Retail: Adopting POS Systems, Digital Wallets, BNPL
In recent years, the retail payment landscape has undergone a significant transformation, driven by the rise of digital wallets, Buy Now, Pay Later (BNPL) services, and advanced point-of-sale (POS) systems, as outlined in FinTech Magazine.
Digital wallets are projected to reach over $16 trillion in transaction value globally by 2028, reshaping consumer spending habits. McKinsey & Company highlights how advanced POS systems now incorporate instant payment technologies for seamless shopping experiences. This shift is largely due to growing consumer trust in digital-first payment solutions provided by tech firms over traditional banks.
The retail payments market in the Euro area showed strong trends in 2023, with non-cash transactions up by 10.1% and contactless card payments surging by 24.3%, according to the European Central Bank. Olivier Sery of Giesecke+Devrient predicts that by 2027, digital wallets will account for 28% of all non-cash transactions, driven by the rise of e-commerce and mobile wallet transactions.
Sery explains: «Digital wallets are evolving beyond simple payment tools. Banks have a unique opportunity to harness their capabilities fully, transforming banking applications into comprehensive payments solutions.» He also envisions «super wallets» integrating various services, from environmental insights to social media, particularly in emerging markets.
Pinar Koygun from Worldpay forecasts that by 2027, digital wallets will represent 61% of online transaction value and 46% of in-store transactions, especially in the APAC region.
BNPL services are becoming increasingly popular, especially among younger consumers who prefer flexible financial solutions. According to Elena Bazhenova from Exactly, the BNPL sector is stabilizing due to regulatory frameworks and market maturation. This trend extends to B2B applications, enhancing traditional trade credit practices with digital solutions.
Louis Carbonnier of Hokodo discusses the challenges and growth of BNPL: «BNPL has seen significant ups and downs. While it has become a preferred consumer payment method, major players struggle with profitability.» He anticipates regulatory changes and market consolidation, with B2B BNPL gaining traction as a secure trading mechanism.
Sery also highlights the potential for traditional financial institutions to compete in the BNPL space by adapting their offerings to meet the demands of digital-first consumers.
Retailers are innovating their payment systems with technologies like scan-free checkouts and mobile POS systems. Brad Hyett of Phos discusses the impact of SoftPoS, which uses NFC technology to transform any device into a payment terminal, enhancing customer experience and operational efficiency.
George Sinanis of Viva.com elaborates: «Mobile POS systems represent a major shift in commerce. With Tap on Any Device technology, any mobile device can become a checkout point, eliminating long lines and enabling transactions wherever the customer prefers.»
Retailers are integrating loyalty programs into payment systems, using real-time data to personalize rewards and improve customer experiences. Pinar Koygun emphasizes the importance of offering exclusive discounts and unified loyalty points, while Alan Holcroft of Cegid stresses the need for advanced POS technology to manage promotions efficiently.
The digital wallet landscape is poised for significant growth and transformation, driven by technological advancements and changing consumer preferences.