Unified payments.

By Filippo Conforti on April 23, 2024

Unified commerce connects online and retail sales channels through one commerce stack. That means that all data, such as payments, orders, customers, and inventory are shared across all channels in real time.

A unified commerce infrastructure cannot be implemented overnight, of course. An organization, where e-commerce and retail departments are traditionally separated, must undergo a significant digital transformation and there are numerous implications, ranging from technical architecture to human resources.

From a technical standpoint, the payment system is one of the primary obstacles to a unified commerce architecture. It is difficult to achieve a true unified commerce stack when your ecommerce platform processes online payments with one provider and your POS system processes in-person payments with another provider. For example, how can you refund an online payment in store? How can you order online and pick up in store? Unless you have the same payment provider, the most you can do is integrate some omnichannel flows. However, this is not a truly unified architecture. Having one payment provider for both online and offline is the first and most basic step.

It's not surprising that payment companies such as Stripe and Adyen are backing this trend, offering physical terminals as part of their core offering. More and more brands and retailers are consolidating their payment providers across all their channels. In addition to simplifying their payment processing and reconciliation, this consolidation gives them a big advantage in terms of transaction fees, since they can get a volume discount from the selected payment partner.

The customer also benefits from unified payments, since they can use their existing payment methods and wallets regardless of where they shop. As a result, the checkout experience is significantly improved, and conversion rates can be dramatically increased.

The use of a single payment provider also simplifies the life of developers who wish to integrate online and in-store payments. All integration complexity is handled by the payment provider, exposing a simple API to handle both online and offline transactions. In an ideal world, the payment API should be exactly the same. In reality, different providers offer different approaches and integration isn't always that straightforward. However, it's always easier than talking to completely separate systems.

Several players in the payments space are promoting unified commerce as their value proposition. Generally, online systems are more successful and faster at expanding in-store than in-store systems are at expanding online, due to their better APIs and performance. Thus, I predict online payment providers will continue to gain an increasing share of the retail payments market over the next few years. This will open the way to other layers of the commerce stack. After payments, orders and customers can be unified within the same stack, making omnichannel a reality.

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