Omnichannel payments is a payments infrastructure that integrates different methods and channels of payment to provide a unified customer experience. The term encompasses online and offline payment environments, including mobile apps, online stores, physical retail locations, and telephone orders. The goal of omnichannel payments is to create a cohesive, fluid, and flexible experience for customers that allows them to switch between channels easily—without losing their transaction history and preferences. Data shows that providing a positive customer experience is imperative to retaining business: as of 2018 in the US, 17% of customers will walk away from a brand they love after one bad experience, and that figure jumps to 59% after multiple bad experiences.

Below, we’ll explain what businesses need to know about creating an omnichannel payment system, including how to choose the right provider.

What’s in this article?

• What channels are involved in omnichannel payments?
  
• How does omnichannel payment processing work?
  
• Benefits of having an omnichannel payment strategy for businesses
  
• How to choose an omnichannel payment processing provider
  

What channels are involved in omnichannel payments?

Omnichannel payments include a variety of touchpoints—physical and digital—through which customers can make transactions. Channels involved in this type of payment system include:

• Physical stores: Here, payments usually occur through traditional point-of-sale (POS) systems, and customers have the option to use cash, cards, or contactless methods.

• Online platforms: On ecommerce websites, customers can use a variety of digital payment options, from credit and debit cards to digital wallets.

• Mobile applications: This includes mobile banking apps, as well as other apps that allow in-app purchases.

• Social media: Some social platforms allow for transactions directly within the social media interface, providing a more immediate purchase experience.

• Self-service kiosks: These are stand-alone devices where transactions occur without human intervention. They are common in a variety of public spaces and industries, including hospitality and public transport.

• Chatbots and virtual assistants: AI-powered interfaces can guide customers through transactions via messaging platforms or websites.

• Phone orders: Some customers prefer making transactions over the phone, usually by providing their credit card details.

• Automated subscriptions: These involve scheduled, recurring payments that require initial setup but proceed automatically thereafter.

• QR codes: Customers can scan QR codes with mobile phones to complete a payment. These codes are often displayed in physical locations or on printed materials.

• IoT devices: As “internet of things” (IoT) technology becomes more prevalent, smart devices—such as voice-activated assistants—are joining the payment process.

• Email and SMS: Businesses can send payment links directly to customers, who can choose their preferred payment method.

• Third-party marketplaces: These platforms often have their own payment methods, but they must integrate well with a retailer’s existing payment system.

• Cross-border platforms: These facilitate international payments, allowing for currency conversion and accommodating local payment methods.

• Buy online, pick up in store: This is when a customer pays for an item online and collects it at a physical location.

How does omnichannel payment processing work?

Omnichannel payment processing involves the integration and synchronization of different payment channels to create a cohesive and versatile payment experience. Application programming interfaces (APIs) usually provide this interconnectivity, allowing separate systems to exchange data and perform collaborative functions.

Here’s how it works:

• Data synchronization: When a customer interacts with one channel, the data generated—such as items in a cart or past purchases—is updated across all channels. This synchronization allows a customer to switch between channels (e.g., an online platform or mobile app) without losing any transaction-related information.

• Payment authorization: No matter what channel the customer used to initiate the payment, a request is sent to the payment gateway for authorization. This usually involves several steps that happen almost instantaneously, including fraud analysis and verification of available funds.

• Transaction logging: After a payment is authorized and processed, the transaction details are logged into a centralized database. This allows for real-time inventory management and provides valuable transaction history that can be accessed through multiple channels.

• Notification and confirmation: Once a transaction is complete, the customer receives notification and confirmation details via their preferred method—usually email, SMS, or mobile notifications. These notifications are uniform across channels, contributing to a cohesive experience.

• Data analysis: Advanced analytics software analyzes the data generated from transactions for a variety of purposes such as fine-tuning personalized marketing, optimizing inventory, and improving customer service.

• Security measures: Multifactor authentication, encryption, and real-time monitoring maintain a high level of security across multiple touchpoints.

• Customer support: Integrated customer support features allow customers to seek help or clarification at any stage of the payment process, regardless of what channel they are using.

• Regulatory compliance: Throughout these steps, it’s important to adhere to all relevant legal and compliance standards—such as the Payment Card Industry Data Security Standard (PCI DSS) for card payments.

• Updates and maintenance: Periodic updates and maintenance checks confirm that all channels are functioning properly, and any new features or security protocols can be implemented simultaneously across channels.

Creating omnichannel payment systems can require a multidisciplinary team of experts that range from software engineers and data scientists to customer experience designers and compliance officers. Choosing the right payment processing solution is another key part of building a successful omnichannel payment system.

Benefits of having an omnichannel payment strategy for businesses

The benefits that businesses can gain from omnichannel payments include:

• Customer convenience: Customers can switch between multiple channels effortlessly. This kind of flexibility can be a powerful motivator for customer loyalty.

• Data consistency: A unified payment platform provides businesses with a more accurate and comprehensive set of data, which they can leverage for more targeted marketing and operational decisions.

• Inventory management: Real-time synchronization between online and offline channels allows businesses to better manage stock levels. This minimizes the risk of overselling or underselling products, and it helps optimize inventory costs.

• Security: With all payment channels integrated into a single system, businesses can centralize their security protocols. This makes it easier to monitor transactions for fraudulent activity and apply uniform security measures across all channels.

• Operational flexibility: Businesses can quickly adapt to market changes or customer preferences. For example, if a certain payment method becomes popular, businesses can integrate it into an already flexible, streamlined setup—which is simpler, generally, than incorporating it into a fragmented system.

• Lower abandonment rates: A simplified, cohesive, and speedy payment process can reduce shopping cart abandonment rates, and it can encourage customers to complete transactions they might otherwise forget about.

• Customer insights: The data that businesses collect from multiple payment options can yield valuable insights into customer behavior, including payment preferences, purchase history, and channel usage. This can be significant for segmentation, personalization, and targeted marketing initiatives.

• Revenue growth: An increase in payment options and greater convenience generally translates to an increase in transactions. This, coupled with lower operational costs from streamlined inventory management, can result in a positive impact on revenue.

• Global expansion: An integrated system simplifies the task of entering new markets, particularly international markets. It can support multiple currencies and payment methods popular in different regions, facilitating global growth.

• Legal compliance and governance: Managing compliance requirements can be simpler when there’s only one payment platform to monitor. A centralized approach makes it easier to update the system in line with new regulations, reducing legal risks.

• Resilience: A well-designed omnichannel payment system is often more resilient to outages or failures. If one method experiences issues, customers can easily switch to another, thus minimizing disruptions in the transaction process.

• Customer engagement: The ability to switch from channel to channel can offer customers a more engaging and satisfying shopping experience. This often translates into repeat business and a more loyal customer base.

How to choose an omnichannel payment processing provider

Creating an omnichannel payment strategy based on your business’s unique elements and needs is the first part of setting up your payment system. The second is selecting the right payment processing provider. Here’s how to approach your decision.

Identify what you need

• List your needs and goals
  Create a comprehensive list of your current requirements and long-term objectives. For example, if you’re primarily an online retailer but plan to open a brick-and-mortar store in the future, your payment system should support both online and in-person transactions. If you’re planning to expand your business internationally, consider a payment provider that can process multiple currencies and handle cross-border transactions.

• Review customer behavior patterns as well
  Do your customers prefer using credit cards, digital wallets, or some other method of payment? The better you understand your customers’ habits, the better your chances of choosing a payment system that keeps them happy and loyal to your brand.

• Detail desired features
  Once you have a clear grasp of your needs and future goals, think about the features that will help you meet them. Here are some areas to consider:

  • Types of payment: Beyond basic credit and debit card transactions, look for a system that accepts a broad range of payment options such as mobile payments, bank transfers, and digital wallets.
    
  • Currency support: If your business has a global footprint (or has plans to have one), your payment system should be able to handle transactions in multiple currencies.
    
  • Reporting and analytics: Choose a system that provides comprehensive reporting tools, such as data about transaction history, customer demographics, and seasonal sales fluctuations.
    
  • Ease of use: Prioritize user-friendly design and intuitive interfaces. A system that’s easy for both your team and your customers to use can reduce the time spent on training and decrease the likelihood of transaction errors.
    
  • Customer experience: From the speed of transaction processing to the simplicity of the user interface, the overall customer experience should be smooth. A cumbersome or confusing payment process can frustrate customers.
    

Research your options

• Compile a list of possible choices
  Generate a list of payment processing providers that could be potential fits. There are a variety of methods you can use to find these providers:

  • Word of mouth: Look into recommendations from business associates, mentors, or competitors. Their experiences can give you valuable insights into the strengths and weaknesses of different providers.
    
  • Online reviews and ratings: Consumer review websites, technology blogs, and business forums often provide in-depth reviews and user comments that can help you gauge the general sentiment around a provider.
    
  • Case studies: Case studies offer examples of how providers have solved specific problems for businesses.
    
  • Industry reports: Read industry reports from reputable market research firms. These often include comprehensive reviews of major players in the payment processing space, along with analyses of market trends that could influence your decision.
    

• Compare features
  Once you have a list of potential providers, create a comparison chart or spreadsheet to keep track of what services each one offers. Your list should include:

  • Transaction fees: Most providers charge fees for each transaction, and these can vary widely. If your business handles a large volume of transactions, even a small difference in fees can have a considerable impact over time.
    
  • Types of payments accepted: Cross-reference this with your list of desired payment types. If you’re expanding into new markets, note that payment preferences can vary substantially from one country to another. Being flexible in accepting various payment methods can be a strong advantage.
    
  • Customization: Can you tailor the payment process to better fit your brand? Customization could mean the ability to control the look and feel of the payment portal, or even to integrate additional services such as loyalty programs or personalized offers.
    
  • Regulatory compliance: Make sure the provider complies with standards such as PCI DSS and any relevant local or international regulations.
    
  • Scalability: Make sure the provider can handle increased transaction volumes and any additional features you may require as your business grows.
    

Consider technical compatibility

• Ease of integration
  A payment system should blend in easily with your existing technology stack. Here are some factors to consider:

  • Compatibility with existing software: Assess how well the payment system will work alongside your current accounting software, inventory management systems, and customer relationship management (CRM) tools. You’ll want a payment system that can share data easily with these platforms, preferably without the need for time-consuming manual data transfers.
    
  • API and developer resources: A provider that offers a large set of APIs and developer resources is usually easier to integrate into your existing setup. These features can allow you to customize the system to meet your specific operational needs.
    
  • Time and cost: Evaluate the human and financial resources required for integration. A system that is complex to set up can drain your resources, so weigh this against long-term benefits.
    

• Room to grow
  A payment system should be able to grow with your business. Here’s what to consider:

  • Scalability: Assess the system’s capacity for handling an increased volume of transactions and data as your business expands. Some systems offer iterative upgrades, allowing you to add functionality as needed.
    
  • Flexibility: A flexible system can adapt to new payment methods, updates in data protection regulations, or shifts in market conditions. Look for a system that can keep pace with these changes.
    

• Safety measures
  Ensuring the security of financial transactions and customer data is a must. Here’s what to look for:

  • Compliance with industry standards: Choose a provider that adheres to recognized security benchmarks such as PCI DSS.
    
  • Additional security layers: A provider that offers extra layers of security such as two-step verification, data encryption, and fraud detection mechanisms gives you and your customers additional peace of mind.
    
  • Reputation for security: Research the provider’s track record. Has it suffered any data breaches? What do users say about the system’s reliability and security?
    

Take it for a test run

The test run phase provides an opportunity to preemptively identify and address any issues before they can impact your operations or customer satisfaction. It also allows you to verify whether the system lives up to the vendor’s claims and meets your requirements. Here’s what this step involves:

• Initial setup and training
  Here’s how to make the most of setting up your system and training your team:

  • Trial period or test environment: Use any trial periods or sandbox environments provided by the vendor. This will give you a close look at how the system functions without affecting your live operations.
    
  • Team involvement: Include staff who will be directly interacting with the system. Their insights can be valuable in assessing ease of use and identifying any learning curves or challenges.
    
  • Documentation and support: During the setup, pay attention to the quality of the vendor’s support resources. Are there user-friendly guides, video tutorials, or a responsive customer service team to assist you?
    

• Performance monitoring
  Once the system is up and running, monitor how it performs under actual or simulated conditions. Here are some things to consider:

  • Transaction speed: Monitor how long it takes for the system to process different types of transactions. Delays can frustrate customers and lead to cart abandonment.
    
  • Error rates: Track any errors or glitches that occur during the test run. No system is perfect, but frequent issues may signal deeper problems with the platform.
    
  • User experience: Gauge the experience from the customer’s perspective. Is the payment process straightforward? Are there any steps that might confuse or deter a customer?
    
  • Data accuracy: Check that all transactions are correctly recorded and reported. Inaccurate financial or customer data could lead to a host of problems, ranging from accounting errors to compliance issues.
    
  • Resource consumption: Be mindful of how the system impacts your other operations. Does it function without hindering other systems, or does it consume an excessive amount of computing resources?
    

Weigh costs against benefits

It’s important to consider every possible expense associated with a payment system. Here’s how:

• A review of all costs

  • Transparent pricing: Look for providers that offer transparent, up-front pricing. Hidden fees can quickly add up and impact your bottom line.
    
  • Breakdown of fees: Itemize the different types of fees involved: per-transaction charges, setup fees, monthly or annual subscription costs, and any additional amounts for specialized features or services. This detailed breakdown will give you a more accurate picture of total costs.
    
  • Terms and conditions: Scrutinize the fine print for clauses that may involve extra costs down the line, such as early termination fees or penalties for not meeting a minimum number of transactions.
    

• Long-term value
  Here’s what to consider when estimating the long-term benefits of a payment system:

  • Operational savings: A well-integrated, reliable payment system can save money over time by reducing the need for manual data entry, rectifying errors, or resolving transaction disputes.
    
  • Customer satisfaction: A smooth and secure payment experience can lead to higher levels of customer satisfaction and repeat business.
    
  • Strategic advantages: A versatile payment system can position your business to quickly adapt to changes, whether that’s entering new markets, supporting new payment types, or meeting evolving regulatory standards. These capabilities can give you an edge over competitors who are slower to adapt.
    
  • Data insights: Advanced reporting options can provide valuable insights into customer behavior and sales trends—information that can be used to refine your business strategies.
    
  • Reputation and trust: A reliable and secure payment process can polish your business’s reputation, which in turn can have a positive impact on customer trust and overall market perception.
    

Finalize your choice

Once you’ve made an informed choice based on a thorough evaluation, negotiate and clarify the terms of the agreement.

• Discuss terms

  • Payment terms: Define how you will pay for the services. Will the provider bill you a flat monthly fee, a per-transaction charge, or a combination of both?
    
  • Termination clauses: Discuss the process and implications of ending the contract early. Are there penalties for doing so? Knowing your options and the associated costs will give you flexibility should your needs change.
    
  • Support levels: Clarify what kind of customer support you’ll receive. Is support available 24/7? What channels can you use to contact them—phone, email, chat? Quick and effective support is invaluable, especially during times of high transaction volumes or when issues arise.
    

• Complete the paperwork

  • Written agreement: Confirm that every detail you discussed and agreed on is documented in writing—including fees, support levels, termination clauses, and more.
    
  • Legal consultation: Seek legal advice. An expert can review the agreement to identify any terms that might not be in your favor, or they can clarify points of ambiguity.
    
  • Data compliance: Verify that the contract stipulates compliance with data protection laws applicable to your industry or market.
    
  • Signature and archiving: Once the contract meets your approval, sign it. Keep a copy in a secure location for easy reference.
    

Monitor operations

After you’ve made your choice and set up the new system, monitor how well it’s working. Look at how quickly payments are processed and how satisfied customers are with the payment experience. Periodically reassess and make any necessary changes so you can continue to meet the needs of your growing business.

Learn more about how Stripe supports omnichannel payments.