Last month, FIS released a study looking at shopping preferences among UK consumers. It has a particular focus on embedded finance technologies and social commerce.
For the uninitiated, embedded finance is a term that describes financial products that are integrated into a non-financial company’s platform. For example, ride-sharing company Uber allows drivers to acquire the Uber Pro Card, a debit Mastercard. This is done through their Driver app. And Starbucks allows users to checkout in-store via a QR code and generate loyalty points through its app. Some other examples of embedded financial tools are in consumer lending. This includes Buy Now, Pay Later (BNPL), loyalty programs, and insurance offerings.
These financial tools are also becoming increasingly integrated into social media platforms as social commerce continues to be a popular eCommerce option among younger consumers. According to FIS, 78% of Gen Z and 70% of millennials said they were likely to make a purchase directly through a social media platform within the next year. Social media apps have developed social commerce features through product tagging, live streaming shows, and merchant storefront integrations. Nearly, all of the major social media apps enable purchases directly within their platform, but in-app checkout is still not widely available to users in the UK. Notably, Facebook and Instagram only allow in-app checkout in the U.S.
The study found that purchasing via social media had an impact on younger consumer purchase behavior. Both Gen Z (27%) and millennial (24%) shoppers reported feelings of more frequent and unplanned spending when making purchases on social media. This is certainly better for merchants, but maybe not so much for household budgets which are tightening as UK consumers battle high inflation and the cost-of-living crisis.
The research also covers other emerging topics in embedded payments such as transacting in the Metaverse, embedded loyalty, and checkout-free grocery shopping. Interest in these payment experiences primarily from younger generations reassures this segment’s expectations for fast, seamless, and convenient payment experiences.
Overview by Ben Danner, Research Analyst at Mercator Advisory Group.