Recent research by checkout.com reveals that trends in current retail-oriented payment usage are highlighting increasing willingness to add additional technologies to augment otherwise stable use of traditional retail payment methods, specifically credit and debit cards. Kevin Woodward highlights key findings in Digital Transactions:
“Digital payments are growing, but credit and debit cards remain the most popular option—for now. Checkout.com’s report found that 79% of U.S. consumers plan to use a credit or debit card in the next 12 months.”
These traditional payment methods provide consumers with comfort and security of both policies and processes that create a foundation established through decades of acceptance. Even so, individuals are willing to try new payment methods, especially digital payment options which indicate growing confidence in alternatives to the simple card transactions:
“More consumers, however, seem interested in using a new payment method, with 42% of those who had not used one in the past 12 months indicating they would been keen to do so in the next 12 months.”
All entities in the transaction, from the buyer to the merchant, need to understand that utilization of digital wallets provides a different venue for the payment rather than a fully different payment method. Taking aside peer-to-peer payments, the majority of digital transactions will still be processed through traditional card rails.
Interestingly, the report highlights a lack of broad based enthusiasm for Buy Now Pay Later (BNPL) programs, with 66% or those surveyed indicating they had not used BNPL providers and only 9% using one regularly. Adding to the recent Consumer Financial Protection Bureau study, this may lead to increased regulation and may slow continued BNPL provider expansion. The combination of less than expected market opportunity and upcoming regulatory changes will not halt BNPL, especially as economic conditions push consumers to delay or defray costs. As previous Mercator research highlights, merchants can hedge against these concerns by assessing how they select BNPL providers to ensure a robust offering that complements other offers including credit.
The checkout.com report may appear sobering in the apparent stagnation of payment choices, however changes will continue and the reality is traditional payments will continue to be leaders, but increasingly improved with new technologies and options ranging from better use of mobile wallets, to more efficient use of installment options such as BNPL.
Overview by Jordan Hirschfield, Director of the Prepaid Advisory Service at Mercator Advisory Group.
