Merchants: What to look out for in 2024

Inflation and the cost of living crisis are directly impacting what customers purchase. These issues are not going away anytime soon in 2024 – so it’s up to merchants to innovate their processes and modernise payments that fit the needs of customers who are embracing careful spending.

Merchants: What to look out for in 2024

Since 2019, historic and substantial global developments – including a pandemic, geopolitical troubles and a rise in sophisticated scamming – have left retailers attempting to navigate an increasingly unpredictable landscape, writes Elena Bazhenova, Business and Sales Operations Manager, Exactly.

The retail sector is always victim to boom and bust cycles of the wider global economy, but the past few years have proven particularly challenging even by this sector’s standards.

The biggest issue for retailers in these circumstances is the changing behaviour of consumers. When times are tough, customers cut back. Money is reserved for the necessities in life, meaning retailers ultimately suffer low sales as consumers have less cash to splash on goods and services beyond the essential bills.

But most alarmingly of all is the prediction that this pattern will persist for a long time yet.

Research conducted by Which? showed that over half of UK consumers think the economy will worsen over the next 12 months, meaning many will lack the confidence to make purchases outside of their typical day-to-day requirements.

Moving into 2024, retailers face a challenge to bring in customers: And this involves introducing innovation into their business plans and platforms to position goods and services as being valuable, worthwhile and easy to purchase.

The payment processing industry – which handles the majority of retail purchases in a digital-first landscape – can support these businesses in their journey to achieve this.

But how exactly can we expect to see the industry changing over the next 12 months and what should merchants be prepared for in 2024?

Open Banking will continue to blossom 

With customers behaving in a more cautious manner in approach to payments – carefully selecting what they buy and when they buy it – it is vital for merchants to provide the kind of customer experience that promises speed, ease and security.

Failing to do so may simply lead to the customer dropping off – as in the current landscape, they do not need a reason to think twice about clicking “buy”. Open Banking plays a huge role for merchants in enhancing the quality of customer purchases.

Simply put: Open Banking allows third-party providers authorised access to customers financial data – such as account balances, transaction history and payment details – meaning payments can be made with ease and the absence of a physical card. Customers can simply click through in seconds.

2023 saw Open Banking adopted on a wider scale – up 68.2% with users from the previous year – with the likes of Apple, Google and Amazon implementing the software to improve customer experience. Across the following year, we can expect many others to follow suit.

Customers expect higher levels of speed, convenience and security around their payment methods in the modern day – and Open Banking can also benefit vendors in additional ways by saving costs on card transaction fees and providing an option to confirm receipt of funds before releasing goods, enhancing overall financial security.

Everyone is looking for better ways to bring in customers – and Open Banking will facilitate increased collaboration between financial institutions and third-party providers.

Biometric Payments will also boom

Technological advancements and the global need for secure and convenient payment methods are a driving force in the biometric payment market – which is forecasted to surpass a whopping $19 billion by 2029.

This is particularly appealing in an era where consumers are increasingly falling victim to scammers and fraud – with The Guardian reporting 1.4m cases of fraud in the UK during the first half of 2023 – the equivalent of one every 12 seconds.

At a time when consumers cannot afford to lose any money, security is pivotal – and biometric payments offer the kind of reassurance that is required to reduce scam tactics.

Biometric payments use authentication methods such as fingerprints, facial patterns, retinal scanning and voice recognition to verify their identity when completing a translation.

Convenience is also a big advantage of biometric payments, making it easy and effortless for customers to confirm their identity.

As digital payments continue to enhance and increase, playing a critical role in protecting customers financial data against fraud as well as increasing convenience, merchants will need to ensure that they are staying up to date with the market trends to position themselves at the forefront of a competitive space.

Further Adoption of Digital Wallets

Cash was king once upon a time. But the situation has changed remarkably over the past three years.

A report from UK Finance revealed that 83% of people in the UK are using contactless payments, meaning tap-to-pay credit cards as well as mobile wallets like Apple Pay and Google Pay.

This trend took off during the start of the pandemic as people veered away further from cash, and in response, retailers with physical locations are increasingly adopting infrastructure to accept contactless payments. 2024 will see continued mainstream adoption as customers continue to prefer contactless as the preferred means of payment.

The increase is largely due to convenience, eliminating the need for customers to carry their physical cards or enter their payment details for each transaction.

Digital wallet payments might be the perfect option if the products you sell are considered to be impulsive purchases or where there is a small window to make the sale.

But most importantly of all – they appear to be what the consumer is demanding in 2024.

And that is something every merchant needs to take note of in the following year: Consider what the customer wants in terms of payment needs and find a way to give it to them.