Daniel Cohen, Chief Product Officer, PayU
Black Friday is arguably the key date in the retail calendar for global merchants. In 2022 the date has a markedly different feel, however.
On the one hand, Black Friday arrives against a backdrop of increasing payments innovation space and the acceleration of e-commerce around the world. It’s estimated that the day is likely to generate nearly USD$9bn in online sales, remaining of high interest to both merchants and consumers across the globe.
On the other hand, stormy recession clouds loom. The ongoing economic turbulence and its consequences are likely to take a toll on customer spending appeal.
Consumers have stated that they will proceed with extra caution thanks to rising inflation and ongoing supply chain disruption. Others have also cited a lack of savings, loss of earnings and lack of available credit as reasons to pull back the purse strings.
As a result, merchants must prepare for an influx of consumers looking to save on the latest products but understand that the likelihood of basket abandonment runs higher than in previous years. For this reason, it’s imperative that merchants take every possible precaution to ensure no sales are left on the table.
Customers will prioritise purchases from merchants that are equipped with the right payment mix and offer streamlined checkout journeys. The more payment options that merchants offer, the less likely that a potential customer will be put off from making a purchase.
Simply put, embracing alternative payment methods is essential for a successful Black Friday. Here are three key reasons why merchants must integrate them into their payments mix today:
#1: The alternative payments revolution is already underway While credit and debit cards remain the preferred way to pay online, alternative payment methods are continuing to gain popularity across the world.
Merchants that sell to an international audience must meet the preferred local payment options. There are nuances which must be met; in our latest whitepaper, Cross border e-commerce: what consumers want, we found that Polish shoppers prefer bank transfers to credit cards, which is at odds with consumers in the US and Colombia. Neglecting these preferences will result in lost sales; 55% of consumers in the US will abandon the purchase if their preferred payment option is not offered by the merchant, compared to 49% of those in Poland.
For a successful Black Friday, merchants must also consider how preferences are changing with the wider macroeconomic environment. Amid the rising cost of living, Buy Now Pay Later (BNPL), instalment payments, and other alternative credit products are becoming an increasingly powerful part of the e-commerce landscape – particularly in emerging markets. By extending more payment flexibility to online shoppers, merchants can expand the affordability and accessibility of e-commerce, driving financial inclusion in the digital economy.
Finally, merchants must consider that in order to find bargains, it’s likely a number of new customers will be visiting their app or website for the very first time. The presale-registration process can be inefficient and time-consuming for first-time
customers, deterring them to complete the purchase. A proven way to mitigate this issue is to offer one-click payments at the checkout.
#2: Alternative payments appeal to a younger generation Young adults are spearheading the alternative payments revolution. In 2021 a survey found that more than half of 18- to 24-year-olds had turned to non- traditional ways of spending over the course of the year. While this was part enforced by ongoing COVID-19 store closures, the greater convenience and choice offering online also increased uptake.
Furthermore, these shoppers are increasingly buying from social media platforms, enjoying the ability to continue interacting with friends while they have an online shopping spree. However, many retailers have been late to adopt social commerce on novel platforms, with just 15% of respondents selling via TikTok.
In order to tap into this growing market, merchants must meet the new selling channels and payment methods that their young, digitally savvy customers now prefer.
3#: Reduce fraud concern with enhanced payments security With the cost of living rising, consumers are more concerned than ever about payments fraud. According to UK Finance, three in five people are worried about falling victim to financial fraud or a scam. Concerningly, Black Friday has historically been a target for fraudsters; in 2021 more than £15 million was lost to holiday season shopping scams in the UK.
To mitigate consumer doubt, global merchants need reliable alternative payment solutions that can thrive in the fast pace of Black Friday. Partnering with a trusted payments provider gives merchants peace of mind that they’ll meet all essential aspects of industry compliance, while at the same time receiving a robust and secure portal for accepting and managing online payments.
Black Friday’s rising popularity means that now, more than ever, merchants must stand apart from the competition, as well as meet evolving customer spending habits. Working with a trusted Payments Service Provider that offers a range of alternative payment methods puts merchants in good stead to not only navigate economic uncertainty but untap the full potential of Black Friday and beyond.