The digital payments landscape is transforming rapidly, so it’s essential for retail businesses to keep up with the changes to remain competitive. This entails not only monitoring emerging trends but also taking time to analyze past strategies. And what better time to do it than the end of the year?
This overview will take you through the digital payments highlights of 2022 and uncover the key aspects you need to focus on to stay on top of the game in the upcoming year.
In addition to learning the importance of short and long-term plans, retailers also had to adhere to the following payment trends:
In 2022, these elements have become so widespread that many consumers now expect them to be present in their online shopping experience rather than perceiving them as value-added features.
All in all, the outgoing year has shown that retail businesses that are not leveraging payments as a revenue-accelerating factor and are not keeping up with industry trends risk failing to maximize their potential in the future.
Checking in with the insights gained over the past year is essential to build a successful business strategy. However, it is equally as important for retailers to have an idea of what to expect in the foreseeable future.
Here are the four main digital payment trends that are forecast to be shaping the retail industry in 2023:
1. Ongoing Expansion of Embedded Finance
Embedded finance has gained a lot of traction in 2022 and will continue its upward trend in the upcoming year. This comes as no surprise, as 88% of businesses that have already implemented it report higher engagement rates while 85% state that it works wonders for customer acquisition.
In 2023, embedded payments are predicted to become more widely available across various customer touchpoints. Some examples of its use cases that consumers will see more often include retailers offering branded credit cards and travel operators providing insurance services.
2. Optimization of Mobile Purchases With One-Click Payments
M-commerce accounts for 73% of the total e-commerce market. What’s more, this figure is set to continue growing, as 4.4 billion consumers globally will shop using a digital wallet already by 2023. However, despite their popularity, mobile purchases suffer an extremely high abandonment rate of nearly 86%.
Due to this, more and more retailers are starting to optimize their payment flow by enabling one-click payments for mobile shoppers that place recurring orders at their stores. Although this adjustment might seem minor at first glance, it has the power to encourage on-the-go shopping, improve consumer retention, and boost revenues, so we are sure to see more of it in 2023.
3. Instant Payments Grabbing the Spotlight
Over the past few years, there has been a growing interest in online bank transfers among consumers and businesses. In 2020, more than 70 billion transactions were conducted using an instant payment system, and experts predict this number to hit 199 billion by 2024.
This means that 2023 will be marked by an increasing share of retailers integrating real-time transfers into their digital payment strategies.
4. Installment Plans from Card Schemes
Recent studies show that 6% of shoppers abandon carts due to a lack of payment options, while 18% do so because of the pricing. When retailers enable installment payment methods, they successfully tackle both of these common issues.
Ever since the COVID-19 outbreak, a lot of attention has been drawn to BNPL services. However, in the upcoming years, the options offered by card schemes like Visa and Mastercard will become more prominent.
This tendency is mainly due to the fact that as major BNPL players such as Klarna and Afterpay are experiencing losses, an increasing number of consumers turn to players that have been on the scene for a longer while and have an excellent reputation.
Thus, retailers that haven’t yet partnered with card scheme installment models, should definitely look into it to achieve exponential gains in revenue.
At the end of the day, retail businesses that adopt an analytical approach to payments, stay attentive to consumer needs and preferences, and focus on maintaining the balance between transaction cost, speed, and security, are sure to keep thriving both in 2023 and beyond.
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