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Can the battered UK high street enjoy a revival? If merchants embrace hybrid payments, Emily Fallon of Tyl by NatWest believes it’ll not just survive, but thrive

Everything, everywhere all at once – that’s what consumers expect from British retail. And flexible payment options will be key to providing that hybrid offering from merchants, however big – or small – their turnover.

That’s the forecast from Tyl by NatWest, one of the few merchantacquiring and card machine businesses run by a major UK bank,

The good news is that, despite the impact of COVID-19 and the current cost-of-doing-business crisis, the British retail industry is not in as bad shape as some feared. Like-for-like overall monthly retail sales were up 5.1 per cent in April, compared to negative growth a year earlier, according to the British Retail Consortium and KPMG’s Retail Sales Monitor.

And those figures weren’t all driven by online purchases, which continue to decline across most categories. If anything, there’s been a distinct bounceback from the online migration we saw during the 2020 pandemic. Even major retailers are pouring investment into real estate in 2023, according to the Investors’ Chronicle, following years of strategic retreat.

While the rising cost of maintaining a bricks-and-mortar presence has played into creating retail deserts, a desperate lack of footfall also played a major part.

British consumers have something of a romantic nostalgia for the ‘high street’. A poll for Tyl by NatWest, showed that shoppers wanted to see outlets such as a bakery, a post office, a café, a bookshop and a pub. Nearly three-quarters (74 per cent) were downhearted about their high street’s decline. But just 17 per cent made the effort to do most of their shopping near to where they live or with small retailers. Forty-three per cent said they only use their local high street once a month or not at all, which might cast some doubt on the 41 per cent who said they were keen to shop more locally to support a high street comeback.

So, given that half of shoppers are, at best, ambiguous and, at worst, disinterested in the British high street, how should smaller retailers respond?

Citing Tyl’s report, Emily Fallon, who leads its customer experience and insights team, believes the future of retail is a hybrid model that everyone needs to get more comfortable with.

“Think about a coffee shop on the high street,” she says, “Maybe someone goes to Broadway Market in London on a Saturday, loves the coffee that they get there, but they don’t live in the area. They google a couple of weeks later, just to see if they can get a shipment of that type

We think ‘what does our customer need from us, but also, what do their customers need from them?’ It’s the intersection of payments which plays a really pivotal role of coffee, and boom, they discover the café has a website and a payment gateway, or a request for payment links on their social media page.”

It is for these kinds of consumers that Tyl has set up a multi-touchpoint, or omnichannel, capability for merchants so they can maintain loyalty with them, even at a distance.

“It’s for a customer who’s both in-person and online – actually the same person just shopping in different ways in a fashion that suits that exact moment for them,” Fallon says.

The legacy of the pandemic is that consumers now expect to easily pick and choose which channels they use – instore and online to browse and buy (look first, buy later, digitally or in person) – as well as the payment option that works best for them (be that plastic card, wallet, an Xpay, buy now, pay later, or, increasingly, account-to-account under open banking).

That breadth of choice is a challenge for big retailers, let alone small ones, so having an affordable, easy to onboard and integrate single payment service linked to a management portal that can deal with all the complexity is a blessing.

Launched in 2019, Tyl is competing in the same market as the likes of Worldpay, SumUp, Square and iZettle, offering a range of payment solutions – from countertop and pocket-sized card machines to an online payment gateway and its all-in-one point of sale (POS) system Clover Flex – to suit any size and type of business.

It regularly tops the review charts (its Trustpilot score is 4.8) for its low-cost hardware designed for start-ups: from £6.99/month, plus £14.95 for the payment gateway and 1.5 per cent transaction fees. And it’s especially praised for its customer service, with merchants of varying sizes mentioning how its advisers really understand where SMEs are coming from.

“We like to take a step back and think ‘what does our customer need from us? But also, what do their customers need from them?’,” says Fallon “It’s the intersection of payments which plays a really pivotal role.”

Highlighting how Tyl can support its clients, Fallon quotes the example of meeting the very specific payment needs of a local dentist.

“What we learned is that a lot of customers skip dental appointments, which leaves the dentist out of pocket,” she explains. “So we have payment capabilities that allow dentists to collect deposits at the time of making the appointment. In that way, patients get an incentive to attend and it gives some comfort to the dentist, knowing that, in the event a patient doesn’t turn up, they don’t completely lose out.”

Making The Connection

Connectivity is another big issue that plagues not just mobile traders but also permanent stores, and it’s one that Tyl seeks to solve. Think of a pub with a beer garden, for example, which struggles to take outside payments due to poor WiFi, meaning punters need to go indoors to pay, and are therefore likely to order less.

Tyl’s newly launched Tap to Pay on Android allows customers to turn compatible devices into contactless mobile card readers and accept in-person contactless payments on their own phones.

“We have a range of payment devices that connect to 3G, 4G, Wi-Fi and you can change between all three of them, at any given moment, giving customers extra security when they’re trying to process payments,” says Fallon.

Meanwhile, its rewards programme allows merchants to design their own loyalty points scheme for customers, while also providing real-time insights on customer behaviour. There’s even a Giveback Fund that Tyl tops up for local charities nominated by its traders.

“It’s not just about our relationship with our customers, but the relationships they have with theirs, and how we can help them drive not just better relationships but loyalty, repeat visitors – however that customer wants to shop with them,” says Fallon.

A recent analysis of top small business trends for 2023 by Experian pointed to earlier research by Sage, which found that eight in 10 SMEs need digital tools to start, survive and expand their business, especially as ‘social commerce, re-commerce and subscription commerce are all expected to grow’ and payment choices change. Digital wallets, for instance, are predicted to account for 30 per cent of all point-of-sale payments in 2023 and BNPL for around a quarter of e-commerce payments by 2026.

Small businesses have long been the backbone of the British economy but they are also a sector that has been woefully underserved by high street banks in the past. That gap has been filled by standalone fintechs over the last decade. NatWest has clearly woken up to this reality: Tyl is part of a much wider strategy at the bank, which includes its speedboat digital-only small business neobank,

Mettle, and its open banking merchant payments service, Payit. They are all responding to trends that could propel small retailers into a new hybrid era.

The bank recently announced a strategic partnership with Vodeno Group to create a banking-as-a-service business in the UK to enable non-financial companies to embed products like payments and POS credit directly into their ecosystem. And the appointment of payments data guru Tim Johnson as head of strategy to straddle the development of both Tyl and Payit perhaps points to a fully integrated payments offer to all clients in future – particularly appealing for small retailers looking for a cost-efficient way of giving consumers a variety of payment choices.

There is another side to this. In 2022, NatWest opened 99,000 new startup accounts, almost 40 per cent of which were via Mettle, giving it a market share of 16.4 per cent among UK high street banks for banking new small businesses. While that’s encouraging, the real issue in the last few years for small businesses has been their banks’ reluctance to lend. Granular, real-time transaction data – information that can be gathered by services like Tyl and Payit – could unlock new credit models and a more flexible approach to lending. And that really could put the heart back into local retail.

So, what will this future hybrid high street look like? On the face of it, much the same as today, says Fallon, but behind the scenes, things will be very different.

“You’ll still see loads of people in and out of shops, pubs, and restaurants. But you’ll also be able to find them when you’re not on that high street. You’ll be able to purchase things online and even share your local high street with family members who might not live in that area.”

All in hand: New shopping habits require new solutions

Meeting these modern consumers’ demands might be a challenge, but if the alternative is that the high street withers and dies, then, as larger-than-life stuttering shopkeeper Albert Arkwright from BBC TV’s sitcom Open All Hours once said: “I'm goin' to have a d-damn good try, aren’t you?”