“Society is unity in diversity,” wrote philosopher George Herbert Mead. Retailers today are faced with the checkout challenge of unifying consumers’ payment preferences, which have never been more diverse. Payment technology plays an essential role in ensuring customers’ transactional expectations are met and even exceeded, so they return again and again.

“Can I pay with this?” Whether a customer is asking the question to a cashier or scanning the payment options at an online checkout, a retailer needs to be able to answer in the affirmative, or at least provide the customer’s second payment preference.

COVID-19 has upended the retail experience and galvanized a major diversification in consumers’ payment preferences. Four out of 10 Americans have permanently changed the way they pay since 2020, according to our Q2 survey.

To a degree, payment preferences depend on the product being purchased. Consumers are more likely to favor cash for smaller items than they would for more expensive products, with 46 percent of shoppers preferring cash to buy bakery pastries vs. 20 percent for clothes.

These nuances aside, one trend is clear across all retailers: consumers favor credit and debit cards. Even at a bakery, 49 percent of customers prefer cards, rising to 69 percent in a clothes store. Supporting in-store card payments requires a robust point-of-sale (POS) terminal. Technology is constantly evolving, but most retailers understand the importance of having the most up-to-date POS, with 73 percent of merchants prioritizing this.

An essential consideration is supporting contactless card payments, which have enjoyed massive growth over the last few years. Our 2018 research revealed that just 3 percent of Americans were paying with tap-and-pay monthly compared to 67 percent today (Q2). Merchants not providing this option at checkout will create friction in the retail experience.

Consumers’ increasing familiarity with contactless card payments is no doubt also stimulating mobile wallet usage in-store. Our research revealed that 37 percent of shoppers are now paying at least monthly via a wallet like Apple Pay using their smartphone or wearable device. With eMarketer reporting that 88 percent of Americans aged 12-plus own smartphones, mobile wallet usage will almost certainly continue to grow.

And the concept of mobile payments extends to POS terminals. Fixed terminal card readers dominate the retail space, with 59 percent of merchants in Q4 offering these. However, wireless card readers that can be brought to the customer are growing in popularity, with 45 percent of retailers using mobile POS systems that are quicker and more convenient, especially in restaurants or for field services like plumbers.

The pandemic’s lockdowns saw retailers increasingly extending their businesses into the digital space with websites equipped with card-not-present (CNP) checkouts. Today, 71 percent of U.S. retailers have an online checkout, with a fifth of these diversifying into e-tail during COVID-19, according to our Q4 research.

This growth is likely to continue. Of the e-tail holdouts we surveyed, 43 percent expect to have an online checkout live by the end of 2022, though 50 percent have no such plans. This would be a mistake. While shelter-in-place orders are now in the past, consumers have never been more engaged with the convenience and speed of e-commerce.

Integrating a CNP checkout into a website does involve investment, though the return on investment will almost certainly be impressive. An online checkout extends a retailer’s opening hours to 24/7 and its geographical reach from a neighborhood to across the country.

Optimizing online customer conversions is just important as in-store. With the range of available online alternative payment methods (APMs), consumers’ payment preferences are arguably even more diverse. That said, cards are still king. With inflation higher, shoppers are tending to prioritize debit cards, with 60 percent using one at least monthly in Q2 vs. 54 percent paying with credit cards.

Connectivity to a payment gateway for card processing is therefore essential for retailers. However, consumers’ growing adoption of APMs means that these also need to be part of a CNP checkout. After cards, online shoppers’ favorite payment method is digital wallets, with 29 percent using a wallet at least monthly. Any retailer without the option of a digital wallet is going to lose customers or create friction with a customer forced to reach for his/her credit card.

Likewise, if a customer is used to paying with Apple Pay on their phone in a retailer’s physical store, this mobile wallet should also be also an option at its online checkout. In Q2, 24 percent of consumers used a mobile wallet to pay online. This number will grow as more retailers bolster their checkouts with mobile wallet offerings.

Looking ahead, with 11 percent of consumers paying online with either cryptocurrency or eCash today, the payments space for retail is set to become even more diverse. Just as retailers aim to satisfy customers with products that meet their specific needs, they need to adopt the same approach to online and in-store payments. After all, merchants’ main objective for every retail action is ultimately a transaction.

Afshin Yazdian joined Paysafe as CEO of its U.S. Acquiring division in 2020, bringing over two decades’ leadership experience in payments. 

Related story: What Does the Buy Now Pay Later Trend Mean for Retail Payments?

Afshin joined Paysafe as its CEO, U.S. Acquiring, in July, 2020, bringing over two decades’ leadership experience in payments. In his role, he is charged with bringing to life Paysafe’s vision of being the U.S.’s leading payments solutions provider.

Before joining Paysafe, he was President of Priority Payment Systems (PPS), a Georgia-based payments technology company serving over 174,000 American merchants. Before that, he held the role of President and CEO of New York-based Cynergy Data until its merger with PPS in 2014. Earlier in his career, he served as Executive Vice President and General Counsel of iPayment and was instrumental in the formation of the company – itself acquired in by Paysafe in 2018.

Afshin holds a Bachelor of Business Administration (BBA) degree from Emory University’s Goizueta Business School in Atlanta and a Juris Doctor (JD) law degree from the University of Miami in Coral Gables, Florida.

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