How Flexible Payments Can Help Retailers Boost Customer Loyalty This Holiday Season and Beyond

This holiday shopping season is projected to record the slowest sales growth since the pandemic, as 84 percent of U.S. consumers plan to cut back on spending.

For retailers, that means traditional levers like promotions and discounts may not be enough to close sales. In an environment where hesitation often equals cart abandonment, the checkout experience has become a critical factor in whether a sale closes or slips away.

Fortunately, businesses have the opportunity to adapt. Retailers that prioritize payment flexibility can meet customer needs to convert hesitant shoppers and protect their margins.

3 Benefits of a Flexible Payments Infrastructure

When shoppers spend more cautiously, flexible payment options offer a critical edge at checkout. However, the benefits of a modern payments infrastructure extend far beyond one season, allowing you to future-proof your customer engagement strategy.

1. Ability to Meet Evolving Customer Preferences

Just as layaway gave consumers the flexibility to pay for items over time, today’s shoppers expect the same control through buy now, pay later (BNPL) options. During the 2024 holiday season, 54 percent of Gen Z shoppers used BNPL programs, compared to only 50 percent who used credit cards.

We’re also seeing Gen Z lead the adoption of alternative payment options like contactless payments and payment apps, far outpacing older generations. By investing in a flexible payments infrastructure now, you can seamlessly add new payment methods alongside traditional credit, debit, and ACH payment options to meet shifting preferences.

Pro Tip: Don’t wait until mass adoption forces your hand. Pilot emerging payment methods early, learn what resonates with your customers, and work with your payments partner to design a strategy that balances innovation with cost efficiency.

2. Higher Conversion Rates

Even if a consumer is browsing with intent, hesitation at checkout can derail the purchase. Approximately 70 percent of online shopping carts are abandoned, and 13 percent of consumers cite limited payment methods as reason for this behavior. Case in point: 40 percent of BNPL shoppers say they’re likely to abandon a purchase if BNPL is unavailable at checkout.

It’s possible to boost conversion by expanding your mix of payment options, but visibility is essential. If a shopper is debating an expensive holiday purchase, knowledge that their preferred payment method — whether BNPL, a digital wallet, or a credit card — is accepted can provide the reassurance they need to click “buy.”

Pro Tip: If available payment methods only appear at the last step, you’re too late. Advertise options like “Pay in 4” earlier in the customer journey — e.g., through banners and promotions on product pages — so shoppers can factor them into their buying decision.

3. Stronger Customer Loyalty

Considering one in five consumers abandon shopping sites due to complicated checkout experiences, ensuring a seamless payment process is critical for retention. A modern payments infrastructure allows you to deliver the ease customers expect and encourage repeat business.

For example, ensuring digital wallets like Apple Pay or PayPal are available to select early in checkout allows shoppers to minimize tedious re-entry of personal and payment details. Likewise, storing customer card details via secure tokens enables customers to easily reuse the same payment method across touchpoints, reinforcing a seamless omnichannel experience.

Pro Tip: Audit your checkout process from the customer’s perspective. Consider targeted improvements to your checkout flow, such as one-click payments and tokenization, to reduce friction for new and returning customers.

Leveraging Payments as a Competitive Advantage

As shoppers navigate shifting economic conditions, a frictionless payment experience is more critical than ever. The option to use an alternative payment method or complete a purchase in one click can ultimately make or break a consumer’s decision at checkout.

While merchants who delay innovation risk losing sales, those who invest in flexible, secure and customer-centric payment infrastructure can convert hesitation into loyalty.

Adam Gray is chief transformation officer of Stax Payments, a payments solutions provider.