The payments industry has evolved rapidly in recent years as it responds to the growing consumer demand for greater choice and flexibility when paying for goods.
With new technologies constantly on the horizon, competition to launch the next game changing solution is hot, but some innovations stand out as primed to drive the payments agenda in 2022.
Buy Now Pay Later: Giving credit where it’s due
The already booming Buy Now Pay Later (BNPL) model enjoyed huge growth over the course of the pandemic as more and more people turned to online shopping to satiate their spending habits.
The often interest-free credit option, which allows for payments to be delayed or spread out in instalments, has been welcomed with open arms, particularly by younger shoppers who may prefer BNPL to traditional credit options.
Where individuals may have otherwise cleared their basket, BNPL providers have stepped in to make that purchase possible. And, for retailers, the proven ability of FinTech’s like Klarna, Clearpay and Laybuy to boost average basket value (ABV) has made the integration of these solutions something of a no brainer, especially when it’s the lender that shoulders the credit risk.
But these platforms have not emerged without controversy. The risk with BNPL models is that, without the deterrent of interest repayments associated with traditional credit cards, and because credit has become so easy to access, shoppers can be tempted to spend beyond their means.
As talk of tighter regulation of this still relatively nascent model climbs the agenda across Europe, BNPL providers are evolving their offering so that their bottom line is not prioritised over the financial wellbeing of consumers.
Big names like Klarna are introducing more rigorous affordability assessments, taking a closer look at customer credit and repayments history to protect shoppers from unmanageable debt. They’ve also recently launched an option to ‘pay now’ for those who want to pay the full amount immediately, evolving their solution and giving both customers and retailers greater flexibility at the point of purchase.
Looking ahead to 2022, it remains to be seen exactly how the effect of new regulation will change the offering of providers. But as more and more fintechs, big tech firms, card providers and online banks enter the game, it’s a safe to say that Buy Now, Pay Later is here to stay.
Buy More and Pay Less with the latest in loyalty technology
Loyalty schemes are currently undergoing something of an evolution as previously friction-filled traditional affiliate marketing processes are replaced by emerging smart marketing and payment solutions that offer a win-win-win for members, merchants, and loyalty programmes alike.
As with any shopping experience, people today expect loyalty programmes and affiliated retailers to offer a seamless and user-friendly experience that demonstrates real understanding of them, as a customer. Where traditional affiliate marketing now struggles to deliver this, “MarPay” technology has emerged to take up the mantle.
By connecting programme members with some of the world’s leading online retailers and giving customers the chance to earn or burn loyalty points instantly when paying online, MarPay solutions give members an incentive to spend – whether they want to tap into their points to buy more and pay less, or keep on collecting points.
And as competition for customers hots up online and in-store, we expect to see more loyalty programmes harnessing this tech to keep members engaged with a great points payment and shopping solution, while working with retailers to maximise spend at checkout.
Contactless will continue to lead the cashless revolution
Contactless cards have been around for some years, and today most people are more than happy to leave the house cashless, safe in the knowledge that we will be able to “tap to pay” wherever they go.
Indeed, even five years ago, you could be forgiven for thinking that contactless payment options were just a handy alternative if you were caught short or in a hurry. But today, there are fewer cashpoints on our streets than ever before and now the shift to a cashless society is well underway.
The rise of mobile wallets has supercharged this. Carrying the same convenience as a contactless card, mobile wallets like Apple Pay or Google Pay – whether stored on a phone or a watch – allow people to make purchases even without their cards.
When it comes to making everyday payments, people want and expect convenience, choice, and security. By eliminating the need to carry cash, contactless technology delivers across all fronts and the trend shows no signs of slowing down in 2022.
In fact, across Europe, the cautionary card limits introduced in the infancy of the contactless revolution are being pushed up, allowing people to spend even more without entering their pin. In 2020, Mastercard raised the contactless limit to 50 euros in twenty-nine countries and in October 2021, the UK announced the national rollout of a new £100 spending limit.
And as the mobile banking industry continues its rapid expansion, new applications for contactless tech like the proliferation of QR codes and the rise of cashier-less shops will continue to emerge and remap the way we pay.
Cash makes way for flexible payments
In today’s payments ecosystem, change comes around fast. And, as consumer expectations shift, new opportunities for innovation will keep on emerging. But if one thing is clear, it’s that flexibility and choice are central characteristics that unite all these payment trends – and these will drive further developments in 2022. From convenient credit solutions to the latest in loyalty tech, we expect to see the payments industry continue to evolve and meet the needs of all consumers.
