Boost Your Margins Through Virtual Payments - RETAIL SECTOR - AirPlus ...
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RETAIL SECTOR Boost Your Margins Through Virtual Payments
Going Digital Is Make Your Payments
More Than How You Process Virtual
Face Customers Updating how you manage payments is a perfect
example of digitalising your retail business.
Two major trends dominate retail today:
We aren’t talking in this eBook about the payments you receive from customers –
It’s a tough market. Costs are up, profits down and although there is plenty of potential in that too, such as accepting mobile payments.
too many big high street names have hit the wall.
Instead, we cover the payments you make as a company – whether your department
is travel, procurement or accounts payable and other teams within finance.
Retail is going digital – big time. UK online retail
sales grew 9.4 per cent in 2017, when the market Payment has been through its own digitialisation revolution.
as a whole grew only 1.9 per cent. The world of payments has gone digital too. Virtual cards suit retail ideally.
You can use them to:
But digitalisation isn’t just about selling online.
It’s about managing your entire business better. Cut admin costs – no more Control employee spend
That holds true whether you are more bricks or lengthy reconciliations, for and stamp out fraud.
more clicks as a retailer. example.
Digitalising your business processes is what Flex perfectly to modern retail
Improve spend visibility.
can help you not just survive but thrive in this needs, like funding voucher
tough environment. payments and goods for
fashion Instagrammers.
What’s inside
This eBook explains:
“UK online retail sales grew
9.4 per cent in 2017, when the market Changes and challenges for retail How your retail business could benefit
companies – and how they relate from virtual cards.
as a whole grew only 1.9 per cent.4” to your payment needs.
What to look for when picking a virtual
4
Retail sales, Great Britain: December 2017, Office for National Statistics What virtual cards are. card provider.
+44 (0) 20 8994 4725 / London@AirPlus.com AirPlus.com
036 Retail Changes Much of the drive towards
digital has focused on sales
How that affects the way you pay
And Challenges – and marketing, from ramping
up online and mobile channels
Too many business payment
processes are rooted in the
old world that digital is leaving
And How They Affect to deploying technologies
like beacons, virtual reality behind. Some companies, for
instance, still fax the front and
and Internet of Things within
The Way You Pay physical stores.
back of a senior manager’s
corporate card to hotels to
But the revolution doesn’t stop front-of- guarantee reservations for other
Digitalisation: no longer a “nice to have” ... house. Today’s retailers need to think employees. That’s massively
and act truly digitally throughout their inefficient, lacking transparency
business to get where they need to be. and a huge fraud risk.
... it’s a necessity. Online sales as a proportion of UK
retail sales have climbed every month since records
began, and moved up again from 16.1 per cent in
April 2017 to 17.3 per cent in April 2018.2
Retail Changes
Retailers get the message:
93% And Challenges
93 per cent say they have a
Costs are soaring
clearly defined digital strategy,
and 54 per cent are implementing Booming wage bills, steeper imports, increasing
digitalisation in existing business business rates ... costs are on the up.
processes and functions.3
54% Meanwhile, consumers’ improved
ability to compare prices is holding back
How that affects the way you pay
It’s time to look at new payment processes
how much you can charge. It all means
that slash admin time
margins are shrinking.In a sector with
(on reconciliation, for example), while
squeezed profits, every penny lost on
maintaining much tighter controls
unnecessary expenses or operational
on employee spend.
inefficiencies is a critical waste.
2
Retail sales, Great Britain: April 2018, Office for National Statistics
3
The Digital Transformation PACT, Fujitsu, February 2018
+44 (0) 20 8994 4725 / London@AirPlus.com AirPlus.com
05Retail Changes Retail Changes
And Challenges …continued And Challenges
Retail is a youthful industry Cashflow is king
With 54 per cent of its workforce aged under 34, retail is the In an inventory-intensive sector like retail, strong cashflow
second-youngest out of all 17 major employment sectors is what makes or breaks a business.
(only accommodation/food services is younger).4
How that affects the way you pay
How that affects the way you pay Scaling a fast-growing business One current threat to cashflow comes pressuring corporate clients who pay
from the travel management companies them by invoice to accept shorter terms
Our youth are our future. But that Retail companies which find success
(TMCs) which book your company’s trips. too. Switching to (digital) card-based
doesn’t mean you want to let can suddenly grow very quickly. But
Airlines are shortening their payment payments, with generous settlement
them loose with plastic corporate when sales boom, the business’s
terms to TMCs, so in turn TMCs are terms, is the answer.
cards. Equally, you can’t expect supporting admin processes don’t
employees to fund business trips always keep up.
out of their own pockets and wait
for reimbursement. Today, there are How that affects the way you pay
safer, faster ways to pay for their
Passing one plastic credit card
travel and other business needs.
around the company to pay for travel The rise and rise of compliance
bookings no longer works once
you have more than a few dozen
employees. Neither does submitting
Compliance issues are forcing their way up retail’s agenda,
‘‘When sales boom, with codes of conduct and more pressure to show business
expenses on spreadsheets or – even
the business’s worse – paper. It’s time to introduce transparency.
supporting admin a slick, consistent payment, expense
and reconciliation process.
processes don’t How that affects the way you pay
always keep up.’’ Traditional payment processes – like using one plastic corporate card to pay for
everyone’s travel expenses – aren’t always very transparent. Digital alternatives
solve the problem by providing more, and better, data.
4
2015 Annual Population Survey, Office for National Statistics
+44 (0) 20 8994 4725 / London@AirPlus.com AirPlus.com
07Virtual Cards What Is A Virtual Card?
Digital Payments To Drive Digital Retailing A virtual card is a 16-digit number just like one you see
stamped across the middle of plastic credit and debit cards.
Like retail, payment processes have But with virtual cards no plastic is involved. The number is
also gone digital. generated (along with a three-digit security code) at point of
payment and used only once.
Like retail, payment processes have also gone digital. Mobile
payments – like Apple Pay, or the phenomenally successful It means each transaction you pay for has a unique card number – and that’s
WeChat and AliPay, which have taken China rapidly cashless – how reconciliation, control and many other benefits come in.
are the obvious example.
Digital payments worldwide
totalled $3.85 trillion in 2017,
14% up 14 per cent.5
For each virtual card, you can:
5
Digital Payments Snapshot, 2017, Juniper Research
When it comes to how retail and other business sectors Only allow it to be issued once
Specify the merchant, or
make payments, rather than take them, the big trend is virtual essential data has been added,
category of merchant
cards. Using virtual cards addresses the many changes and such as employee number,
(e.g. a hotel).
challenges for retail mentioned earlier. cost centre or project code.
Virtual cards are forecast to
account for almost a quarter of
commercial card spending in
1/4 Europe by 2022.6
Set a date for payment Set a limit on how much
to be made. can be paid.
6
Commercial Cards in Europe 2018, RBR
+44 (0) 20 8994 4725 / London@AirPlus.com AirPlus.com
09How Virtual Cards Help TIP: The ideal way
Your Retail Business to pay for meetings
SIX reasons why virtual cards tick all the boxes: & events
From staff conferences to roadshows to photo shoots, retail
CONTROL what your END time-consuming manual companies handle all sorts of meetings & events.
employees can (and can’t) spend reconciliation
1 You’re in the driver’s seat, setting Wasting frustrating hours cross-
Paying for them on a single employee’s plastic corporate card,
a limit on how much can be spent checking purchase and payment
4 as often happens today, is far from ideal:
– and where and when. data becomes a chore of the past.
Now you just auto-reconcile the
two by matching up the unique
REDUCE fraud risk card number.
Figuring out which payment on
2
Virtual cards are used only once, There is significant danger of
the card relates to which event
and for a specified transaction, maxing out the card spend.
can be confusing.
so they can’t be stolen (or lost). PAY for everyone
You can use virtual cards to pay for
all stakeholders, including trainees,
USE with any booking channel 5 interns and external contractors.
For travel booking you can go virtual And employees face no end of month
3 for any payment, whether through expense claims either, because you Virtual cards nail the M&E payments problem.
your TMC or directly via any website settle all the virtual cards centrally
or app. through one monthly bill.
GAIN total visibility of spend Each payment can be given an
Spend is unlimited
Being able to input extra details like cost centre or project number for every event code to make spend totally
6 (but controlled).
payment makes all the difference. It helps you track costs and budgets with a transparent and easy to allocate.
fine tooth-comb.
+44 (0) 20 8994 4725 / London@AirPlus.com AirPlus.com
11Case-Studies - Payment Case-Study
Digitalisation in Action ASOS – Funding fashion Instagrammers
Matalan – Boosting efficiency, reducing costs and risk Fashion Instagrammers are a great example of how
new retail business practices need new process
Matalan is a classic example of how virtual cards can transform thinking to support them.
retail business processes.
Before After
Matalan’s travel manager paid for many Matalan digitalised by introducing AirPlus
employee trips on her own corporate credit A.I.D.A. virtual cards. Improvements since Before
card. That led to: then have included:
Getting online bloggers and influencers to model your clothes on
A fraud risk, with her card number being shared
their sites has become a key marketing tool for fashion companies.
No fraud.
around too many hotel front desks. But ASOS had no process to fund Instagrammers to buy ASOS
clothes without being able to spend the money elsewhere.
Maxing out the spend limit on the card, leaving the
company unable to complete bookings (and prices No exceeding of spend limits.
rising by the time more credit was authorised).
Detailed supplier and internal stakeholder
Limited spend data – little more than supplier,
spend data for each transaction, with all data in
amount and date of purchase.
one report.
No need for reconciliation. All booking and
A monthly nightmare of reconciling spend on
billed data is inherently reconciled, with full After
the card.
cost-centre allocation.
ASOS now issues approved Instagrammers with AirPlus A.I.D.A.
virtual cards, which are capped at a fixed amount and can only be
used on the ASOS website. The bloggers get their clothes; ASOS gets
“Operationally, it’s been a much, much smoother process to book with its marketing – and control over the whole process.
A.I.D.A. sat in the background on our booking system,’ says Matalan.
‘It has brought efficiency to our financial teams, who are able to
reconcile much faster because of the data available on the statement.”
Piers Gibbons, Head of Operations, AirPlus International UK
+44 (0) 20 8994 4725 / London@AirPlus.com AirPlus.com
13Choose The Right
Virtual Payment
Provider For You
We hope that by now you agree going digital through
virtual payments could really help your business.
But how do you select the virtual payments issuer
that is right for you?
Here are some key factors to consider.
Is the solution pre-paid?
Many are pre-paid, in which case you lose one of the key benefits of cards
for any retailer: improved cashflow. Look instead for virtual cards which
can be settled through a credit-based centrally billed account.
What’s your overall payment strategy?
Virtual cards need to be seen in the context of your entire corporate
payment needs, which could also include lodge cards (ideal for air ticket
payments) and plastic corporate cards (important for frequent travellers).
‘‘Instead of prepaid, Make sure your issuer can offer the best in all three categories.
look for virtual How well does your issuer integrate?
cards which can Seamless digital payments for your travel needs depend on deep
integration with TMCs, online booking tools, expense management
be settled through systems and many others. Not all virtual payment issuers are as well
integrated as others, so check how well they hook up with your chosen
a credit-based service providers.
centrally billed
account.’’
+44 (0) 20 8994 4725 / London@AirPlus.com AirPlus.com
15WANT TO KNOW MORE ABOUT How virtual payments can boost your travel and finance programmes? Contact us today! +44 (0) 20 8994 4725 London@AirPlus.com AirPlus.com
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