Customer experience has become a key currency in the COVID era, taking on a new definition and dimension. And with retailers constantly seeking ways to not only meet, but exceed customer expectations in a highly-crowded e-commerce environment, they need to find the tools that can give consumers what they’re expecting: a more tailored experience which suits their needs and budget.
What constitutes a great retail customer experience has dramatically shifted. Gone are the days when just a “good enough” customer experience was sufficient.
With consumers moving online en masse, and shopping across a variety of devices, including smartphones, computers, tablets, and even watches, they want to be satisfied with not just what they buy, and the price they pay, but also how they pay. Today's consumers are demanding an instant and seamless way to pay for purchases with easily digestible payment options which help increase cash liquidity. This has opened up a whole new world of interest-free, transparent digital payment products.
Alternative payments have therefore emerged as one of the most important drivers of a strong online customer experience, providing the flexibility, transparency, spending control and convenience that shoppers have come to expect from a seamless payment experience.
Democratising the payments landscape
Alternative payment methods like buy now pay later (BNPL) are democratising the payments landscape with consumer-centric solutions which give shoppers the choice of how they want to pay. This meets consumer demand for more transparent, budget-friendly and responsible options when it comes to buying, enhancing the customer shopping experience.
This demand is evident in the uptake of the Payflex BNPL payment solution which has increased from 12 000 to over 65 000 customers over the last year. Shoppers want more control when it comes to managing finances, and a BNPL solution allows shoppers to organise their budget by facilitating payment across instalments (and pay cheques) without the burden of interest and ancillary fees.
While South Africa is still in the nascent stages of alternative payment methods, the focus on customer experience is driving innovations in this payment sector.
A recent PayPal survey found 56% of consumers prefer to pay a purchase back in instalments rather than use a credit card, while 50% said they could manage their expenses better if they can buy some items now and pay for them later.
This increased adoption of BNPL as a payment solution is translating into an increased market share, which is expected to double from 2.1% in 2020 to 4.2% by 2024, according to the 2021 Global Payments Report by Worldpay. Similarly, Kaleido Intelligence expects BNPL’s value to reach $680 billion by 2025.
Gen Z, millennials drive adoption of alternative payments
One of the key growth areas in adoption of alternative payments comes from the Gen Z and millennial shoppers. With concerns about credit card interest, hidden fees and revolving debt, these younger shoppers are accelerating a growing trend away from the use of credit cards.
While these concerns over high interest and debt were prevalent prior to the pandemic, they have been further highlighted by the resulting economic fall-out.
A report by PYMNTS.com confirms this, finding 87% of shoppers interested in the services were between the ages of 22 and 44. Similarly, more than one in three consumersaged 18-37 say the availability of an instalment payment option has influenced their decision to complete a purchase.
This is a generation that is getting more used to the ease of paying for things on subscription, breaking down the cost of all sorts of things from fitness apps to Netflix and Ucook.
These younger shoppers are digitally minded and constantly looking toward personal finance options that maximise their shopping experience, while allowing them to navigate their finances by themselves in a more seamless, innovative and user-friendly manner. Part of this ethos is seeking payment options that let them know upfront exactly what they’re going to pay and how it can fit into their budget.
Changing the game
The pandemic has drawn a line in the sand between retailers that have put alternative payments first and those that have not yet adopted these customer-centric payment solutions.
While South Africa is still in the nascent stages of alternative payment methods, the focus on customer experience is driving innovations in this payment sector.
These payment solutions are expected to become as ubiquitous as Visa or Mastercard, being accepted at checkout within the next three to five years in line with consumer demand for flexibility when it comes to payment while facilitating the enhancement of customer experience in the process.
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