Keeping up with consumers: how retailers can ride the instalment wave 

  • 05th September 2023
  • Reading time: 2 min

Retailers haven’t had it easy in recent years. In the EU, retail trade volume has been struggling. In the UK, the shift to e-commerce has caused the loss of 6,000 physical retail stores in the last five years alone.  

To cap it off, the payments landscape has been in flux. Consumers have a number of new payment-based expectations, especially around payment method choice. Plus, the introduction of strong customer authorisation has brought about friction in the payment process, and the rise of buy now, pay later (BNPL), has triggered a rise in merchant fees too.  

To make better sense of the payments landscape today, we interviewed 250 retailers and 2,500+ online consumers across the UK and Europe. By asking them about their priorities, pain points, and preferences, we uncovered some key insights on everything to do with retail payments. 

To buy now, to buy later 

Credit card merchant fees have always been a subject of concern for retailers. They can really dent profit margins – especially for small businesses and for those selling low-margin products. But with fees of up to 8%, the rise of BNPL has been even more difficult for merchants to contend with, especially in light of the ongoing cost-of-doing-business crisis.  

Our research bore this out. Over a quarter (29%) of our retailers said they’ve had to raise prices specifically to cover fees relating to payment methods in the last two years, and a further 14% said they may have to do so. When consumers are also struggling economically, such moves are less than ideal. 

But it’s not just the fees that are the issue. In terms of the ethics and practicalities of BNPL, our retailers had mixed feelings. Indeed, 58% of our retailers said they don’t know how to ethically promote or manage BNPL; providers don’t always undertake affordability checks, and many are concerned that offering BNPL encourages impulse or irresponsible spending

When it comes to BNPL, retailers also expressed a dislike that the payment relationship is between the customer and the lender, rather than with them. The loss of customer base control was an issue for those we surveyed: three-quarters (76%) of our retailers said this was a concern, and 47% said more control over customer relationships and customer data is a priority.  

Owning the payments experience

There’s no shying away from it: BNPL is popular. While only 27% of our retailers currently offer BNPL, a whopping 90% of our retail respondents said they “know” they have to offer some kind of instalment-based payments.  

That said, there are many issues with BNPL. And while it’s a popular way of paying in instalments, it’s only one way of paying in instalments. 

This is where Tymit comes in. The world’s first instalment credit card, Tymit provides consumers with incentives such as flexible instalments and interest-free deals. As for merchants, they get to own their payments experience, get access to crucial transaction data, build customer loyalty, and encourage repeat spend – all with zero merchant fees.  

The payments landscape is a complex place. But despite the changes of recent years, free and fair payments are possible. 

To find out more about consumer sentiment and what other retailers are doing, take a look  at our report, Freedom and fairness: Owning the consumer payments experience

Download the report

Chat to one of our experts about how you can Own It with Tymit.

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