Retailers across the world have seen the shift from in-store shopping to digital retail over the last few years. It has since been turbocharged by Covid, with many physical stores forced to close their doors for the past 12 months. However, those shifts aren’t reactionary; they’re here to stay. In this article, we outline the top retail payment trends that will remain in the new normal.
The impact of the pandemic on retail payment trends
According to IBM, the pandemic sped up the move from physical stores to digital by five years. The growth of online and hybrid shopping re-centres the retail conversation around digital and tech. And one of those discussions involves payments.
Offering a fluid payment process online and in-store is vital for any business that wants to succeed and increase its customer numbers. But what does the evolving payment space look like in retail? Let’s explore three top retail payment trends that are here to stay and will enhance the shopping experience.
Top retail payment trends to remain in the new normal
1. Mobile and contactless payments
The growth of contactless payments – either via card, wearable or mobile phone – has accelerated in the last 12 months. The Financial Conduct Authority (FCA) recently increased spending caps from £45 to £100 for a single transaction and £100 to £300 for multiple purchases.
These increases only reinforce the desire for people to use contactless payments as their de facto way for in-store shopping. It won’t come as a surprise if those spending caps increase further to reduce the contact involved with face-to-face payments.
Initial security concerns have been allayed, and the widespread adoption of “tap-and-go” payments suggests sustainable use in the long term. Its convenience and simplicity have led to a better customer experience when shopping in-store.
Around the world, an increasing number of customers are taking their business to shops with contactless payments at the point of sale. Millennials are leading the contactless charge, with more than half choosing to avoid stores if it doesn’t offer contactless payments.
Since the pandemic, 82 per cent of millennials say they are more likely to use a new shopping or payment method. This further underlines changing retail payment trends, and contactless payments are the major driver in the physical retail spaces.
2. Flexible finance as a payment method
Maintaining a budget is of great importance to customers, especially in the wake of the pandemic. It’s led to many people moving away from traditional avenues of credit with high interest rates and instead gravitating to alternative payment methods like buy now, pay later and instalment payment options.
Online checkouts are a critical stage in the buyer journey. And yet, too often, people face barriers right before making a purchase. In 2018, cart abandonment was 79 per cent in the UK. However, the rise of alternative payments methods can significantly help to reduce those numbers and remove friction at the checkout stage.
Merchants can also further enhance their customer acceptance numbers by offering methods like multi-lender retail finance. It works in the background, automatically moving customers onto the next lender if they’re rejected by the first one. The result is higher acceptance rates as more customers qualify for finance.
Flexible finance streamlines the checkout process while removing one of the largest barriers that prevent customers from completing a purchase. It’s no surprise that more than 50 per cent of Brits have started using alternative payment methods since the pandemic began.
By adapting to pandemic-influenced retail payment trends and offering alternative payment options, brands can increase their chances of sales and provide customers with more methods to pay for goods and services. It gives those customers convenience and security while allowing them to spend responsibly.
3. Rise of omnichannel commerce
Covid has also forced businesses to expand their touchpoints beyond traditional payment means. The result is a greater need for omnichannel commerce, and 2021 will see more businesses investing in unified commerce technology to reshape their processes.
A larger number of people are shopping online for rudimentary products, such as groceries and everyday household items. As a result, companies who were previously used to a larger average order value in-store have needed to adapt to a digital operation.
In the second quarter of 2020, global online sales soared to 71 per cent year-over-year. With consumers moving to online shopping, companies are finding more ways to offer their items and services through an expanded omnichannel experience.
The growing consumer demand for an omnichannel experience will influence future retail payment trends. For some brands, this means offering a fluid buying experience that includes multiple ways to pay online, same-day delivery, contactless payments and in-store pickup, all in one seamless setting. This is happening with businesses large and small.
Today, customers shop online, via mobile and in-store, and they don’t want their experience to differ between touchpoints. Omnichannel commerce offers a first-class shopping experience that allows customers to shop, review and pay for their purchases between devices in a seamless manner.
Summary: Payment methods revolutionising retail
It’s hard to find many positives born out of Covid, but the retail space’s ability to evolve and adapt has laid the foundations for an exciting future. From flexible payments to contactless options, consumers have more entry points to pay for products and services. Merchants who move quickly to meet the demands of new retail payment trends stand a better chance of seeing higher conversions while increasing their bottom line.
Deko is a leading provider of multi-lender, multi-product retail finance solutions, powered by award-winning technology. Take a look at our range of flexible financing options for merchants or get in touch to find out more about the benefits of multi-lender retail finance.