Are you wondering what the future of payments will look like? Then you have come to the right place. This blog post is based on the Nets Payment Outlook report, which invites you to learn more about the exciting world of payments, and what the future has in store for merchants and consumers.
Which are the most important payment themes for the future?
In the Nets Payment Outlook report of 2022, we have formulated the following five themes:
I, the consumer
Pay as I please
Beyond the point of sale
Data, the enabler
Platforms for success
These themes are inter-related and involve both the customer- and the merchant side, displaying how businesses are reacting to changed customer behaviour and the increased data focus.
Let´s dig deeper into each five topics and what merchant implications each of them has:
1. I, the consumer: the empowered and more conscious consumers
Consumers are exercising more power towards merchants and express more elaborate expectations for them to live up to. Today’s consumers expect merchants to cater for their ever-changing-individual needs, at any time and in every way preferred by the individual consumer.
They also push harder for sustainability and for brands to act ‘responsibly’ in a transparent way- demanding qualified and quantified proof of their proclaimed efforts. Consumers continue to value climate actions and circular economy, which puts pressure on merchants to communicate circularity as well as to improve reusability of their products. The rise of social media usage has enabled consumers to raise their voices about immoral actions and decisions businesses make.
Increased focus on happiness and wellbeing
Another trend is that consumers are becoming increasingly self-aware of their needs and wellbeing. They are more and more trying to fulfil their need for joy to cope with today’s fast-paced world. A combination of interactions on social media and in the real world is used to seek opportunities for joyful experiences.
New opportunities for home-based offerings
Even after the pandemic, people are expected to spend more time at home, especially those that have flexible work arrangements. This offers opportunities to rethink the way in which products and services are delivered to consumers. This trend implies that we are moving towards an “anything delivered” reality, putting pressure on merchants’ delivery options as consumers increasingly search for on-demand deliveries. In addition, physical service providers, such as hairdressers and masseuses, have also started to offer in-home treatments to consumers.
How can you as a merchant take advantage of the themes within “I, the customer”:
‘Walk the talk!” Be transparent and genuine in your sustainability initiatives
Cater for the consumers’ needs for joy through positive messages that empower them, let them have fun and make them feel better
Seize the opportunity to rethink the design of products and services delivered and consumed at home in order to create customer experiences that stands out
2. Pay as I please: the consumer demand for seamless payments
Consumers see payments as a commodity – they just expect it to work. Therefore, the easier and more convenient a payment option is, the more attractive it will be for consumers. Minimizing friction thereby becomes the main challenge.
Apps are becoming more common
In previous years, new ways of exchanging money have emerged, and businesses are moving towards integrating smart loyalty programmes that can be used as an alternative payment form. On top of this, around Europe more merchants are introducing apps with integrated payment services, which helps them gain valuable insights into customer behaviour and needs, while providing customers with personalized offers and a streamlined shopping experience.
Consumers demand flexible payments and are showing a growing interest in the Buy-Now-Pay-Later solution, allowing them to touch and feel the products they buy without carrying the liquidity burden of those they return.
What else?
Mobile payments are taking over along with the usage of on-device biometric identification, allowing a more seamless experience. For in-store transactions, multi-functional smart devices are becoming more popular, that integrate the merchant-and consumer-facing devices into one and simplify the interaction between them. These devices also allow for the terminal to be placed anywhere in the store, removing the customer friction of having to stand in line at the cash register.
How can you as a merchant use the trend “Pay as I please”:
As the available pool of payment options expands, you need to accommodate your customers in their payment choice.
It is important to get to know your customers and enable their preferred payment experiences.
Seek the opportunity to increase interactions with your customers, expand control of the complete customer journey, and offer personalization - by using merchant apps.
3. Beyond the point of sale: the digital core of retail in the future
Interactions between merchants and consumers are becoming more dynamic and personal, and the line between the various interaction channels is becoming more and more blurry. Consumers expect merchants to provide a seamless and coherent experience across all channels. Increased pressure is put on the in-store experience to live up to the advantages of digital channels, which offers possibilities of introducing digital spaces in the physical stores.
75 % of the total European population uses social media
Social media offers the potential of reaching and interacting with customers, as well as the option of integrating products directly on the platform (such as Instagram) which creates an even more integrated shopping experience. By integrating the web shop on Instagram, you allow for one-click shopping, which diminishes the risk of customers leaving the purchase flow.
80 % of consumers think the shopping experience is as important as the product
There is no doubt that the retail experience of tomorrow will revolve around a digital core, meaning that physical stores need to develop into something more than just a sales channel. The focus should be on creating an extraordinary customer experience, designed to accommodate the needs of each individual customer. By offering a unique experience, it is possible for merchants to create deeper bonds with their customers.
How can you as a merchant take advantage of the trend “Beyond the point of sale”:
Focus on providing a seamless and coherent experience across all interaction channels
Integrate online channels, human interaction, and products in physical spaces to be able to offer exceptionally personalized shopping experiences
Explore and understand the dynamics of social media to be able to exploit the full potential of interacting and creating deeper bonds with consumers
4. Data, the enabler:
It is critical for all businesses to be able to utilize data since it is a key enabler of everything digital. Data is paramount if you want to be able to offer the personalized and seamless experiences we laid out in the previous themes. Also, many businesses rely on customer data to develop new offerings and services, improve customer experiences, as well as to optimize internal processes and capabilities.
Be clear about why you are asking for consumer data
Consumers are increasingly demanding a clear benefit for sharing data, expecting to be compensated for granting access to it. For this reason, it is important that businesses can provide a clear advantage as well as to build a foundation of trust, transparency, and security for consumers to be willing to share their data. Furthermore, investments in cybersecurity and risk management systems are expected to grow, to accommodate for consumers’ concerns for data security.
What does the ‘Data, the enabler’ trend imply for you as a merchant?
Great customer value can be achieved by using the data to personalize offerings, and to improve service and customer experiences
Ensure transparency by clearly stating why specific personal data is collected
Focus on data security: protect the data you have collected at all costs
5. Platforms for success:
Looking forward, there is no doubt that the competitive landscape will be under a substantial transformation as many industries are experiencing disruptions in business models, value propositions and data strategies. To make an impact in this dynamic, competitive landscape, businesses must adopt a customer-first mindset. Customer loyalty today is closely linked to the ability of providing seamless and personalized experiences. Additionally, businesses can differentiate themselves through their business models. In recent years, there has been an increase in businesses with subscription-based offerings, and this development is expected to continue.
One way of addressing consumer expectations is by increasing business collaborations across the competitive landscape, using strategic partnerships with other firms that together can improve services and products while shortening the time to market.
That’s not all…
The platform economy is still on the rise, where platform businesses attempt to become go-to facilitators and fulfil as many needs as possible. Open platforms can in many industries cultivate innovation and value creation, as it enables improvements in cross-business collaborations. Everyone is to gain from this trend- especially the consumers who will benefit from highly sophisticated solutions at competitive prices.
How can you as a merchant use the trend “Platforms for success”:
Implement a customer-first mindset from the start of the product development process
Use open platforms for collaboration to increase innovation and customer value
Seize the opportunity to expand the core business through strategic partnerships
Summing up on Payments Outlook 2022
To sum it all up, the Nets Payments Outlook report 2022 highlights how consumers are becoming increasingly aware of the power they possess and expect to be able to choose their preferred payment form. For merchants, it is key to enable all payment forms relevant to the consumer to sustain friction-less payment experiences. Furthermore, the entire customer journey will move beyond the point of sale, and become ‘something more’, as consumers wish to experience the advantages of online shopping in-store. This transformation is enabled by data. Accepting that data is a key enabler companies make huge investments to be able to collect and utilize it properly. Finally, customers are turning to platforms that bundle services and improve convenience, and the platform strategy offers opportunities for businesses to collaborate with other businesses to improve innovation of products and services.