4 Key Factors to Consider in Creating Consumer-Grabbing Payment Options
Shoppers want options.
That’s especially true, of course, in the merchandise and services they seek. However, it’s increasingly evident that shoppers want — and actively seek — various ways to pay for their purchases, whether it be over time or up-front, in person or, increasingly, online.
This consumer trend of wanting greater payment choices presents retailers with an enormous opportunity to generate more sales, profits and loyalty from the audiences they crave the most.
That’s the topline finding from a recent survey1 conducted by Bread, the fintech division of Alliance Data that provides advanced payments technologies to transform the way consumers shop. Indeed, as the economy begins to recover and expand in the aftermath of the pandemic, shoppers are actively looking for more ways to pay, including, increasingly, digital options.
About 75 percent of customers said they're interested in opening a credit card or using buy now, pay later (BNPL) with a favorite retailer at checkout. The interest in BNPL — paying in monthly installments with interest, or splitting a purchase into four biweekly interest-free payments — is especially notable, as more than half of individuals surveyed say they're more interested in financing with BNPL than they were only a year ago.
Why the surge in BNPL and other payment options? One answer is the recovering economy. Despite high unemployment in the early stages of the pandemic, consumers and businesses are beginning to bounce back. In fact, 70.3 percent of respondents say their finances have improved or stayed the same over the past 12 months.
Savvy omnichannel retailers should seize the opportunity and make purchasing even more attractive by offering desirable, no-delay credit options at the point of purchase.
BNPL has become increasingly prevalent as merchants seek to provide flexible, convenient options for consumers. Just last month, Fiserv, a global provider of merchant acquisition and other financial services, and Bread announced a partnership where Bread’s innovative digital payment solutions would be offered to Fiserv’s robust network of merchants.
BNPL is a trend that’s here to stay. Are you ready to capitalize and expand your payment offerings to drive customer engagement and acquisition? If so, keep these four key factors in mind when creating solutions for your customers:
- Act now. With BNPL and other alternative payment methods reaching widespread awareness, more shoppers expect them as a feature at checkout. This is particularly important in e-commerce, which now accounts for well over half (57.5 percent) of consumers’ shopping budgets.
- Provide choice. Our survey findings revealed that shoppers who are interested in retail credit cards are also interested in BNPL. By offering both, you provide a suite of options that shoppers can consider depending on their current financial condition, purchase size, or other preferences.
- Enrich the offer. Remember to address the entire customer experience. That could mean offering low or 0 percent interest, pricing discounts, loyalty points, or other benefits if using one of these purchase methods.
- Keep an eye on all audiences. Millennials, the largest consumer cohort, rank highest in owning both traditional (78 percent) and retailer (54 percent) credit cards, and have the highest usage of BNPL (56.5 percent). However, interest is keen among all generational groups, and merchants would be wise to keep a variety of demographics in mind when promoting these payment methods.
Retailers have a prime opportunity to use innovative payment options to help unlock more revenue at the point of sale — and to get a leg up on the competition.
1 Study conducted Feb. 15-23, 2021, with a random sample of n=2018 U.S. consumers over 18 years of age. Margin of error is +/- 2.76% at the 95% confidence level.
Val Greer is executive vice president and chief commercial officer at Alliance Data Systems Corporation, a leading provider of data-driven marketing, loyalty and payment solutions.
Val Greer is EVP and Chief Commercial Officer at Alliance Data Systems Corporation (NYSE: ADS), a leading provider of data-driven marketing, loyalty and payment solutions. Bread is the fintech division of Alliance Data providing advanced payments technologies that enable merchants and partners to enhance customer experiences, increase sales, and improve conversion rates through fully-integrated and seamless checkout experiences.