As consumers made their lists and set out to do their shopping this season, surveys revealed that on average, they planned to spend $825, a 6 percent increase in holiday spending over last year. Although some retailers may have a faint memory of holiday shopping seasons when consumers would have made those purchases with cash, times, definitely, have changed. Shoppers are drawn to the convenience of diverse payment methods — and expect merchants to accept them.
Here’s a breakdown of the ways consumers are transacting this holiday shopping season:
A key finding from NerdWallet’s 2019 Holiday Shopping Report is that 71 percent of US consumers planned to use credit cards for purchases this year, even though 48 million consumers say they’re still paying off 2018 holiday credit card debt.
Brick-and-mortar merchants can rest easier when they use EMV technology for card-present transactions. According to Visa, EMV, which uses chip cards that communicate with payment systems, has reduced card fraud by 76 percent.
Online merchants, too, have tools that can help them reduce card fraud, such as Card Verification Value (CVV) code and other user-authentication methods.
In addition to ensuring that credit card payments are valid and authorized, merchants are also addressing the high volume of payment card transactions by finding ways to streamline payment experiences for their customers. One strategy is to eliminate signatures at the point of sale, which most card brands no longer require due to the security and authentication abilities of state-of-the-art payment technologies. Omnichannel merchants are also tokenizing payment data, so loyal customers won’t have to re-enter data online or present a card for an in-store return of an online purchase.
When shoppers use their charge accounts for in-store holiday spending, not all of them will be using plastic. The NerdWallet survey found that 32 percent of US consumers — about 71 million — are using mobile wallets, such as Apple Pay or Google Pay. The percentage of consumers paying via phone is even higher if you factor in popular apps that facilitate payment, such as the Starbucks app.
In addition to the convenience of not having to carry cash or plastic cards — just a smartphone, which consumers never seem to be without — shoppers can also count on the added security of paying via mobile wallet. Not only is it harder to access payment information in a locked phone than on a plastic card in a stolen wallet, mobile wallets automatically tokenize payment data.
Contactless payment cards and near-field communication (NFC) mobile wallets are giving consumers the convenience of tap-and-go payments in more locations this holiday shopping season. This type of payment protects card-present payments in the same way that EMV technology does, but it delivers a faster, easier payment experience for shoppers.
Contactless payment adoption in the US has grown incrementally, due in part to limited places where consumers could use contactless payments. This year, however, Visa reports that 78 of their top 100 merchants by transaction volume now accept contactless payments — and the Salvation Army is enabling people to make donations by tapping their phones via a system known as “Kettle Pay.”
Click and collect
Another trend this holiday shopping season is buy online, pickup in store, aka click and collect. More than half of consumers will engage in this holiday spending option that allows shoppers to find what they need and pay online and pick up their merchandise in a physical store to avoid shipping charges — and to get their items sooner.
Tokenized payment data can make click and collect or in-store returns of online orders easier for customers and more easily managed for merchants.
Person-to-person payments for gifting
A relatively new holiday tradition centers on person-to-person payments, especially for those hard-to-shop-for relatives or those who prefer gifts that help them fund experiences. Person-to-person payments make it easy to transfer funds to a friend’s or family member’s account and to “group gift” by splitting the amount with other people.
Advice for Software Developers
Entering a new decade, shoppers are carrying out their holiday spending — and spending throughout the year — in more diverse ways. Your clients need payment technology that allows them to give their customers the options they demand. Their ability to create the types of experiences that consumers want is essential to their success. It’s also crucial to your relevance.