Retail payments are changing as financial services navigate the digital revolution. By 2028, it's expected that digital wallets will have processed over US$16 trillion in transactions globally, drastically altering consumer purchasing patterns all over the world.

McKinsey & Company states that sophisticated point-of-sale (POS) systems are integrating rapid payment technology to offer seamless, real-time purchasing experiences. Large internet companies are overtaking conventional banks in terms of customer trust, indicating a desire for digital payment solutions that come first. This movement in consumer confidence has an impact on this technical advancement.

Buy Now, Pay Later (BNPL) services are becoming more and more popular, which is indicative of a larger trend toward flexible financial options, particularly in difficult economic times.

technologies in point-of-sale (POS) technology, such as cloud-based systems and greater personalization, are indicative of the changes occurring in the retail payment business. These technologies hold the potential to transform retail interactions and improve consumer happiness.

Global Trends and the Growth of Digital Wallets

In the first half of 2023, the retail payments market in the Euro area showed promising trends. The increase in non-cash payment transactions by 10.1% indicates a faster move toward digital payment methods. According to data released by the European Central Bank, contactless card payments significantly grew by 24.3%, while card-based payments increased by 15.6%.

The aforementioned trends underscore the growing inclination of consumers in Europe towards digital wallets and inventive technologies, as well as their need for quick, safe, and easy payment methods.

Digital wallets are expected to account for 28% of all non-cash transactions by 2027, according to predictions made by Olivier Sery, Global Head of Sales, Digital Solutions at Giesecke+Devrient.

According to a Capgemini analysis, e-commerce and mobile wallet transactions will dominate transaction values by 2026, accounting for 54% of total transaction values, which is what is driving this increase.

Sery goes into further detail on how digital wallets are changing, saying that they are becoming more than just basic payment instruments. Banks have a rare chance to completely utilize their potential and turn banking apps into all-inclusive payment solutions.

"By facilitating NFC-based payments and giving consumers more visibility, control, and options, this transformation puts these institutions at the forefront of environmentally friendly banking practices."

He goes on to discuss the possibilities of "super wallets," which combine many services into one application.

"Users of digital banking may take useful environmental insights and actions by leveraging transaction data. Super wallets also make it easier to use a variety of services, such as social networking or instant messaging, online shopping, and credit requests. This industry is expanding significantly at the moment, particularly in emerging markets.

"Consumer expectations are shifting as digital wallets become more integrated into daily life; they anticipate more comprehensive lifestyle services from banks and payment providers," says Sery.

Generally speaking, a "super wallet" is a digital wallet that has many more functions than merely holding cryptocurrency. A super wallet is different from a basic digital wallet because it can support multiple digital asset types (tokens, cryptocurrencies, and even non-fungible tokens, or NFTs) and provide services like asset swapping, lending, and staking through the wallet interface. It can also integrate different financial services.

Put simply, it's a more sophisticated and adaptable tool for handling digital money, frequently designed to offer a complete financial platform within a single application.

According to Pinar Koygun, Senior Director of Retail Vertical Growth at Worldpay, digital wallets will account for 46% of in-store purchases and 61% of online transaction value by 2027. Due to the high acceptance rate among younger customers and the use of QR-code payments, this trend is particularly noticeable in the Asia-Pacific area.

With a focus on convenience, 49% of the 5000+ respondents from major markets in our worldwide poll said they had used digital wallets in the previous year. We expect greater usage across all commerce channels, since over half of customers engage in multi-channel purchasing and 34% of respondents, who are between the ages of 18 and 26, prefer digital wallets.

The Development and Steadiness of BNP Parity Services

Consumer credit is changing as a result of BNPL services, particularly for younger generations who are used to instantaneous online buying. Because of its simplicity, BNPL appeals to younger generations who prioritize their digital lives.

Experts like as Elena Bazhenova of Exactly anticipate that as these services develop, the regulatory frameworks and market maturation will cause BNPL services to stabilize.

The development of BNPL is not just confined to deals involving consumers. The industry is also making progress in B2B applications, where digital solutions are being used to improve traditional trade credit procedures and provide more organized and secure payment arrangements.

Construction and other industries stand to gain greatly from this change, which is mostly being pushed by IT corporations in the US and Europe.

In his discussion on the development of the BNPL industry, Louis Carbonnier, co-founder and president of Hokodo, points out the sector's cyclical appeal and practical difficulties. "BNPL has seen notable ups and downs. Despite its explosion in popularity and development as a preferred payment option for consumers, big businesses have challenges with profitability, according to Carbonnier. Although he expects significant regulatory and market consolidation changes, he predicts that BNPL will continue to be popular in B2C industries.

In addition, Carbonnier draws attention to the unique characteristics and expanding market for B2B BNPL services, which are being spearheaded by a small number of US and European IT firms, among them Hokodo. "B2B and B2C BNPL are very different. Companies that are used to trading credit are naturally more frugal with their expenditures, which affects the dynamics of bad debt in business-to-business transactions "explains the speaker.

Carbonnier anticipates a shakeout in the industry, saying that "a few dominant players will emerge as the market matures." B2B BNPL is becoming more and more popular as a straightforward, safe, and encouraging business-to-business trade method." These findings highlight the B2B BNPL segment's expected expansion and stabilization, which is indicative of a move toward more controlled and organized market circumstances.

When talking about the rapidly expanding buy-now-let (BNPL) market, Sery emphasizes how popular it is becoming, especially with younger customers who appreciate the ease and convenience of digital transactions. "BNPL's popularity, especially among millennials and Gen Z, is tied to the seamless integration with e-commerce."

He also talks about how BNPL platforms have developed into "super apps," which are now the hubs of customer buying experiences. "These super apps not only connect merchants with new customers but also enable personalised interactions based on established purchasing habits." Retailers now have a great opportunity to improve consumer engagement and retention as a result of this change.

Sery further highlights the possibility of successful competition for conventional financial institutions in the BNPL market. "Banks may easily modify their products to satisfy the needs of customers who shop online first. Banks may take use of their existing connections and knowledge by adding BNPL functionality to mobile banking apps, thereby generating a "super wallet."

According to Sery, this connection will improve conversion rates for retailers in addition to streamlining the payment process. "As banks embrace flexibility and digitalization, they're likely to see a more comprehensive and efficient payment experience, aligning with the needs of modern consumers," he says in closing, hinting at a strategic shift in the relationship between the retail and financial services industries.

Advancements in POS and Checkout Systems
Along with modernizing their payment methods, retailers are also improving customer service and fostering innovation at the point of sale. In this context, mobile point-of-sale systems and scan-free checkouts are essential.

The CEO of Phos, Brad Hyett, recently spoke about the new wave of scan-free purchasing technologies, including SoftPoS, that are revolutionizing the way people purchase by streamlining the checkout process.

"Mobile point-of-sale systems, enabled by NFC technology, allow retail staff to use their existing devices to meet customer needs promptly, eliminating long lines and the search for checkout counters," he says.

His statement highlights the mutual advantages for both customers and employees, saying that "this technology not only enhances the shopping experience for customers but also alleviates the pressure on staff from managing large crowds and maintaining multiple checkout terminals."

Hyett emphasizes the advantages of using NFC-enabled SoftPoS systems in terms of both cost and operational efficiency.

"Retailers don't need to make extra expenditures in checkout infrastructure to boost productivity and cut expenses. This highlights the strategic benefits for retail operations implementing these cutting-edge technologies and frees up workers to focus on delivering great customer service rather than managing the logistical issues of traditional checkouts," he continues.

The emergence of mobile point-of-sale (POS) systems is revolutionizing how customers engage with businesses. Devices like as Tap on Any Device technology enable any smartphone or tablet to function as a payment terminal, radically improving customer experience by enabling transactions both inside and outside of the store. Improving customer experience and business effectiveness require this flexibility.

Viva.com's COO, George Sinanis, explains how mobile point-of-sale (POS) systems are transforming the retail industry by turning any smartphone or tablet into a payment terminal. Thanks to this invention, payments may now be made anywhere, right at the time of consumer encounter, greatly increasing the flexibility and efficiency of retail transactions.

"Mobile POS systems represent more than just an enhancement in payment convenience—they signify a major shift in commerce," writes Sinanis, highlighting the significance of this technology. Any mobile device may easily function as a checkout point using Tap on Any Device technology, cutting down on long lines and allowing customers to complete purchases wherever they want."

"The need for large, traditional cash registers declines for small firms, allowing for cost reductions and the utilization of already-existing technologies for transactions. Bigger businesses can provide employees mobile devices so they can process payments anywhere on the property—in hotels as well as stores—improving customer satisfaction and preventing wasted revenue from waiting around."

In his conclusion, Sinanis emphasizes the wider ramifications, saying, "Tap on Any Device is redefining retail interactions—it's more than just a new payment method." It creates opportunities for transactions at every consumer touch point, thus eliminating the need for a payment procedure and seamlessly integrating it into the whole customer experience."

Increasing Client Loyalty with Creative Initiatives

Retailers are employing real-time data to personalize incentives and improve consumer experiences by integrating loyalty programs with payment systems on a growing basis. This strategy improves the customer's entire buying experience by integrating social commerce components while also retaining consumers.

The best loyalty plans are outlined by Pinar Koygun as follows: "Preferred programs include memberships, point-based systems, and tiered incentives. Providing special discounts and unified loyalty points is crucial in the current economic climate. Furthermore, it is probable that next loyalty initiatives would prioritize customized rewards, eco-friendliness via repurposed prizes, and smooth interactions throughout all platforms."

Cegid's UK Country Manager, Alan Holcroft, highlights how crucial it is to match retail strategy to consumer preferences. He writes: "Retailers must understand customer needs to tailor clienteling solutions effectively, using purchase histories to drive personalised engagement and boost sales."

Holcroft also emphasizes the difficulties of running promotions in retail settings. According to him, "successful promotions attract customers, but POS systems must efficiently handle multiple discounts to prevent dissatisfaction and loss of sales," highlighting the necessity of cutting-edge POS technology to guarantee both customer pleasure and operational efficiency.

The environment of digital wallets is expected to see substantial expansion and change in the near future. Global payment systems are about to undergo a transformation because to digital wallets and shifting consumer tastes and technological improvements.