The way consumers shop –– and pay –– has changed drastically over the last few years. Electronic payments are taking center stage as buyers seek quick, convenient modes of purchase.
Read along as we explore the seven most popular trends in electronic payments for 2024 and how you can take advantage of these new consumer buying behaviors.
Increased Globalization of Sales
E-commerce has opened the floodgates of limitless possibilities for retailers and brands. Just a few years ago, sellers were limited to geographical location. Today, cross-border e-commerce opportunities have made a global market possible.
According to a report by BlueSnap, the projected value of all cross-border payments will hit $250 trillion by 2027. That’s an anticipated growth of $100 trillion from 2017.
The jump in online and cross-border sales has ignited a shift from paper currency to digital payments. The study above predicts that 95 percent of purchases will be online by 2040.
The electronic payment industry will grow as consumers change their shopping behaviors and choose online retailers, distributors, and merchants. Retailers recognize that they’re operating in an omnichannel market. As such, they must provide electronic payment options to their shoppers.
Optimizing Payments for Best ROI
Many businesses implemented online payment options because of the pandemic. But more than two years in, consumers have maintained their shift to online shopping habits. And retailers are discovering that quick-fix, short-term electronic payment solutions aren’t cost-effective.
Now that it’s clear that e-commerce is quickly becoming the preferred and permanent method of shopping, businesses will work to optimize authorization rates and reduce technical debt wherever possible.
For example, electronic payments collected internationally are often subject to transaction fees. Global payment authorizations must be matched with the customer’s country and the processing country, the issuing bank with the acquiring bank, and the issuing currency to the acquiring currency. These matches can add up, and if businesses aren’t careful, they’ll inadvertently shoulder the burden of added fees.
Optimizing electronic payments through the appropriate processing channels and providers allows businesses to bring in the highest revenue possible without the drain of cross-border processing fees.
Acceleration of Buy Now, Pay Later Use
Buy Now, Pay Later services are wildly popular –– and for a good reason. Shoppers utilize BNPL to bring home big-ticket items without jeopardizing planned monthly budgets or raising credit card debt. When a business or retailer offers POS financing options, they provide realistic purchase solutions for their customers that help them gain a competitive advantage in their markets.
Installment loans allow shoppers to bring home the goods they want same-day. It also provides greater purchasing power. BNPL services empower consumers to increase their cart value –– choosing additions or upgrades –– by committing to just a few extra dollars per monthly payment.
BNPL provides shoppers with electronic payment options that make a high-value purchase possible. However, recently BNPL has come under fire as the risk of fraud rises.
Adoption of Mobile Wallets
The pandemic ushered in the present era of contactless payments done via mobile phones. For years, Apple has pushed the idea of a mobile wallet. Thanks to the desire for electronic payment brought about by pandemic safety measures, the widespread use of mobile wallets has occurred.
A report from eMarketer found that in-store mobile payment grew by 29 percent over 2020. The numbers project that more than half of smartphone users will adopt mobile payment methods by 2025.
Consumers already utilize their phones for both active and passive shopping, so it’s no surprise that using their mobile wallets is the reasonable next step. The U.S. lagged in mobile wallet adoption primarily due to retailers’ slow roll-out of payment processing systems. However, the pandemic spurred on mobile payment usage, which is on track to surpass cash spending very soon.
Electronic Payment Gaining Popularity Across Industries
Electronic and mobile payments are now mainstays in many industries: restaurants, grocery stores, and retailers. This year, you can expect emerging payment options to gain popularity across other industries that initially have been slow to adopt.
If the last two years have shown us anything regarding electronic payment, it’s quick and convenient, and consumers love it. Researchers expect that electronic payment adoption will be seamless among other industries not mentioned above. Buyer journeys within the travel, insurance, telecommunications, and grocery delivery markets will soon be marked by electronic payment.
Electronic payment is simple for the consumer and the retailer, allowing for a complete and accurate digital paper trail for every transaction.
Emphasis on Cybersecurity
Emerging payment options –– which occur electronically –– are no longer the exception, but they’ve rapidly become the norm. In a survey conducted by Mastercard, ninety percent of consumers tried an emerging payment type in the last year.
With so many consumers turning to electronic payment, threats over cyber security have become a growing concern. In the same Mastercard survey, one in four individuals was a victim of fraud, and the rate of cybercrime rose nearly 50 percent.
Electronic payments are the new way of life for most retailers and shoppers. Payment is more straightforward this way, but there’s also a new threat of cybercrime that has never been an issue before. Businesses must ensure their customers’ data is secure with their electronic payment processors. Only then do individuals feel confident making purchases with those retailers.
The rise of electronic payment has ushered in a new awareness and emphasis on cyber safety and security.
Higher Accountability for BNPL Services
As mentioned above, BNPL solutions have transformed consumer shopping for big-ticket items. But some BNPL services are coming under fire.
“Buy Now, Pay Later” companies provide installment loans at the point of sale, allowing the consumer to repay the loan over time. However, some firms do not adequately vet shoppers before giving an approval notice. Without thorough credit checks, resulting in missed payments and impossibly high fees for the consumer. What began as a simple payment solution becomes a nightmare when the financing firm provides loans to unqualified applicants.
This year has seen a push for higher accountability for consumer financing firms. Electronic installment loans can provide incredible opportunities for consumers –– as well as the businesses that offer third-party financing. By maintaining a high standard for consumer financing firms, shoppers benefit from safeguards and are protected from avoidable debts and fees.
Conclusion
Electronic payment options have gained popularity quickly across industries and markets. Understanding trends in electronic payments allows businesses to position themselves to meet consumer needs and capitalize on these emerging payment options.