The economy has been unusually difficult to predict since the pandemic began, with inflation trends, jobs numbers, layoffs and consumer spending creating seemingly conflicting pictures of where things are and where they’re going. For example, consumers worry about high prices, but at the same time book the most international travel in years. The unemployment rate is rising, but the economy is also rapidly creating new jobs. Inflation is slowing in the US and eurozone, but many business leaders still expect a recession.
Due to the ongoing uncertainty, many customers are looking for new shopping options that offer them discounts, more convenience or more time to pay. Businesses need to rethink and evolve their payment methods to meet new customer needs and business challenges. In this article, we take a look at some trends that show what consumers care about now and how businesses can deliver.
Give customers (especially younger ones) more time to check out
With staple food prices remaining high, more than 20% of Buy Now Pay Later (BNPL) users say they have their grocery purchases billed to BNPL plans. BNPL has gained popularity during the pandemic as it allows shoppers to improve their lives at home during lockdown, with most BNPL spend on clothing and durable goods such as electronics, gym equipment and home furnishings. The fact that so many BNPL users are buying groceries and other staples on time shows that retailers of all types need more flexible payment options.
In ClearSale’s most recent global survey of consumer attitudes towards e-commerce, fraud and customer experience (CX), 57% of online shoppers said they find BNPL and other alternative payment methods such as digital wallets a convenient way to shop. More than half (55%) also said they would consider shopping elsewhere if a new website didn’t offer these payment options. Among younger consumers, aged 18-39, the preference for BNPL and other alternatives was much higher. 72 percent of online shoppers in this age group say BNPL and digital wallets are convenient shopping options for them, and 63 percent would consider going elsewhere if these options are not available.
More loyalty rewards
Another way to address the needs of price-sensitive customers is through payment options that include discounts or points for purchases. Regional grocer HEB, which supplies Texas and northern Mexico, recently launched a line of branded cards that include cashback on purchases. With the Mastercard debit card and Visa non-annual credit cards, customers receive a 5% rebate on private label products. The credit cards also give customers a 1.5% discount on all other purchases at HEB stores and elsewhere. This strategy can help build loyalty by saving customers on grocery shopping and giving them more time to check out. It can also increase sales by incentivizing private label purchases.
Co-branded cards are also becoming more common in the highly competitive home delivery startup space. DoorDash’s partnership with Chase offers perks to customers who pay with a Chase card, including reduced fees for delivery orders and rewards for purchases made on the app and elsewhere. Chase recently announced a co-branded card with DoorDash competitor Instacart, building on the benefits Chase users have already received through the app.
More convenience, better cash flow
It’s not just grocery stores and restaurants that are taking new approaches to checkout. Some salons and spas are introducing BNPL options for salon services and beauty products. Healthcare providers in the US are also seeing new BNPL options to help patients manage the cost of treatments and associated deductibles and expenses. These options also help beauty and healthcare providers book more treatments and maintain customer and patient loyalty.
The homebuilding industry is finally starting to catch up with digital payment technology after years of lagging behind and requiring customers to write paper checks. This approach has many disadvantages, including processing time, data security, and the use of fact checking is becoming less common among the next generation of homebuyers. More than a third of Gen Z adults have not written a check in the past six months, and 20% have never written a check.
30% of US construction companies are now investing in digital payment technology to enable better cash flow, reduce reliance on checks, and avoid payment-related disruptions. These improvements are happening now as companies look for ways to streamline their processes during a downturn. But they will also lay the groundwork for better efficiencies and a better customer experience when the housing business picks up again.
Now the best payment practices
As more industries adopt modern payment methods to meet customer needs and streamline their own operations, businesses that don’t evolve in payments risk falling behind. Now businesses looking to keep up with the pace of payment changes can choose the right options for their customers.
Identify the challenges that matter most to your customers. Use your first-party data and analytics to understand what your customers need now. Maybe it’s about more time to pay, discounts or just more convenience.
Find payment options that fit your customer and business needs. For example, if your customers want more time to check out, BNPL options could be a good place to start as they can get their product or service instantly and your business gets paid instantly too.
Integrate new payment methods into your security tools. Every payment method and platform has some security features. These can be a valuable part of an in-depth defense strategy against fraud and data theft. However, it is advisable to ensure that you can apply your existing anti-fraud processes to orders placed using the new payment methods.
Select and track payment KPIs. Monitor metrics for your new payment method(s), including completed orders, approval rates, fraud rates, false reject rates, and customer sentiment. This data shows you whether you need to adapt your new payment processes at short notice. In the long run, it can help you understand which methods are most appealing to your customers and most cost-effective for your business.
Finally, keep an eye on what’s happening in the consumer payments space. Not every new innovation works for every business, but by identifying new options that your customers like, you can create a better experience faster and discourage your customers from looking elsewhere for alternatives.
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