Seven Payment Trends to Watch in 2017
In recent years, the way both merchants and consumers interact through transactions and payment processes has significantly changed. Payment technologies such as mobile wallets, on-demand apps, and connectivity through near field communication (NFC) and Bluetooth are significantly transforming how consumers shop and make purchases. More than just improving payment processing, these technologies, along with other recent trends, are driving significant behavioral and societal changes.
Also transforming the retail and hospitality industries is the driving force of the millennial generation. Growing up in the days of the proliferation of the internet, millennials expect things to be efficient and on-demand. Given that millennials make up about one-fourth of the US population, outnumbering the Baby Boom generation and three times the size of Generation X, it should come as no surprise that the industry needs to quickly adapt to the current and future changes in payment processing that millennials expect.
Heading into 2017, here are seven payment trends all small business merchants should be keeping in mind:
The Rise of Mobile Payments: The use of NFC technology and mobile wallets among consumers will continue in 2017. Most major players in the mobile device industry have delivered their own versions of the mobile wallet incorporating NFC technology (e.g. Apple Pay, Android Pay, Samsung Pay). With Apple Pay reporting a growth of one million new users per week, there are strong signs that many consumers prefer this method of payment. Mobile wallets are quickly becoming the norm, particularly among millennials. Because mobile wallet payments are faster than using EMV or traditional swipe credit cards, users are quickly converted and want their purchases to be seamless and fast wherever they go. This demand for mobile wallets will significantly impact the way small business merchants provide payment services in 2017.
The On-Demand Economy: Just as Amazon Prime has become a household name, in 2017 we will start to see a new level of demand take over the retail and hospitality industries. No longer content to wait two days for a package, consumers want their purchases within a few hours. This “on-demand” economy is already taking place among major retailers, but mobile wallet and related technology will improve its growth in 2017. From using your smartphone to make an “order ahead” purchase online, to location tracking that will notify a store when you’ve arrived for pickup; the process will be free of plugging in a credit card and waiting in long lines to make your purchase. In 2017, the on-demand approach will drive growth among small business merchants looking to take advantage of this trend.
Bluetooth Everywhere: Bluetooth will take off in 2017. With Apple pulling the plug (no pun intended) and doing away with the headphone jack, millions of iPhone users, and consumers in general, will be more comfortable with everything wireless in the coming year. While this has been a long time coming, the disruption of taking away the headphone jack opens the way for more experiences with wireless including Bluetooth and accessories. The increased stability of Bluetooth coupled with the familiarity of mobile payment technology among consumers paves the way for future use of Bluetooth connectivity in mobile payments, enabling a more seamless process.
An Elevated Retail Experience: In 2017, we’ll see a big push towards creating a more personalized shopping experience for consumers. Customer demands for an emotional connection when shopping will motivate retailers, big and small, to think outside the box such as re-arranging their store fronts, bringing in interactive screens and pop-up shops, and partnering with local restaurants to provide an elevated retail experience. One example of this is the recent takeover of Macy’s flagship store in New York City by Grandin Road with a 1,400 square foot pop-up shop dedicated to all things Halloween. The experience was meant to fully immerse customers while transporting them through an interactive shopping experience using the company’s classic Halloween décor.
In 2017, there will also be a continued push to blend smaller retail and pop-up shops with recreational activities. From dining, to lounging, playing Bocce, book exchanges and play centers for kids, small business merchants – particularly in shopping centers – will incorporate more of these types of activities around their store fronts. Another part of the next generation of retail experiences is the use of virtual reality. In the next three years, Gartner predicts that 100 million consumers will shop in augmented reality. As retailers realize the impact a visual and interactive experience can have on consumers, the industry can expect to see increased virtual reality experiences incorporated into these businesses in 2017.
The New Personal Assistant: Digital assistants will have a large impact on the retail and hospitality experience in 2017. After years of Google learning about consumers, their surroundings and behaviors, digital assistants now have the ability to interact with consumers on a human level. Privacy concerns aside, personal assistants are now intelligent enough and capable enough to make a meaningful attempt at mass availability of artificial intelligence. Imagine walking into your favorite big box retailer (e.g. Target) and asking your digital assistant to find a certain product. Based on the contextual awareness of the digital assistant, paired with your previous online habits, it will already know what store you’re in, what product to look for, and where to find it, replacing the need to ask the nearest sales associate. By connecting all the data, and providing additional information such as price comparisons and reviews, retailers can tap into this by offering incentives and targeted discounts based on customer location and interests.
Beyond Pricing Pressures: The highly commoditized market of payment service providers will drive pressures on pricing for merchant accounts in 2017. Moving into the New Year, payment providers will find new ways to differentiate and offer value to their customers beyond low rates. By staying one step ahead and offering innovative technologies in their offerings, providers can help small business merchants connect with their customers by creating loyalty programs, managing mobile wallets, providing real-time offers and discounts, and pushing notifications. Offering these tools and services will make them an invaluable part of their customer’s business.
The Act of Sharing: On-demand apps such as Uber, Grubhub, and Wag will continue to drive the sharing economy in 2017. New payment processing tools and technology make sharing an Uber ride or splitting a restaurant bill seamless and efficient. In fact, payment processing tools are in many ways facilitating the sharing economy and will continue to do so in the coming year. The high expectations of today’s consumers for fast and easy ways to share purchases will motivate small business merchants to take advantage of these technologies. Driven by customer demand, in 2017, there will be a surge of payment processing technologies focusing on how to better promote the sharing economy.
As 2017 approaches, small business merchants need to recognize the changes taking place in the payments industry and begin to streamline processes for their customers. Considering how they can evolve their business processes to meet the demands of the modern consumer as well as looking to payment processing providers for guidance, small business merchants can keep pace with the evolving changes of today’s economy.
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