Cold cash is losing value in favor of digital dollars as payment tools evolve

The changing landscape of retail payments is significantly shaping consumer behavior. As retail changes rapidly, payment preferences are key to purchasing decisions.

From biometric payment cards to digital wallets and Buy Now, Pay Later (BNPL) options, consumers are increasingly turning to retailers that offer their preferred payment methods. Research suggests that many online shoppers abandon purchases due to inability to pay.

Moreover, the rise of BNPL services has become the norm across retail sectors, appealing to a wide demographic spectrum, especially younger consumers. As consumers interact with brands across multiple channels, providing a unified omnichannel experience has become essential for retailers looking to increase customer satisfaction and loyalty.

Liam Gerada, CEO and co-founder of Krepling, noted that this trend is particularly evident among Millennial and Gen Z consumers, who seek financial services from non-traditional providers and expect seamless experiences across platforms. Krepling enables e-commerce companies to create, manage and scale online stores without coding knowledge.

Adjusting payments to consumer preferences

The rise of embedded financial solutions and partnerships with independent software vendors (ISVs) further highlight the impact of consumer choices on the digital payments industry. By working with ISVs, merchants can offer innovative payment solutions through social media, rewards sites and customer loyalty programs.

“Many companies realize the importance of adapting to changing consumer needs by implementing new payment technologies, partnering with independent software vendors and prioritizing customer preferences to position companies for success in the rapidly changing digital payments landscape. These changes in consumer choice and flexibility are making the digital payments industry more agile, innovative and customer-centric,” Gerada told E-Commerce Times.

In many ways, the widespread adoption of contactless technology has been the most consequential change in retail payments. While the number of digital wallets on the Internet has been growing like a wave, the presence of contactless technology in smartphones has made everyone’s favorite device now a simple and easy way to pay in stores, proposed Jason Pavona, general manager of North America Enterprise at Worldpay.

According to Worldpay’s latest data, “nearly one-third of all U.S. point-of-sale payments will be made via digital wallet by 2027,” he told E-Commerce Times.

Innovative payment solutions for retailers

One of the latest solutions to meet this demand is the introduction of the Krepling Pay e-commerce channel management platform. It provides merchants in over 150 countries with greater transparency on payment fees and includes multi-layered encryption and security features to protect merchant and customer privacy and data.

The platform’s user-centric payment gateway feature helps sellers reduce e-commerce cart abandonment and increase conversions faster. Sellers are currently missing out on potential e-commerce sales opportunities due to cart abandonment, which has an average global rate of 70%.

According to Krepling, most online shoppers don’t complete their purchases because of high shipping fees, unclear return policies or the time it takes to create a profile. Krepling Pay alleviates this industry challenge by providing merchants and customers with a seamless checkout process that saves time and reduces costs.

The platform offers centralized e-commerce workflow integration and customer analytics to help sellers track trends and execute effective strategies. Integrates with popular e-commerce platforms.

“We understand that the retail payments space is rapidly evolving, creating many new challenges for merchants who want to provide a seamless, secure and personalized transaction experience. That’s why we developed Krepling Pay – with one-click transactions, localized currency, language support and customizable layouts,” explained Krepling’s Gerada.

How Krepling Pay works

Krepling Pay modernizes e-commerce transactions with a one-click checkout process. Once customers enter their personal and credit card information at checkout, a digital wallet is created within seconds and encrypts the customer’s personal information.

This system enables quick purchases on any browser or device, matching currency and language preferences, ensuring seamless cross-border e-commerce.

“We took a data- and user-experience-centric approach to develop the simplest, fastest and most useful payment gateway integration to help customers feel satisfied throughout their shopping journey, while helping merchants reduce cart abandonment and increase sales. Privacy is also important to us, which is why we have made Krepling Pay compliant with PCI standards to support secure 3D payments to ensure the security of your business data and payments,” Gerada said. It encourages customers to complete purchases quickly and reduces the cart abandonment rate that plagues online retailers. Localized currency and language support meets the preferences of a global customer base, supporting trust and loyalty.

Retailers must adapt to consumer payment expectations

According to Worldpay’s Pavona, merchants must be open to flexible payment strategies to meet changing consumer expectations and take advantage of emerging opportunities. For example, digital wallets accounted for half of all online sales by value last year.

Digital wallets turn online payments into a single click and entering payment credentials along with personal and shipping information, eliminating the need to store credentials with a new merchant.

New payment trends and consumer behavior are reshaping retail transactions, prompting retailers to rethink their payment strategies to better serve their customers.

“It also leads to a conversation about who owns the customer and how retailers need to change their mindset around retention, rewards and service,” Pavona explained.

Fintec’s operations have similar issues in payment technology

The changing dynamics of retail payments are also impacting financial technology or fintech payment processes. There are two main factors at play. One of them is the increase in fraud caused by the advancement of technology and artificial intelligence. The second is the growing importance of customer experience, or CX.

In 2023, the global retail sector lost $429 billion due to payment fraud. According to Donal McGuinness, CEO of payment link platform Prommt, almost half of all businesses globally experienced some form of fraudulent activity, cyberattacks or data breaches last year – an increase of 32% compared to 2022.

“This requires immediate investment in secure payment processes and fraud prevention measures,” McGuinness told the E-Commerce Times. “Fraud prevention, protecting customer data and privacy, and ensuring regulatory compliance are increasingly becoming top payment technology priorities.”

He explained that this requires implementing data encryption and tokenization, enforcing strict data governance, applying access controls and robust authentication measures, and adhering to global compliance standards.

Millennials, Generation Z, are changing their retail payment priorities

As McGuinness noted, the payment experience as the final touchpoint leaves a lasting impression on a brand. That’s why it’s so important to eliminate friction at checkout and offer a variety of payment methods.

Nearly half of both market groups (51% of Millennials and 48% of Gen Z) would abandon a purchase if their preferred payment method was missing. What’s more, 67% of Gen Z believe that automatic payments will reduce checkout times and improve the overall shopping experience.

“They move effortlessly between physical stores, online platforms and virtual environments and want the freedom to pay at their convenience, from anywhere and on any device,” McGuinness said.

“They are transforming retail with their hybrid shopping behavior.”