HomeBusinessFinanceThree Payment Trends Merchants Need To Get Right During The Holidays

Three Payment Trends Merchants Need To Get Right During The Holidays

Getting payments and fraud prevention right during the holidays is about more than just capturing up-front revenue. Merchants best able to streamline the purchase process in Q4 will be in a position to secure and build customer relationships moving into the New Year.

451 Research’s inaugural Voice of the Connected User Landscape: Connected Customer, Holiday Experiences 2021 survey has identified three high-impact areas merchants need to master as holiday shopping kicks into high gear: buy now, pay later (BNPL), false declines and cross-border. Below, each is discussed in greater detail.

Buy Now, Pay Later (BNPL)

As the holiday shopping season kicks off, more consumers are looking for the option to pay in installments at checkout. More than one in 10 (12%) holiday shoppers told us they plan to finance purchases using BNPL, rising to 17% of Millennials and Gen Z respondents. A high-single-digit percentage of Millennial, Gen Z and Gen X consumers actually plan to use BNPL more frequently than other payment methods when holiday shopping online this year.

As consumer appetite for BNPL grows, it’s becoming more of a conversion factor. One in ten respondents said that a merchant not offering a BNPL option at checkout would be a factor that would cause them to abandon a purchase this holiday season. For merchants to extract the full value of BNPL, it’s important to generate top-of-funnel awareness. Ensuring shoppers are aware early in the shopping journey that they can pay for their purchase using BNPL may help to influence buying behavior.

False Declines

Nearly two-thirds (62%) of merchants highly agree that their approach to fraud prevention makes it challenging to provide a smooth customer experience, according to 451’s Voice of the Enterprise: Customer Experience & Commerce, Merchant Study 2021. This challenge comes alive during the holidays as online purchase activity accelerates and bad actors look to blend in with the increased volume. For many merchants, the biggest driver of losses during this period won’t be chargebacks, but false declines. Nearly one-third (31%) of respondents told us a false decline would cause them to abandon a transaction while holiday shopping this year. Even more concerning, 59% said they would shop with a merchant less often after experiencing a false decline during the holidays.

To minimize the occurrence of false declines during the holidays, it’s imperative that merchants adjust their fraud rules to accommodate changing purchase patterns. Buying behavior that may otherwise appear suspicious during the remainder of the year (e.g., billing and shipping address mismatches) can be commonplace during the months of November and December. Employing some degree of automation is also imperative to reduce manual review queues (and consequentially, shipping delays) and enable expedited fulfilment (e.g., curbside pickup).

False Declines Have Long-Term Consequences


The holidays provide a unique opportunity for merchants to attract new shoppers – especially those from geographies outside of their home market. Two in five respondents plan to make purchases with international merchants (i.e., those based outside of the US) when holiday shopping this year, but younger consumers are leading the charge. Nearly two-thirds of Gen Z (64%) and Millennials (63%) plan to shop cross-border for gifts, compared with just 12% of Baby Boomers and 2% of The Greatest Generation.

It’s critical for international merchants to leave a positive impression to convert cross-border holiday shoppers into long-term relationships. To win them over, localization is the name of the game. Tactics such as local acquiring, dynamic currency conversion, local payment method presentment and utilizing local languages can pay dividends in driving conversions and building repeat cross-border business. To court younger US consumers, offering familiar digital payment options such as Apple Pay, PayPal and Klarna is imperative.

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