The frenzy of Christmas and Halloween marketing is already in full swing, with date reveals of Christmas market returns to pumpkin patch locations, retailers are gearing up to execute their strategies as the Golden Quarter approaches. This year, however, retailers have another string to their bow, another key message to land, and another way to snag a customer: ‘Buy Now, Pay Later’ (BNPL). Lucian Daia, CTO at Zitec, tells us more.
Business is booming in the BNPL game, with the market quadrupling in size since 2020. Now expected to hit a record level of £30bn in 2024, the payment option is fast becoming a staple in the digital wallets of millions for the major retail milestones of the year.
Halloween is the first major retail moment in the run-up to the festive season as Britain settles back into its winter routine. This year, however, the rise of BNPL points to consumer behaviour that’s fast evolving and anything but predictable.
But BNPL is just one piece of the puzzle. The Financial Conduct Authority (FCA) estimates that it’s likely more than half of UK adults are now using digital wallets. Furthermore, it’s expected to comprise half of all e-commerce spend (£203.5 billion) by 2027. Instant payments are also a growing part of the payment mix, with the innovation expected to represent 10.8% of overall payments by 2028. Retailers must navigate a wave of new technologies that are redefining check-out and payment processes.
Allowing new payment innovations
Retailers sink or swim based on the customer experience they deliver. From the rise of omnichannel strategies to speedy same-day deliveries, click and collect options, and attention-grabbing immersive experiences, there’s no shortage of initiatives to drum up customer loyalty. Now, payment solutions are part of the equation. Embedded finance is front and centre of this change, integrating financial services (like loans, insurance, debit cards etc.) into businesses that don’t usually handle finance.
Through Application Programming Interfaces (APIs), with a ‘Plug and Play’ type functionality, retailers can offer seamless payment solutions like BNPL or digital wallets directly on their systems. This integration keeps shoppers on the site, reduces the tiresome friction of third-party pop-up systems, and offers features like zero-interest point-of-sale loans or app-based rewards. Of course, it allows them to check-out as easily and as quickly as possible too.
Bye-bye Velcro
Bye-bye Velcro, hello snazzy digital wallet that holds payment cards and bank account details all in one place. Digital wallets have become essential components of modern payments and offer a convenient and less risky way for shoppers to buy their items.
Gone are the days of searching for physical cards under stashes of files or keying in repetitive digits on a keyboard. Digital wallets also offer a reduced risk of fraud because of its advanced encryption and tokenisation technologies. Beyond security, digital wallets provide retailers with valuable consumer insights.
For instance, if a customer buys a Halloween costume and decorations, retailers can use this data to target them with personalised offers, such as a discount on themed candy bowls or matching spooky accessories. This level of personalisation is make or break for retailers today, with customers setting a higher bar than ever for personalised content, offers and experiences that meet their needs and interests.
Speeding up cash flow
Another innovation that retailers need to have on their radar is instant payments. Unlike traditional systems that mean transactions can take hours or even days to complete, instant payments ensure that funds are transferred within seconds.
For retailers, especially those who are operating on thin margins or managing high transaction volumes, the speed at which funds are made available can be make or break. The quick availability of cash means retailers can better manage their finances, buy new stock and address operational costs at pace.
Contrary to common belief, Brits don’t love queuing; in fact, they hate it. Faster payment options in-store have been pivotal in giving customers the speedy experience they demand so they can get on with their day. Quick transactions not only improve cash flow and reduce delays but enhance the customer experience, making it ideal for those who’ve left their shopping too late, or forgotten an item on their list. As a result, customers walk away with the right impression.
Ditch the lines and pay with a tap
Retailers should be equipped with mobile point-of-sale (mPOS) systems that allow customers to make payments through their smartphones or other mobile devices, cutting down on wait times and speeding up the checkout process.
Retailers also stand to benefit from digital receipts, detailed sales reports, and real-time inventory management from having this system in place. This efficient processing not only improves cash flow but also provides valuable data for managing stock levels and customer preferences.
Beyond the Golden-Quarter
As retailers prepare for the Golden Quarter and beyond, understanding and leveraging fintech payment innovations can seriously pay dividends. By adopting technologies such as embedded finance, digital wallets, instant payments, and mobile payments, retailers can improve their operational efficiency, enhance customer experiences, and position themselves for future growth in a digital-first world.
Indeed, in recent years marked by economic shocks, huge tech advancements – especially with AI – and increasingly unpredictable consumer behaviour, it is crucial for retailers to stay ahead of payment options. Providing consumers with flexibility, choices, and ultimately, ways to manage their outgoings and spread the cost will be key. Retailers will need to take a view on which innovations align best with the changing expectations of their customers and who they partner with to help them remain competitive.