The days of handing over cash at a counter are becoming scarce, as the ways we can pay multiply at pace. From contactless payments, paying ‘later’ or via instalments online, or even making money on transactions, innovation is at a constant, and so is competition for consumer spend. Meanwhile, the fast-evolving payments industry must also keep up with consumers’ rising expectations for choice, value, and flexibility.
With the exciting world of payments set to innovate and evolve further in 2022, Dominic Hofer, CEO and Founder at Loylogic and Pointspay, loyalty and payments platforms, looks at three trends that are leading the charge: buy now pay later, loyalty-points based MarPay technology, and cashback payments.
Buy Now, Pay Later and the global takeover
The trend that people can’t stop talking about, the ‘buy now, pay later’ (BNPL) model has earned its place in the mainstream, with the likes of Snoop Dogg appearing in Klarna adverts and retailers such as ASOS and JD Sports offering at least four different BNPL schemes at checkout.
It’s easy to see why BNPL has soared in popularity, allowing consumers to make purchases instantly and easily, and then spread out or delay payments, often with no interest. Evolved from long-standing credit models, BNPL is arguably one of the most revolutionary innovations in the payments world in recent years, and it’s made its mark on the checkout experience.
Described by CNBC as a $100 billion industry and accounting for 2.1% of global e-commerce transactions, Buy Now Pay Later is here to stay and it will continue to grow in 2022. However, the model is not without its challenges, and as rumours and threats of greater regulation spread across the UK and Europe, protecting customers from debt is at the forefront of the conversation. It’s clear the BNPL industry will need to evolve and innovate to ensure it is protecting consumers and its own survival.
Looking ahead, while compliance with potential new regulation may see BNPL providers alter their offerings slightly, we are sure to see more and more card providers, fintech firms, and online banks getting involved in this phenomenon.
Buy more, pay less with loyalty points
Loyalty schemes have come a long way from customers receiving token rewards in exchange for hard-earned points. Indeed, with customer loyalty never more difficult to retain, and valuable to hold on to – brands are looking to increasingly innovative loyalty solutions that offer a win-win-win for members, merchants, and loyalty programmes.
Today the likes of emerging “MarPay” technology are building and improving on the legacy of affiliate programmes – connecting merchants with loyalty programme members looking to maximise their points at checkout. This cutting-edge payments technology allows members to “buy more, pay less” – by spending and earning loyalty points instantly at checkout and getting more for their loyalty – all the while driving engagement with programmes. This model is also favourable for merchants, having been proven to boost average basket value.
These days people want to get the most from their spend, and their brand loyalty. With this in mind, we expect more and more brands and merchants to adopt MarPay technology that is designed to make consumers’ money go further, and loyalty grow stronger.
Cashback incentives – spend money, earn money
Everyone likes free money, so it’s no surprise that cashback incentives are also a popular payments trend on the rise. Unlike the over-the-counter cashback of old, today’s virtual cashback incentives – which are offered by many banks, credit cards, specific cashback websites and apps – give consumers the chance to make or save money on their purchases. One cashback company RetailMeNot even launched an annual ‘Cash Back Day’ that provides consumers with cash back on their purchases of thousands of different items from participating retailers.
We have already established the importance and value in customer loyalty, and cashback incentives are another tool in some payment providers’ loyalty toolbox. For instance, Whatsapp has launched its own payments app in India as an alternative to the likes of Apple pay and has recently been trialling cashback as a way of building its userbase. Reports say the users can get 51 Rupees (equivalent to 50p) cashback per transaction. It’s not life-changing, but it’s still free cash.
But is this ‘free’ money too good to be true? While it’s a great incentive, many of the offerings, such as via Top Cashback operate using affiliate marketing – and this tends not to be instant. So what may bother some consumers is the delayed gratification, as it can take time quite some time to get the cashback.
As payments providers scrabble to win consumer attention and loyalty in an increasingly competitive market, it will be no surprise to see more cashback options popping up in the repertoire of other major payments businesses too.
Choice and flexibility lead the way
In this age, where constant change and cutting-edge innovations are the norm, consumers have two demands when it comes to payments: choice and flexibility. But they are also increasingly looking for brands to go over and above on value – offering something ‘extra’ that makes the experience a special one, whether that be receiving cash, earning loyalty points or having the ability to defer payments. One thing remains clear – to stay relevant in 2022, brands need to innovate and stay in step with consumer expectations by incorporating different and exciting payment methods.