Prioritising payments: Navigating the consumer and merchant landscape

  • 06th September 2023
  • Reading time: 3 min

The payments world is in flux. From the implementation of strong customer authorisation to the rapid rise of instant payments, and buy now, pay later (BNPL) providers, there have been a number of recent changes for merchants and consumers to contend with. 

To make sense of payments today, we interviewed 500 merchants in the retail and travel sectors, as well as 2,500+ online consumers across the UK and Europe. Through asking them about their priorities, pain points, and preferences, we uncovered some key insights on everything to do with payments.  

More than this, though, we uncovered the value of merchants wresting back control from credit card and BNPL providers and taking ownership of the payment experience. 

Power through customer insight

When it comes to gaining access to consumer insight, there’s nothing better than transaction data. Transaction data lets merchants understand consumer behaviour and take action in response. For example, if a merchant knows a consumer likes a certain product range, they can send the consumer targeted promotions. On top of this, transaction data can help merchants better manage their inventory, fine tune their pricing strategies, and promote products usually bought in conjunction. 

Unfortunately, not every payment method offers merchants this level of transaction data. Our research found that among the challenges merchants are facing, 74% see access to customer payment data and insights as a significant or moderate issue. 

Benefits beyond the basket

In the cost-of-living crisis, customers are less loyal to brands – something that’s proving problematic for many merchants.  

Luckily, the right transaction data can help with waning loyalty –  as knowing how often customers make purchases and what they buy helps when creating loyalty programs. On a related note, businesses can use transaction data to segment their customer base into different groups based on behaviour, allowing for more effective marketing. 

As our report also found, merchants would do well to offer an instalments-based payment method under their own brand name – as this can foster positive consumer feeling. Of our consumer respondents, 40% said they think such a brand would care about the financial wellbeing of its customers, 38% said they would be more likely to be loyal to that brand, and 38% said they would be more likely to talk positively to others about that brand.  

Prepare your business for the future

There are no two ways about it. BNPL is popular. In the UK, consumers spent more than £5.6bn via BNPL between January and June 2022. On top of this, a significant number (31%) of our merchant respondents said they offered BNPL payment options to customers, with a further 10% saying they plan to introduce them. 

But while BNPL is currently a popular choice, the tide may be turning. Ethical concerns have been circulating for a while now. There are typically no affordability checks with BNPL, and users often struggle to repay as a result. During a cost-of-living crisis, many merchants are realising that promoting BNPL isn’t always an ethical choice.  

On top of this, news regulations are fast approaching. Once passed, the proposed legislation would mean the Financial Conduct Authority will have the power to regulate BNPL operators. When this happens, BNPL providers will likely have to do more to protect consumers, adhere to regulatory requirements, and follow consumer credit rules. 

Prepare your business for the future

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 merchants 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.

Speak to an expert