24 May 2024
Topics in this article
  • Retail

What are the 2024 trends for The Retail Digital Payment Landscape?

The rules of the game have changed within retail. As the lines merge between brick-and-mortar retail and e-commerce, with traditional high street retailers developing an online presence and digital native businesses expanding into physical stores, there is no longer ‘online’ or ‘offline’ – there’s simply retail. Proxima’s recent Retail Evolved report delves into many challenges and opportunities that have arisen and will continue to do so.

One area mirroring the evolution is Payments. Pre-pandemic, we were already gravitating towards a more digital payment landscape, questioning whether we were seeing the end of physical currency. We all know how that played out once cash was dubbed a virus vector – changing the preferred way to pay for nearly 70% of consumers.

Fast forward to today, cash remains in a steady decline, the use of debit cards and credit cards continues to increase, and more than half of consumers now rely on digital wallets such as mobile wallets like Apple or Google Pay. Reports claim that by 2030, global cashless payment volumes are expected to almost triple from 2020 levels, to more than 3 trillion.

In fact, the digital payments landscape is nearing – if not already in – a new era. An era established by a heady combination of technological advancements and shifting consumer preferences, making for an increasingly competitive and digital marketplace. From guarding against sophisticated AI-enabled fraud to ensuring seamless cross-border transactions, retailers will need to adapt to keep up with the evolving parameters of payments if they are to retain their customers.

Key Trends in Retail Payments

Here, we look at the key trends for the year ahead and beyond and the role procurement will play in helping retailers thrive.

The surge in digitalization within retail in recent years has led to greater consumer expectations. Mobile apps and in-store interactive screens have enhanced the shopping experience, injecting convenience, ease, and customization. As such, it is critical that retailers do not fall at the final payment hurdle.

Account to Account (A2A)

Although not new, improvements in open banking are paving the way for A2A to become a more accessible payment option for retailers to offer. For consumers, where relevant for the purchase, A2A offers a convenient and secure payment option. For retailers, it offers an easy-to-integrate solution that can help improve cash flow.

Central Bank Digital Currencies (CBDCs)

As financial institutions and banks explore the potential of CBDCs, retailers need to stay updated with these developments to provide more secure and efficient digital payment methods.

Digital wallets

The use of mobile payments, contactless payments, ‘tap and pay,’ and QR codes is all on the rise, contributing to a definitive shift towards digital payments, which are seen as a quicker and more secure option, enhancing the buying journey.

Embedding purpose

Online platforms now expect an embedded payment process where they can complete their transactions without leaving the brand website and being redirected to the payment provider. The seamless experience encourages buying, whereas the alternative often results in an abandoned basket. Those who are savvy also take payment in as few steps as possible – look at Amazon’s ‘one-click-buy’.

Loyalty scheme integration

There’s an opportunity within loyalty schemes, too. Integrating a loyalty scheme into your payment platform offers further convenience both for consumers and retailers. The former accrues points in, ideally, an app-led style simply through spending, and the latter benefits from increased sales from their loyal customers without having to incur the expense of integrating separate loyalty software on their own.

Smart and mobile point-of-sale (POS) devices

Similarly, customers expect this ease to continue in-store, calling for smart POS devices to enable payments where the customer is located in-store, as opposed to queuing at the checkout. Schuh, the shoe retailer, was amongst the first to implement this, taking payment in the middle of the store after a new shoe-try-on.

What is the Role of Procurement in Retail Payments?

Clearly, payments play a significant part in a competitive retail market. Retailers looking to optimize their offering in this space should look to procurement to implement the right technology, with the right providers, at the right price, on the right terms.

Across trends, some key opportunities procurement professionals should seek to explore are detailed below.

Understanding your pricing construct

The payments market is often overly linked to volume for discount and pricing tiers. When it comes to identifying where you can leverage greater value, it is vital to unpick agreements to understand the charging mechanism around multiple fee elements, i.e., gateway fees, acquiring fees, risk tools, PIN entry devices, and any additional charges.

Challenge the Provider Ecosystem

As demonstrated by the wide-ranging trends, there is scope for your payment landscape to get complex. Legacy providers coincide with FinTechs and others in between. The market is hot with merger and acquisition activity—regularly monitoring your requirements against what is being offered will allow you to switch and consolidate as appropriate. Some providers offer large signing bonuses as part of the relationship.

Effective supplier management

In a landscape driven by innovation, early movers will stay ahead of the game. This means effective management of your provider network to ensure you are accessing the latest solutions to enable you to offer them to your customers. Understanding which suppliers in your payments eco-system are strategic will provide focus to your relationship management efforts, and implementing robust governance and reporting structures will ensure compliance to agreed SLAs. Procurement can ensure true value is being realised from the agreements in place, and challenge where it is not, with an objective view outside of the operational relationship.

Strategy alignment

Having a vision to focus your organization is key within a market that is evolving as rapidly as payments. What must not happen, however, is being so focused on future possibilities that the opportunities of the here and now are overlooked. This is where your procurement strategy can inject practicality and action to deliver what is needed in the short term and set you up for the longer term. Aligned strategies and continuous cross-functional communication between procurement, payments, risk, legal, and technology will be vital for success. It is also imperative that your payment strategy aligns with your overarching organizational strategy. For example, consider how you are positioned in the market and what expectations your customers will have of your payment portfolio. Different requirements will exist between a local budget store and an omnichannel luxury goods setup.

Technological Innovations and Risks

Artificial intelligence (AI) and new technology

AI and blockchain technology have been in the payment landscape for some time – whether for tracking customer buying patterns to deliver a more personalised experience or enabling open banking functionality. The momentum gained in recent years, however, and the rise of new innovations, such as Generative AI and biometric verification methods, has led to further opportunities and risks for retailers to consider.


Amongst the positives of Generative AI within retail payments, such as improving customer service and sales effectiveness, there is also a significant risk evolving. AI or Generative AI-enabled fraud is becoming increasingly sophisticated, placing customers’ payment and identity information at risk. That said, used effectively by both retailers and their payment providers, the same technology can be used to predict consumer trends, conduct real-time analysis, detect anomalies, and report on context to identify and mitigate fraudulent activity, helping to prevent identity theft.

Digital Identity Authentication

As digital payment methods advance, so does the need for secure authentication. Digital identity and biometric authentication methods, such as facial recognition, are becoming more prevalent to ensure secure transactions.

Cashierless checkouts

Perhaps less about the new technology and more about the new use case, the rise of cashierless checkouts in places such as fast food restaurants or fashion retailers brings to life the early-naughties predictions of robots taking our jobs. A little slicker than envisioned, though, retailers are benefitting from satisfying the emerging tech-savvy consumer while also reducing labour costs.

New payment methods

The combination of evolving technology and customer buying habits has led to the emergence of multiple payment methods – extending and expanding what’s available to consumers to suit wide-ranging needs.

Buy now, pay later (BNPL)

Leading providers such as Klarna, ClearPay, and PayPal have been growing rapidly, providing consumers with the option of credit. Although this increases average order value and attracts customer loyalty, it is not without its risks, such as a large number of returns and unfulfilled payments. Offering BNPL at checkout, regardless of whether it is online or in-store, is yet another sign of the merging of business models.

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