The digital age has brought with it an array of payment methods catering to online shoppers’ convenience. However, 2023 is observing an interesting twist in the tale of ecommerce payment preferences.
The Decline of BNPL (Buy Now, Pay Later)
BNPL, once hailed as the future of online transactions, has seen a surprising decline in its adoption this year. Several factors could explain this downturn. Financial strains faced by households have made consumers more cautious about deferring payments, especially with the potential pitfalls of accumulating debts.
Another significant factor affecting BNPL’s allure is the recent rise in interest rates. Such hikes make borrowing more expensive for BNPL providers. In response, some providers, like Zip, have had to increase the costs for their customers, making this payment method less attractive compared to its previous zero-interest offers.
Resurgence of Credit Card Transactions
In contrast, credit card transactions are witnessing a resurgence. With established trust, security features, fraud protection, and enticing reward points and cashbacks, credit cards are reclaiming their space among online shoppers.
A Silver Lining for Merchants
For merchants, this shift isn’t necessarily a setback. Credit card transactions typically come with lower processing fees compared to BNPL services. Thus, an increase in credit card payments could mean substantial savings in transaction fees for merchants, potentially leading to better profit margins.
Adapting to Change
Merchants must stay adaptable. While the decline of BNPL might seem concerning, it’s crucial to understand the underlying reasons and adapt accordingly. The return of credit card transactions serves as a testament to the trust in traditional payment systems. At the same time, security remains paramount, with a need for encryption, two-factor authentication, and other protective measures.
The 2023 ecommerce landscape is teaching merchants the importance of adaptability and understanding market trends. Sometimes, these trends, like the shift from BNPL to credit cards, can offer unexpected benefits. Recognizing these changes and their underlying causes can pave the way for more informed and profitable decision-making in the dynamic world of ecommerce.
BigCommerce ANZ State of Ecommerce Report 2023