After over two years of shifting buying habits in favour of eCommerce, many consumers have practically abandoned the high street, and are now embracing a fully digital future as a more personal, efficient and convenient way of shopping.
Customer expectations and habits are constantly changing, and as shoppers become more comfortable with an increasingly digital post-pandemic future, businesses need to adapt and keep abreast of the latest developments in retail behaviour.
In this article, I’ll look at five of the latest payment trends in eCommerce, helping business owners better understand the newest technology and how modern fintech solutions allow companies to create better retail experiences and customer journeys.
The most popular payment methods
Digital payments come in many forms, from debit and credit cards to e-wallets. Continual innovation means that more methods are being offered every year, so it’s vital that your checkout offers customers all of the latest trending technologies, as well as popular favourites that they recognise and trust.
Of course, in order to stay on top of the latest trends, you’ll need to know what your customers are likely to favour over the coming years. Luckily, an international payment service provider ECOMMPAY conducted a UK-based survey in collaboration with Censuswide in March 2021 in an effort to see where consumer preferences were heading. Here are the results of that survey:
Question: Which of the following, if any, payment methods will you use most over the next five years?
- 50% will use Debit Cards the most
- 36% will use Paypal the most
- 29% will use Direct Debit the most
- 25% will use Credit Card the most
- 22% will use Cash the most
- 12% will use Apple or Android Pay the most
Are you surprised by the answers? Although it’s tempting to look at the results as entirely unremarkable, the devil really is in the details: When we separate the responses by age, for example, we see Apple and Android Pay use rise to 26% in the 25-34 age bracket, yet drop to just 6% among 55+ year-olds.
Overall, our data shows that one thing is for sure: the UK’s payment landscape will continue to see digital payments continue on an upward trajectory, so it’s more important than ever that merchants have all the latest solutions in place to appeal to every demographic.
Are you familiar with Open Banking? If you’re unsure, then don’t worry; you’re not alone: Our survey highlighted that only 27% of business owners were fully up to speed when it came to understanding the concept, with a massive 36% not knowing what Open Banking was at all.
In a nutshell, the technology hands control back to the consumer, which in turn, allows third parties to access their data. This means that it’s now possible to effortlessly accept payments via thousands of banks across the UK and Europe, with near-instant account-to-account transfers and the ability to easily handle refunds.
Here are a few of the advantages offered by Open Banking:
- Direct transfers between banks, allowing clients to pay the way they prefer.
- Higher conversion rates due to fast, seamless payments without manual inputting of card data.
- Higher successful transaction rates compared to credit and debit cards.
- Lower fees compared to typical card transactions.
- Faster settlement compared to cards, with payments often appearing instantly.
- Zero chargebacks, protecting businesses from fraudulent transactions.
Buy Now, Pay Later
Buy Now, Pay Later (BNPL) is rapidly gaining traction with UK consumers, especially in the younger demographics. Despite a certain degree of negative press and fears that the schemes can fuel unmanageable debt, BNPL is set to become one of the fastest growing trends in 2022 — despite the more stringent government regulation planned for 2023.
As to the mechanics of BNPL, this payment is relatively straightforward: Buy Now, Pay Later allows customers to set up a flexible, short-term financing plan with the total purchase cost going straight to the retailer and the instalments collected by the BNPL provider.
For businesses, BNPL schemes offer increased conversion rates and the possibility of a higher spend per customer, especially among the younger demographic, with up to 40% of 25-34-year-olds admitting they would be more likely to initiate a purchase if the payment scheme was available.
However, it’s important to note that tension is growing around BNPL schemes, especially in a climate where inflation is partly responsible for fueling their growth. As regulation looks set to tighten around Buy Now, Pay Later, it’s increasingly important to choose a reliable payment provider who offers credit history checks, as well as educating customers on the pros and cons.
QR code payments have been around for decades, but as smartphone penetration reaches ever-greater heights, the growth of their use is set to continue.
So why should business users consider using QR codes to launch a product page or even take a payment? In short, QR codes allow businesses to open new marketing and sales channels and offer customers a seamless, single-tap payment experience that works amazingly well for both offline and on-screen applications.
Brands may find QR codes valuable sales tools to add to print advertisements or even at the end of video ads, whereas offline establishments can use them to enable shoppers to place orders or pay for items without waiting for a member of staff (food, travel and entertainment establishments being prominent examples).
However you decide to implement QR codes into your marketing or payment flow, you can be sure of a mostly positive reception:
According to one survey, 70% of UK consumers would be happy to see QR code use become more widespread in the future, with 69% open to using them for payment purposes.
The last payment trend is a less positive development: The rise of online fraud. ECOMMPAY’s survey data revealed that a staggering 30% of online business owners had seen an increase in fraudulent activity at their checkouts, with 37% of consumers having been scammed whilst shopping online.
Tackling online fraud is a complex topic, but to slow the growth of this trend, business owners need to have reliable and effective risk control systems in place to weed out would-be scammers, whilst offering consumers a safe, transparent payment experience that they can trust.