Easy Money: The Top Five Payment Trends in 2022
Updated: Jul 17, 2022
You have created a wonderful business. Your customers love your services/products, and you love them right back. It seems like every day you're working as hard and as fast as you possibly can to grow your business and your revenue, but at the end of the month, there's never enough.
For many business owners, making a profit is the last matter of business addressed. In fairness, the day-to-day demands of a customer/client-facing business make it difficult to do much more than keep your head above water - and that's when things are going well!
The good news is that there's an answer for a lot of these challenges you're facing, and many of them are simple fixes you can implement making it EASY for your customers/clients to spend money with you.
The Top Five Payment Trends we're seeing in 2022:
1. Digital Wallets/Frictionless Payments
In 2020, as a result of the global COVID-19 pandemic, online purchases skyrocketed, and for the first year on record, card-not-present transactions surpassed the number of card-present transactions. Not only have our buying habits changed, our payment habits have as well.
Early indications are clearly demonstrating that there is an increase in growth and engagement with a frictionless payments process. A frictionless payment encompasses several modes of transactions including digital wallets, one-click payments, in-app purchases, automatic renewals, contactless payments, and NFCs (near field communications).
Studies and surveys related to the impact of frictionless payments on buyer behavior, in every case we've seen, show a large majority of consumers under 40 years of age have indicated and demonstrated that they will spend more money as well as be more likely to make a purchase if they are able to make a contactless payment. For consumers over 40 years of age, about a third are similarly oriented, and these numbers continue to rise.
2. BNPL or Buy Now, Pay Later Programs
By 2026, BNPL programs are anticipated to reach 25% of all digital purchases, and younger consumers prefer these programs to traditional credit offerings. Furniture companies have been offering installment plans for decades, and in recent years, we've been seeing significant, exponential growth with online retailers leveraging this offering.
As a result, we're likely to see increased regulation, as more digital installment partners expand their reach in this space. For a consumer, seeing the option of smaller payments makes it easier to "say yes to the dress" or leap to whatever purchase they may be considering. At the same time, an opportunity to earn more per transaction through interest provides an additional potential for revenue increase as well.
3. Social Commerce
Just as at the onset of the internet e-commerce transformed purchasing habits on a broad scale, social commerce will change the way we make purchases. By integrating your e-commerce into your social channels, you can gain more customer conversions, ensure greater stickiness and customer/client engagement, and reach people where they are by providing purchase options for all buying habits.
Have you ever made a purchase based on something that showed up in a social feed? We have. That's social commerce. It brings the store or the service to the consumer directly, allowing you to leverage AI, ML, and other targeted marketing strategies to make each dollar you spend on digital marketing and advertising work for so much harder for you.
4. Authorization Rate Optimization
Your authorization rate is the rate of your transactions that are approved versus declined. With a greater shift to online purchases, there's a greater increase in declined transactions as well as fraudulent transactions.
According to First Data's Head of Global Digital Commerce, Nandan Sheth, "Nearly $15 billion in ecommerce revenue is missed annually, because merchants haven’t had a reliable authorization optimization strategy." That's a lot of revenue to leave on the table. We'd much rather it be in your bank account!
By implementing an authorization rate optimization strategy, you can reduce your declines, increase your sales, and keep your data more secure.
5. Heightened Focus on Security
With digital purchases becoming the norm, retailers and B2C businesses especially will come under increased cybersecurity attacks. In the rush to provide additional access points for your customers/clients to make a purchase, be mindful of the apps and access points you partner with and utilize. This will be one of your first and greatest lines of defense. All solutions are not created equally.
Not only do you need to prevent threats against your own system and finances, it is also critical to protect the information of your buyers. A loss of their trust and confidence will cost far more than the investment you can make proactively in keeping your payment access points secure.
We have already seen a spike in ransomware attacks as well as phishing schemes, and they will continue to increase. A best practice would be to hire an audit of your cyber security to ensure you proactively mitigate all potential risks. At a minimum, familiarize yourself with the regulations and resources available to combat cybersecurity, and remain vigilant at every point.
Watch for future blog posts exploring these topics in greater detail. Follow us on social and join our mailing list to keep up to date on how to get the most out of your payments program.
100 Command, an LMC company, is a unique and innovative provider of merchant services and credit card processing solutions. We are a proud member of the 100 Group, and as always, your wish is our command.