From digital wallets to BNPL – your customers are looking for more ways to pay

5-minute read

In this article, Linda Weston, Head of Core Product at Barclaycard Payments, explores ways in which customers are looking to pay for goods and services, and the implications for merchants. Providing choice over how to pay in an easy checkout experience can boost sales and increase levels of repeat business.

Customers have increasingly gone digital over the last couple of years, embracing apps and new ways of interacting with their favourite brands.

They are also looking for choices around how to pay – prizing convenience, flexibility and transactional ease, whether that’s online or in person. As a merchant, catering for this is essential if you hope to attract and retain customers.

Seamless experiences are key for customers

Part of providing choice is making it easy for customers to cross over from online to in-store seamlessly and both pay and receive their item however best suits them. We see this omnichannel concept in action in Click and Collect, and also with ‘pay at table’ options in restaurants – an eCommerce method of paying in a physical setting.

Those seamless experiences are the driver of other emerging trends, too, such as Open Banking, which provides merchants and consumers with new ways to pay. Barclays Bank Pay uses Open Banking specifications to allow customers to pay straight from their bank account, instead of using card details, when they’re shopping online. This makes payment direct, fast and easy – no additional passwords or identifications are needed. It’s especially useful when paying for a high-ticket item such as a car, as auto dealers often don’t accept card payments. It provides an easy and convenient method for the customer, and confidence for the merchant that the funds have been cleared.

Shoppers are buying into digital wallets

One of the standout changes in the way customers are paying is the rise of digital wallets. In fact, the latest research from Barclaycard Payments, based on feedback from 250 UK corporates and SMEs, finds that digital wallets now represent the highest single transaction method at 30% of sales, outstripping contactless payments in-store (24%), conventional card payments online (21%) and cash (17%).[1]

In an age where people manage so many aspects of their lives through their phones, the appeal of a digital wallet is clear. Download it onto your phone and then one device will allow you to browse, choose and pay on the go – it’s the ultimate form of convenience. Combine this with the excellent customer experience that digital wallets create – where card details are automatically stored and you can pay with a simple tap – and their popularity seems assured.

Digital wallets now represent the highest single transaction method at 30% of sales.

Barclays consumer debit data shows that Apple Pay is the fastest-growing wallet, although PayPal remains the biggest by market share – but the gap is narrowing. Apple Pay looks well-positioned to challenge PayPal for dominance during 2022, but there are lots of other popular wallets too. As a merchant, it’s important to review what’s out there and ensure you can take payment through the wallets your customers use – if you can’t, you’re effectively turning sales away.

[1] Merchant research throughout taken from: Understanding a fast-moving payments landscape, Barclaycard, 2022


Buy Now Pay Later is in demand

It’s also becoming increasingly important to accept new payment methods such as Buy Now Pay Later (BNPL). Having boomed in the wake of the pandemic, BNPL remains the fastest-growing payment method globally. It offers consumers increased choice, convenience and flexibility over how they pay. In fact, nearly 10 million Brits said that they avoided buying from retailers that don’t offer BNPL options at checkout.[2]

Nearly 10 million Brits said that they avoided buying from retailers that don’t offer BNPL options at checkout.

There are clear potential upsides for retailers too: many merchants offering BNPL report increased conversion at checkout and higher basket values.[3]

However, BNPL is not without risks. It remains unregulated, meaning that affordability checks and consumer protections are much less robust than with conventional credit. Nevertheless, BNPL shows little signs of slowing down; 8 out of 10 merchants we surveyed expect demand for BNPL to rise in the coming 12 months, with much of this demand being attributed to the cost-of-living crisis.[4] New Barclaycard research has also found that retailer backing for fully regulated BNPL products could prevent up to 876,000 Brits from getting into unmanageable debt this year.[5] This shows that effective regulatory outcomes could further bolster consumer and merchant confidence in BNPL services.

8 out of 10 merchants we surveyed expect demand for BNPL to rise in the coming 12 months,

As BNPL evolves and matures – and the number of providers continues to proliferate – merchants will increasingly be looking to work with trusted payment partners to implement the right BNPL solution for their business.

Security shouldn’t hinder the customer experience

Across all these payment options, security must remain front of mind. It’s all about balancing anti-fraud measures – that may introduce extra checks – with maintaining a great customer experience. This is especially relevant now that full Strong Customer Authentication (SCA) has come into effect in the UK.

SCA introduces friction into the checkout journey, which could lead to basket abandonment.  However, if merchants adopt new payments technology such as Barclaycard Transact, which leverages an exemption in the regulation owing to its highly sophisticated fraud checks, they can offer customers a faster and simpler checkout experience while keeping them secure.    

Choice and convenience are king

Ultimately, convenience and offering a choice of ways to pay are crucial in meeting customer expectations. The more you embed these, the more likely you are to build loyalty, increase repeat business and attract new customers.

So, ask yourself: do you need to offer customers more ways to pay, and are you doing everything you can to facilitate a smooth and seamless checkout experience?

Get up to speed

With so many emerging eCommerce and payments trends, it’s important to keep up to speed so you can serve your customers better and build a more profitable business.

Explore our recent whitepaper Understanding a fast-moving payments landscape to see how things are changing and how you can take advantage of the opportunities.

[2] Finder, 2021.
[3] Bain, 2021.
[4] Barclays Partner Finance commissioned Opinium to survey 2,000 UK consumers (nationally representative sample) and 400 retail industry decisionmakers. The research took place between 13 and 20 May 2022.
[5] Barclays Partner Finance commissioned Opinium to survey 2,000 UK consumers (nationally representative sample) and 400 retail industry decisionmakers. The research took place between 13 and 20 May 2022.