fraud and auditing are tops

49%

44%

33%

27%

44%

Auditing and reconciliation

Predictive analytics

Risk compliance anddata breach insurance

Offer management

Order management

68%Advanced fraud protection

The US was the region most concerned with fraud protection with 80% of respondents interested in receiving additional protection27


Agenda

Introducing the 2016 IBM Payments Merchant Study• Merchant viewpoint on consumer payments influence on growth

• Challenges merchants face when expanding payment capabilities

• Capabilities merchants desire most within payment acceptance solutions

What’s Next• Key data points and findings from the study

28


Merchants universally see the need to offer more payment options to consumers…

19%

United States

5%95%

81%

11%89%

Agree vs disagree that more payment options lead to more completed sales

1800%more 709%

more 326%216%more

United Kingdom

24%

76%

France

more

Germany

29


But many merchants are burdened with settlement concerns…

United States

40%

17%

Feel too difficult to reconcile and settle multiple payment sources

United Kingdom

54%

France Germany

33%

30


Or with security risk concerns…

United States

20%

50%

Feel security risks are too high

United Kingdom

31%

France Germany

0%

31


Or deployment and maintenance cost concerns.

United States

20%

50%

Feel too high deployment and/or maintenance costs

United Kingdom

31%

France Germany

33%

32

2016 IBM Payments Merchant Study. All rights reserved, 2016. ibm.com/commerce/ - vansonbourne.com33 January 2016

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2016 IBM Payments Merchant Study · Nearly all merchants have online consumer payment acceptance...

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