While consumers are clearly excited to come out of lockdown and visit their favorite local retail spots, Antonio Gagliardi, who leads strategy, product and analytics for American Express merchants in the U.S., told PYMNTS that their expectations have changed.
After months of easily completing purchases online, consumers don’t just prefer a touchless payment experience — they expect merchants to offer it and seek out those that do. “You need to have the technology that allows the consumer to pay how they want to pay,” he said.
PYMNTS research, done in collaboration with American Express, found that 57 percent of consumers would choose where to shop based at least in part on whether they have the right mix of digital payment options. And 69 percent of consumers who now use digital wallets say they have been shopping more often since they began using them, and 54 percent say they spend more at merchants that accept digital payments.
Taken together, Gagliardi said this provides a clear digital wallet mandate for merchants in 2021 — but it’s not the only focus. “Wallets are just a way to pay, and the same customer can pay in different ways during the same day,” he said, noting, for example, that a consumer may pay with a credit card at a store — and then five minutes later, could pay with a mobile wallet at their favorite coffee shop.
“Therefore, merchants should continue adapting to the evolving needs of consumers — digital wallets being one,” Gagliardi said.
The Rise Of Contactless Payments
With COVID-19 still top of mind for most people, six out of 10 merchants have seen a marked increase in the number of consumers demanding contactless payments at checkout; 35 percent of consumers say they’re more likely to use a contactless payment option now than before 2020, and 39 percent said the same for digital wallets or merchant apps.
Even after the risk of COVID-19 infection has subsided, 63 percent of consumers say they plan to keep using contactless payments permanently. “Contactless payment is faster, it’s frictionless,” Gagliardi said, and it’s safer for those who want to avoid touching dollar bills or putting their PIN into a keypad. American Express research has found that 31 percent of consumers are less likely to use cash post-pandemic.
Given these shifts, retailers will have to ensure that they’re providing digital-first consumers with access to the connected payments and purchasing options they want, Gagliardi said, working with payments processors and systems that can easily integrate into their business to provide multiple ways to pay. “The good news is that technology and software … make it relatively easy for even small businesses to come toward the consumer’s need and help them attract and retain customers,” he said.
Gagliardi noted, too, that merchants must make it clear to consumers that they accept digital and contactless payments through signage and social media posts. “I would start from the basics,” he said. “Having visible signs, if it’s a brick-and-mortar store, that tell the customer ‘I do accept all types of payments’ is a very good starting point.”
A Big Opp For Small Biz
Small and medium-sized businesses have not had an easy time over the past year and a half, first grappling with COVID-related lockdowns before trying to reopen amid an ongoing pandemic and changing consumer shopping preferences.
Gagliardi said that the past 18 months have caused consumers to adopt a more connected mindset, with online habits acquired during the pandemic now expanding to brick-and-mortar stores.
“Things like online and mobile shopping, contactless, or patterns like buying online and picking up curbside have accelerated dramatically with the pandemic, but those trends were already happening,” Gagliardi noted. “Now merchants should adapt in order to accommodate consumers’ preferences.”
American Express noted last month that consumer and commercial spending surged in the second quarter of the year as COVID-19 vaccination rates increased, with spending rebounding in many categories above pre-pandemic levels. Executives at the financial services company project that overall global consumer spend may reach 95 percent of pre-pandemic levels by the end of the year.
To help support merchants during this payments evolution and the beginning of the end of the pandemic, American Express this summer expanded its Shop Small Movement, teaming up with Pinterest to launch a digital storefront that expands the reach of small and medium-sized businesses. The Shop Small Summer Pinterest Shop included over 20 small businesses offering outdoor, fashion, beauty and home essentials.
The partnership with Pinterest is also a move into the burgeoning world of social commerce, which is projected to top $36 billion in the U.S. this year, according to eMarketer, accounting for just over 4 percent of eCommerce sales.
“It’s a way that we, as a company, support the backbone of our economy — small business owners,” Gigliardi said, noting that the Shop Small Movement is one of the reasons he enjoys working at American Express. “We can help them experiment and pivot in the transition toward online, which is clearly happening before our eyes.”