Fintech Industry Strategies for Black Friday 2023

Black Friday, once synonymous with in-store chaos and frantic shopping, has evolved into a global digital shopping phenomenon. In 2022, online Black Friday sales saw a 3.5 percent increase, reaching a staggering $65.3 billion worldwide. However, as macroeconomic challenges loom, the growth of Black Friday sales in 2023 may be at risk due to rising living costs worldwide, prompting consumers to tighten their budgets, as outlined in The Fintech Times.

To navigate this evolving landscape, fintech experts share insights on how both businesses and consumers can make the most of Black Friday, while avoiding pitfalls and fraud.

While traditional payment methods like debit and credit cards remain popular for holiday shopping, recent research by payments platform Paysafe reveals a shift towards alternative payment methods (APMs). Digital wallets are favored by 48 percent of consumers for online holiday shopping, with 41 percent using bank transfers and 25 percent embracing online cash payment solutions, also known as eCash.

Rob Gatto, Chief Revenue Officer at Paysafe, emphasizes the importance of offering multiple payment options: «Retailers must embrace a wide range of payment methods to capture consumer attention on Black Friday. Providing a seamless payment experience can differentiate retailers, cater to new audiences, and boost conversion rates.»

Trends show that Black Friday may be losing its allure for shoppers. Tink, an open banking firm, reports that 34 percent of consumers are less likely to participate in Black Friday due to regular year-round discounts. Moreover, 48 percent of merchants admit that their Black Friday discounts aren’t significantly better than those offered at other times of the year.

Tom Pope, SVP Payments and Platforms at Tink, suggests that merchants and consumers are facing increasing financial pressures, which may impact Black Friday this year.

As Black Friday sales surge, the number of returns also rises. Tink’s research estimates that one in three items ordered on Black Friday was returned last year. A significant challenge in the returns process is the time it takes for customers to receive their refunds, an issue noted by 33 percent of merchants.

Tom Pope emphasizes the importance of a smooth returns process, especially when consumers need their money back promptly due to financial constraints. Solutions like Tink’s Pay by Bank can be added at checkout to streamline the process.

Buy Now, Pay Later (BNPL) solutions are gaining popularity, but many consumers remain unaware of the potential risks. A study by responsible lender Creditspring found that 31 percent of people do not believe BNPL purchases can lead to debt, rising to 51 percent among those aged 18 to 24.

Neil Kadagathur, CEO of Creditspring, expresses concern about the lack of awareness regarding BNPL risks, especially with many planning to use credit products during Black Friday.

Around 66 percent of UK shoppers expect personalized experiences from their favorite brands during Black Friday, according to Twilio’s research. This presents an opportunity for brands to engage with new audiences, as 36 percent of consumers are open to trying new brands on Black Friday.

Sam Richardson, CX Consultant at Twilio, emphasizes the importance of personalization, using first-party data to offer relevant products and make customers feel special.

As Black Friday offers significant discounts, it becomes a prime target for scams and fraud. Emma Lovell, CEO at the Lending Standards Board, highlights the need for collaboration to combat increasing fraud levels. Preventative measures and cross-sector collaboration between financial services firms, retailers, and e-commerce organizations are essential to protect consumers and prevent a spike in fraud losses during Black Friday and Cyber Monday.

Asger Hattel, CEO of Signicat, underscores the importance of security and compliance in the face of rising fraud, particularly during peak shopping periods like Black Friday.

Black Friday’s transformation into a digital shopping event brings both opportunities and challenges for businesses and consumers alike. Embracing alternative payment methods, understanding the true value of discounts, optimizing returns processes, being aware of BNPL risks, personalizing customer experiences, and addressing fraud are key strategies for success in the evolving Black Friday landscape.