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What Exactly Is A Split Payment in Retail?

Posts, Retail Order Management

Split Payment in retail

Omnichannel retail evolves almost on a daily basis. But it has to because customers are more and more demanding. For a long time, omnichannel retail meant to buy from anywhere, and fulfill from anywhere. But has another component now been added? Should ‘pay in any way’ be added to our definition?

What are Split Payments?

Split payments combine several payment methods for one purchase transaction. This means a shopper can buy an item with a credit card, a gift card, and cash or any combination of payment methods; on a single transaction. Although this makes a purchase more complex, it caters to the customer’s needs. Split payment methods are not a rarity in the brick and mortar stores world. However, we haven’t seen it as prevalently online … yet.

Why Bother with Split Payment?

It’s about catering to the customers’ needs. Consumers have many payment options at their disposal. A shopper can use a credit card, prepaid or gift card, debit card, PayPal or mobile wallet for purchases. Add to it a contactless payment fob, bank or non-bank app, credit memo, cryptocurrencies, and let’s not forget cash. With so many choices, the demand to split payment for purchases will only grow.

A report on the Future of Payments (by Paul Hastings) highlights the growing use of alternative payments in retail. The graph below depicts the use of various non credit card methods in transactions across the US and UK. In fact, the report forecasts that by 2026 in the US 82% of businesses will accept alternative payments. In the UK 74% of businesses will accept alternative payment methods.

Share of Consumers using Alternative Payment MechanismsSource: Future of Payments

Common Split Payment Example

Gift and pre-paid cards have become a norm for many retail chains, as an example. Shoppers may have a gift card, but it may not have enough funds for a transaction. This is the easiest and most common case. Here the retailer uses the gift card, with the remaining balance put onto the credit card. Today, this option is expected of all merchants. Not having this simple capability would impact customer satisfaction. As this becomes commonplace, so too will the expectation of using mixed payment options.

Complex Split Payment

It is easy enough to understand the need for a split payment for gift cards. But, what if there are multiple gift cards? What if the customer needs to split a large purchase across two credit cards? What about a split payment across credit cards, cash, cryptocurrencies, gift & loyalty cards, mobile wallet, a credit memo and their debit card?

With a growing set of payment options, paying with several methods will be a growing desire. To capture this growing demand, splitting transactions will have to become a normal event. Which means POS and order management systems need to be equipped to handle these sales.

Online Split Payment

Although a simple split payment is not uncommon in physical retail, it seems rare online. Ironically, the online payment system or payment process on the digital side lags physical retail. Research by CreditCards.com in 2016 showed few large retailers supporting online split payment.

Split payment transactions online? Probably not?

Split Payment Opportunity

Split payment capabilities are important in retail. In-store is still ahead of digital commerce in this respect. However, consumers will start expecting this capability across all channels. After all, the goal of omnichannel is to create a consistent and seamless experience across channels.

Use split payment as a differentiation opportunity, today. Catering to the customers’ purchase desire means they will come back to you as a preferred retailer. At the very least, start preparing for split shipment as a new norm coming soon. In that regard, make sure your order management technology is capable of handling it.

Omnichannel retail isn’t just about shopping across channels anymore.

Today’s omnichannel retail lets shoppers:

  • Buy,
  • Collect, and
  • Pay

Any way they want!

Tecsys OrderDynamics’ advanced OMS offers split payment options, built in. Mix and match payment methods, online, on mobile, at the call center, or in-store. Reach out for a quick discussion about whether it is right for your retail needs.

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