The views and opinions expressed in this article are those of the author.
Pay now, pay later, pay by mobile, pay in instalments. Today, there are increasing numbers of ways for consumers to spend quickly and easily. And in the fast-paced world of payments technology, innovation is always just around the corner.
The industry is being shaped by the unabating demand for choice, value, and flexibility. To meet this demand, the industry is rapidly developing a host of new technologies, but three trends are leading the pack.
Buy now pay later (BNPL), contactless technology and a new generation of loyalty points-based payments, fuelled by emerging MarPay technology.
Buy now pay later: Giving consumers control over cash flow
The ‘buy now, pay later model’ has taken the world by storm over the last few years. Spreading worldwide and gaining ferocious popularity, buy now, pay later (BNPL) providers such as Klarna, Clearpay and Laybuy have made their mark on the checkout experience by creating a new category and changing the way people pay forever.
And it’s no wonder why. The new generation BNPL models let people spread out costs and still get everything they want, when they want it – often with zero interest.
But there’s an obvious challenge with this type of payment model. If repayments aren’t managed correctly, consumers can get themselves into sticky situations and even problem debt.
As the threat of increased regulation looms across the UK and Europe, BNPL providers can no longer afford to ignore this issue.
Big names like Klarna, have strengthened affordability assessments in an effort to ensure that consumers aren’t spending more than they can afford to pay back.
They’ve also shifted away from deferred payments - launching buy now, pay now options that reduce the risk of shoppers getting sucked into debt, but still offer flexibility at checkout.
But it’s unlikely that regulation will be the nail in the coffin. It’s just another factor to navigate and if there’s one thing that these payment providers have proved over the years, it’s that they have the ability to innovate at speed.
Some of the original BNPL providers like Klarna are evolving to broaden their offering beyond payments, and seeking to position themselves as a one-stop-shop for shopping.
Meanwhile, an ever-growing number of retailers continue to adopt BNPL at checkout. Recent data from Juniper Research predicted that by 2026, global spending via BNPL services will reach $995 billion (€881 billion), almost quadrupling the current figure.
At the same time, fintech firms, big tech players, card providers and online banks are all launching BNPL options, looking for a slice of the pie.
Buy more, pay less: Reduce cash flow and earn more points
The loyalty schemes of old are making way for a new generation of smarter solutions that offer a win-win-win for members, merchants, and loyalty programmes alike.
Long gone are the days where your hard-earned points translated to a £2 tester sample of lipstick. Reward points today can pack much more of a punch when combined with the right cutting-edge payment option.
Emerging “MarPay” technology is connecting the world’s top online shops with loyalty programme members looking to maximise their spending power at checkout.
Traditionally, affiliate marketing-based offers provided by loyalty programmes can be tricky to navigate, fall short on tracking due to evolving privacy rules and are slow to register on points balances which can lead to disengaged consumers.
But new specialist ‘MarPay’ technology platforms can connect online merchants directly with loyalty programmes to make sure that consumers can spend and earn points instantly on each purchase.
This tech can work to either free up shoppers’ points so people can buy more and pay less on their purchases – or allow consumers to earn points on their purchases, giving them the opportunity to top up their points balance as they spend.
Meanwhile, the merchant benefits by boosting average basket value and capturing a greater share of what consumers are willing to spend.
As consumers’ spending power is increasingly squeezed by the rising cost of living across Europe, there will be a bigger and bigger role for BNPL payment options and ‘MarPay’ tech.
By allowing consumers to tap into alternative wallets of rewards points, this flexible new solution can make their hard-earned cash go a lot further.
As we move into 2022, we can expect to see more merchants adopting MarPay tech. As competition to win share of wallet ramps up, brands will be battling it out to unlock spending power and offer consumers even better value at checkout.
Contactless: Technology that changed the world
With just a wave of your debit card, your watch, or your phone, you can buy anything from a latte to a wardrobe. Contactless is king when it comes to easy, convenient payments in a world that won’t wait for you to get out your wallet.
Though contactless technology is nothing new, the pandemic led consumers and banks to look for ways to reduce physical contact points.
This meant cash was ushered aside, while contactless technology was prioritised and new use cases quickly emerged.
Spending caps skyrocketed all across Europe – permitting people to make even bigger purchases without a pin. In the early days of the pandemic, France saw its cap lift from €30 to €50, while the UK limit rose from £30 to £45 and then more than doubled to £100 later on, in October 2021.
Contactless payments involving card readers are going nowhere in 2022, but the growing popularity of digital wallets means that no touch payment technology is increasingly popular in other contexts.
The proliferation of QR codes over recent years has opened up a new world of possibilities for contactless. The codes allow for instant payments simply by scanning on your phone, which means whether you’re scrolling social media or browsing your favourite online store – virtual payments have never been faster.
And it works in real life too, where QR codes make for a cheaper alternative to chip and pins. In restaurants for example, it’s possible to view a menu, scan the meal you want and pay for it in the same second.
Meanwhile, the use of QR codes in stores can help retailers create a seamless omnichannel experience by allowing consumers to scan an item and pay then and there on their phone without needing to wait in line for the till.
The decade of fully flexible payments
The common thread that holds together these payment trends is flexibility. And consumer demand for choice and flexible ways to pay will only continue to rise.
People have embraced – and now expect – payments methods that deliver great value, function instantly and make their lives easier.
From interest free instalments to the ability to seamlessly spend and earn loyalty points at checkout, the next few years will see the payments industry innovate to suit every type of shopper.
For consumers, the trick is keeping up with everything that’s on offer.
- _Dominic Hofer is the CEO of Loylogic and Pointspay, a loyalty and payments platform. _