Community banks and credit unions take pride in their ability to provide a high level of service beyond the standard practices of larger financial institutions. As many retailers (70%) report they are prioritizing modern ways of shopping to help build customer loyalty and spending, these financial institutions need to prioritize providing cutting-edge merchant services capabilities.
Whether it’s uninterrupted shopping cart access across platforms or improved self-service capabilities that allow customers to create the exact payment experience of their choosing, these five payment trends represent the latest merchant services expectations.
1. From Card To Account
It’s likely been a while since many of us have paid using a checkbook, and it seems physical credit card usage is following the same trend. Driving this shift is consumers’ desire to use convenient (84%), quick (49%), and easy-to-understand (37%) payment methods at the time of purchase.
Use of mobile wallet for payment nearly doubled in the past few years, and the number of people willing to use their mobile wallet to pay bills has spiked from 31% in 2019 to 49% in 2022.
While some retailers offer dedicated mobile apps to meet consumers’ mobile payment and shopping preferences, others simply rely on a QR code that will link to a payment platform when scanned by a customer. More than 1 billion people currently use QR code payment options, which is expected to reach more than 2.2 billion by 2025.
2. Frictionless Omnichannel Commerce
Retailers that expect to grow their business know they’ll need to embrace omnichannel commerce — a modern way of shopping that blurs the line between traditional person-to-person payment transactions and methods such as mobile checkout, text invoicing, QR codes, or even augmented or virtual reality (AR/VR).
To aid the omnichannel experience, more than one-third of retailers (34%) would like to provide more payment options, such as buy now, pay later (BNPL). While nearly all consumers are familiar with BNPL financing (94%), almost half (46%) have yet to use the method. Rather than requiring customers to access a different app or service to take advantage of this option, retailers who integrate BNPL into the payment journey are more likely to have customers take advantage of it.
Cloud-hosted point-of-sale (POS) systems also ensure merchants can provide the same or better omnichannel experience as their competitors. By using a cloud-hosted POS system, retailers make it possible for customers to pay where and when they want.
3. Better Self-Service Infrastructure
Empowered to manage their own payment experiences, consumers appreciate more choices and personalization options that create a streamlined customer payment journey.
While you’ll be hard-pressed to find a retailer that allows split credit card payments online, retailers are making it easier for customers to store and access multiple payment methods in their online transactions. For example, by storing several credit card numbers within a company’s payment system so a customer can pay for their pizza delivery with their airline miles credit card one week and use their cash-back credit card the next.
Additionally, blockchain technology continues to advance, enabling a growing number of secure and quick transactions. While it still has challenges to overcome, blockchain technology stands to improve customer self-service capabilities. For example, its ability to more efficiently secure customer data could mean less need to verify a customer’s identity repeatedly.
Businesses that incorporate self-service infrastructure also see significant benefits, from saving on costs to freeing up employees’ time. For example, customer care leaders prioritizing self-service report a 65% decrease in call volume, indicating improved customer satisfaction and understanding.
4. Seamless Integrations
To create the type of friction-free payment journey customers want, seamless omnichannel integrations are essential. For instance, as a default, customers expect account payment links between their credit cards and the businesses they frequent — brick-and-mortar and online — so they can automatically build rewards, earn points, and gain status.
A loyalty program integrated into the payment system removes that burden for customers. A cloud-based POS system can also analyze individual customer purchase behavior to determine a motivating reward. For example, customers who always purchase a donut with their coffee will likely be happier with a free donut coupon than free oatmeal.
As more retailers offer the ability to pay with mobile checkout and QR codes, people also expect to be able to use their digital wallets for other functions. The percentage of consumers using digital wallets for non-payment tasks, such as concert and movie tickets, reached 39.2% in 2022, a 14% hike compared to 2021. Embracing the non-payment element of digital wallets allows companies to deepen customer loyalty, making them more likely to spend more with the brand.
5. Improved AI Functionality
With artificial intelligence (AI), retailers have consumer insights at their fingertips, which makes predicting customer actions and preferences easier. By using AI-based tools, organizations are making data-directed efforts to improve the customer experience and build loyalty.
Most fraud happens when an action is taken outside a customer’s typical pattern of spending or purchasing habits. By using AI to continuously monitor for changes in patterns, detection tools can stop fraud during the payments process and trigger a notification so the customer can verify the validity of unusual activity for themselves.
As customer payment expectations continue to shift, retailers will want to work with financial institutions whose merchant services can meet their emerging needs. By partnering with Elan, organizations have access to Elavon, a leading merchant services provider with extensive experience helping community banks and credit unions offer the payment tools that small businesses need to increase sales, improve efficiency, and build customer loyalty.
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