RedBalloon’s Naomi Simson: We live in a “have now, pay later” world

The instant gratification offered by payment gateways like Afterpay is the stuff of retail dreams. More than a payment method, it’s a way of delivering audiences, where the last piece of the retail puzzle has become a customer’s first port of call.

For 15 years I’ve been wanting to solve the riddle of how we could offer customers the option to ‘lay-by’ experiences, allowing them to chip in how and when they want to purchase a gift. At the same time, we’ve watched a shift in the way people buy. Almost everything goes on a credit card now.

Let’s not forget that fintech is challenging. Dealing with the safety and security of customer data and payment information has never been more significant.

As a business owner, and representing thousands of other businesses through the Big Red Group, I am all about ensuring frictionless customer encounters with our brands. That includes everything from the experience a customer has on one of our websites, to the support they receive when they contact us, right through to the end product or service. And it also means offering payment options that reflect how customers wish to pay for these things — we learnt a valuable lesson on this back in November 2017.

Consumers too have changed. Now we see a retail world where payment gateways like Afterpay and zipPay are competing against Myer and David Jones for audience share. Payment gateway sites are disrupting the department store model by offering their own online shopping mall experience. They have built it and the customers are coming, in droves.

We implemented Afterpay at RedBalloon in March, and it’s made a material difference to the business. And we’re not alone: according to Fairfax, 8% of all online retail spending in Australia is currently being paid for using the platform.

Who would have thought the last piece in the retail puzzle would become a customer’s first port of call?

You remember lay-by, right? You had to delay gratification. You didn’t get the goods until you’d coughed up all of the cash (plus a small fee). Payment gateways give you the goods on the spot, without having to accumulate credit card debt. Customers can be both rewarded and restrained at the same time.

But it’s more than that. This is not just a method of payment, but a way of delivering audiences. Their “online shopping mall” model delivers a here’s-one-we-prepared-earlier audience to retailers. And in this debt-laden society – just last week former Treasurer Peter Costello controversially claimed most Australians will be dead before our national debt is paid off – services like this actually offer a more financially responsible alternative to credit cards.

But there’s no such thing as a free lunch …

They’re interest-free platforms, not free platforms. It’s a true retailer-pays model — with Afterpay, for example, retailers pay a fee of between 4% and 6% from each and every sale.

If credit card transaction fees were that high, I’d be having big red kittens. But given the benefits we’ve seen in offering these payment options to customers, we consider the fees an investment in delivering audiences to our brands.

Being a customer-obsessed business means offering a myriad of ways to engage with our brands, and that isn’t always cheap. But delivering a seamless customer experience is the end game, so I’m happy to foot the bill.

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