2023 payments trends

Flexibility, customer service are the keys to thriving in 2023

By David Sharp, President, PaySimple

Once the domain of large online retailers like Amazon and eBay, digital payments have reached a tipping point for small businesses, including brick-and-mortar stores. Craving the security and convenience they experienced during the pandemic, customers are demanding payment flexibility wherever they shop. Owners are responding to the sea change – 41% of US small businesses have prioritized digital transformation this year, according to the Small Business Recovery report from American Express and Kabbage.

Here are the biggest digital payment trends for small businesses in 2023:

  1. The rise of mobile wallets

​​After several years of pandemic isolation, consumers are back to shopping, dining and exercising in person and bringing their mobile wallets with them. In-store mobile wallet transactions are on trend to be more than 2.7 billion by the end of the year. In 2023 we expect mobile and tap-to-pay to be the fastest-growing POS payment method as customers ditch their plastic credit cards and cash.

Gen Z shopper
  1. Gen Z drives payment disruption

Speaking of tech-savvy, Gen Zers not only want to buy their coffee with their Apple watch but other goods and services as well, and there’s nothing you can do about it. So as their spending power increases, small businesses must offer digital payment flexibility if they want to capture Gen Z’s business.

  1. Card on file and subscription-based services see a comeback

Moving beyond gym memberships and newspapers, the subscription model thrived during the pandemic as consumers sought easier shopping experiences. Now, as customers depend less on large businesses, they want to experience that same model from smaller businesses, putting their favorite vendors, from composting services to life coaching, on autopay.

The global subscription e-commerce market is expected to grow 65% in 2022, providing more opportunities for upselling and customer retention than pay-as-you-go.

BNPL mobile shopping
  1. Buy Now Pay Later meets the moment

The intersection between digital payments’ exponential growth and a shaky economy, including high inflation, has created the perfect opportunity for buy now pay later (BNPL) to become ubiquitous in areas beyond online shopping. The payment option that allows retailers to offer installment plans should account for nearly 25% of all global e-commerce transactions by 2026, up from just 9% in 2021. Service-based small businesses are seeing an increase in financing and installment payments.

  1. Demand for integrating payments into existing business solution SaaS soars

As consumers crave payment flexibility, offering digital payments becomes a customer experience differentiator. Faster, more secure, and less labor-intensive, digital payments are a win-win for customers and businesses. But for many small businesses who may already pay for several cloud-based operating systems, adding another can feel overwhelming.

Heeding the voice of the customer, business solution providers are integrating payment options into their SaaS. The move means small businesses only need one platform to manage their business, from marketing to scheduling to invoicing and accepting payments, online and in-store.

small business payments

The digital payment era is now

Consumer taste for digital payment has increased dramatically, putting pressure on small businesses to rise to the occasion. The good news is that many digital payment trends are heading in their favor, creating opportunities for increased cash flow, stickier customer retention, and more manageable task automation.

Business owners who lean into digital transformation – investing in technology, creating a seamless experience for mobile wallet users, providing frictionless customer service, and educating their less tech-savvy customers on how to adopt the new payment method – will thrive in this new world.

David Sharp, President, PaySimple

David Sharp is President of PaySimple. He joined the company in 2007 and is passionate about helping customers, employees and investors realize their full potential with the simplicity and flow that PaySimple’s commerce enablement platform brings to the marketplace. David has 21 years of experience in the payments and software industry, including eight years as Vice President of the Western Region for Global Payments. He has led business development for payment network processing, agent bank and ISO programs, and alternative payment solutions during his career. He served as a non-commissioned officer in the US Army following graduation from the Defense Language Institute and holds a BBA in International Business from the University of Georgia.

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