Post-Holiday Consumer Spending and Trends
Since founding my payment technology company, I’ve been living and breathing payments trends in retail. Over the last five years or so, projections have been all over the place: Is Black Friday dead? Is anyone still going to malls? Do consumers feels safe using their credit cards? As of early December, the stock market was up around 25 percent; Bitcoin had soared more than 1,000 percent; the unemployment rate was at 4.1 percent, the lowest it has been since 2000; and the economy had grown an annual rate of 3 percent the past two quarters.
Looking at these numbers, I think it’s safe to say consumers will keep spending past the holiday season and well into 2018, which is good news for everyone. While we’re anticipating spending to continue increasing based on these figures and trends, the way consumers are submitting payment continues to drastically change due to advanced technology. I’m a huge proponent and spokesperson for innovation in this space. At the end of the day, consumers are looking to use payment methods that are convenient (i.e., touch of a button) and secure (i.e., low risk of identity stolen), and also offer incentivized payment options (e.g., cash-back deals). All of these benefits, for the most part, eliminate cash payments.
Most consumers are thriving in the age of Amazon Prime and shifting the majority of their shopping online. This is especially true on big shopping days such as Black Friday, where consumers are still able to enjoy sale prices while beating the crowd and shopping securely. Even with in-person payments, mobile and credit card methods have made a major shift in the last few years, and below are some of the new innovations we’ve seen make a major impact:
- Digital Wallets (Apple, Samsung and Android Pay): Our phones’ built-in contactless payment systems use a new technology called near-field communication, transmitting your stored payment information when it’s near the retailer’s payment terminal, allowing consumers to make payments without pulling out their physical wallets. Each of these services uses tokenized account information to ensure actual card numbers are never shared with businesses, aiming to prevent fraud.
- Masterpass and Visa Checkout: In addition to its availability through the above digital wallets, these banks also offer their own apps allowing consumers to pay with a quick tap of their device at many terminals spanning from coffee shops to retail boutiques. Visa also recently launched a promo with Starbucks specifically aimed at caffeine addicts — if consumers purchased a Starbucks e-gift of $10 or more using Visa Checkout, they would receive an additional $10 e-gift for free. In addition to making payments easier for consumers, this also demonstrates how retailers are incentivizing consumers to use “smarter” payment methods.
The combination of an economy boost and cash payment alternatives offering security, incentives and cash back lays the ideal groundwork for a continued shopping uptick during the post-holiday season. For the self-gifting “new year, new me” attitude, retailers can expect this shopping boom to continue both in-store and online. Innovated payment methods demand innovative processing, meaning the biggest takeaway for retailers is to make sure you’re prepared to take on the ebbs and flows of consumer shopping habits. We always recommend for retailers to research and invest in a processor that helps you keep track of transaction analytics while providing a clear billing experience for both you and your customers. Once your technology is up-to-date, following your company's sales trends in 2018 will be simple.
Suneera Madhani is the CEO and founder of Fattmerchant, a merchant service provider offering subscription-based payment processing.
