Since 2020, consumer expectations have vastly changed — from the need for frictionless experiences to instant access and digital-first engagements.
And merchants need to keep up.
The evolution of consumer habits is changing the way merchants and financial institutions operate. The primary goal is to not only convert consumer interest into transactions but also be able to retain customers and maximize lifetime value. But as obligatory compliance with anti-COVID regulations takes root, digital payment habits continue to change.
After two years of shifting work habits and increased online shopping, consumers are now more comfortable navigating the world through a digital lens. In fact, consumers are more digitally-oriented than ever before, with 39%shopping daily or weekly on their smartphone, and 23% saying they shop online at least once a day. Smartphones are now also heavily used for payments in both contactless payments and for scanning QR codes to provide information before making a purchase or payment. Payments by cards and mobile contactless cards have become the norm and are becoming increasingly popular, which was in part fueled by an increase in the contactless payment transaction limit. To keep up with the times, companies will need to think about how it accepts and processes payments.
The main thing about customer preferences in 2022.
The COVID-19 pandemic has transformed our lives. It has changed the way we work. It has changed the way we communicate. And it has certainly changed the way we shop and do business. The Visa Back to Business Global Survey — which was conducted among small businesses and consumers in nine different regions of the world — found that almost 70% of consumers say their preferred payment method has changed forever, with curbside checkout and contactless payment methods leading the way. That’s roughly 7 out of 10 consumers who say they have little interest in going back to shopping like they used to. And there is more to this shift than just pandemic precautions. Digital payments give consumers the ability to shop anywhere, anytime, and provide consumer protections such as the ability to challenge fraudulent payments that simply don’t exist in cash.
In short, digital payments provide consumers with an easier, more convenient, and more secure option to get the products and services they need.
Contactless payment options for in-store purchases have also become a convenient and secure way to pay for transactions during the pandemic. In 2019, contactless payments accounted for just 0.25 % of debit card POS transactions. By 2020, this figure has risen to 1.6%. According to 2020 data, about half of Gen Z and Millennial consumers used a digital wallet (compared to 40% and 47% in 2019, respectively. About 31% of Gen Xers used a digital wallet and only 13% of the Baby Boomer Generation.
Cash is in decline
Only 11% of transactions at the point of sale are paid for in cash — which is not surprising given the growing popularity of cashless payment methods. A 2021 study by the Federal Reserve Bank of San Francisco found that 75% of consumers prefer cashless payments. Credit and debit card users also spend more than cash buyers. In fact, the average debit card transaction is 50% larger than the average cash transaction, and businesses can increase revenue by 17% simply by offering cashless payment options. That’s not to mention the savings card transactions as paying with cash costs merchants about 28% more.
Convenience and speed
Users do not want to perform unnecessary actions and prefer speed and convenience. According to Nation Retail Federation, 97% of shoppers abandoned an online order because it was difficult or inconvenient to complete, resulting in an 80 % cart overall abandonment rate. Roughly 83% of shoppers say convenience is more important now than it was five years ago.
QR codes are still popular
About a third of consumers like to use QR codes for payments. Just over 44% of restaurants have started using QR codes for payment. In addition to being contactless, they are also convenient, more environmentally friendly, and allow businesses to make changes on the fly. For digital payments to work for everyone, they need to be reliable, secure, and easy to use.
As consumers and businesses continue to adapt to new shopping habits and ways, the use of digital commerce will become a competitive advantage that will lead to increased sales and consumer confidence. If you’re interested in learning more or want to enable contactless payments for your business, reach out to us here.