This week’s payment news roundup covers retail reports amid inflation, rising interchange rates from Visa and Mastercard, the appeal of physical gift cards versus digital gift cards, and more.
Despite inflation, retail sales up 8.7% year-over-year (YOY)
Mastercard Spending Pulse™, a market intelligence solution that measures in-store and online retail sales across all payment forms, reported consumer spending has increased 8.7% YOY and is up 17.3% compared to pre-pandemic spending patterns (2019).
Though inflation rates are climbing, several verticals like apparel and department stores are benefiting from consumers purchasing new wardrobe pieces in preparation for their return to the physical office. President’s Day sales spiked growth rates for furniture and furnishing verticals as well.
With the influx of consumer spending, now is a good time for independent software vendors’ (ISV) merchants to secure their share with secure, flexible payments functionality.
Previously-scheduled credit card fee increase goes into effect after two-year delay
Some online merchants will notice increased interchange rates from Visa and Mastercard starting next month, particularly for card not present (CNP) transactions such as online ecommerce transactions, electronic invoicing and orders taken over the phone. The full categorization includes any physical credit or debit cards that aren’t dipped, swiped or tapped.
Other merchants — including businesses specializing in education, health care or real estate — may experience the opposite effect, as the change actually lowers their fees.
Pymnts.com said the price hike was slated to start two years ago but was put on hold during the pandemic.
An estimate from consulting firm CMSPI said Mastercard fee changes will result in a net increase of $330 million annually. Both Visa and Mastercard said the fees have helped cover costs associated with fraud prevention and other innovative measures.
The ongoing value of physical gift cards in a digital world
Though the pandemic accelerated payment technology innovation and the desire to shift to contactless payments, one study found that more than half of consumers (54%) still prefer physical gift cards.
According to the report, while digital-savvy customers like the immediacy and ease of digital gift cards, more traditional shoppers favor physical gift cards.
- 61% like physical gift cards because they provide the recipient with a tangible gift
- 46% like that physical gift cards give the recipient something to unwrap
- 39% say physical gift cards are easy to give and use
Birthdays are the most popular reason for a consumer to give someone a gift card, and although there may still be a strong demand for physical gift card options, it’s important to note that 35% of survey respondents are looking for a mobile platform that could host all their gift cards in one space.
BNPL anticipates staggering 11% compound annual growth rate through 2025
In other payments industry news, Payments Dive recently shared a 156-page report that showed buy now, pay later (BNPL) will be the quickest-growing ecommerce payment method through 2025 in the United States and Canada as well as other markets in Brazil, Hong Kong and India.
An alternative financing payment method that’s seen immense growth in recent years, BNPL will generate approximately $438 billion of the global ecommerce transaction value by 2025. It’s also estimated that its ecommerce transactions value for North America will reach $2.3 trillion by 2025.
We have reported on BNPL and its benefits and fast-growing popularity in several instances, and there seems to be no slow down even as customers return to brick-and-mortar retailers.
What’s next for Request to Pay services?
Request to pay services, which allow users to initiate a payment request across a secure messaging channel, are great for person-to-person (P2P) payments — and according to a survey featured on PaymentsJournal, 71% of global banks and payment service providers recognize the potential, too.
The flexibility and transparency of this solution reduces costs and lowers instances of missed payments, plus it provides retail customers better control of their cash flow. Seventy-three percent of survey respondents said the “reduced cost of reconciliation” is the main benefit.
As best practices for request to pay develop, the payment industry will continue designing a framework that prevents push-payment fraud as well as building the infrastructure that will bring this service to the market quickly but safely.
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