Inflation has risen faster from 2021 to 2022 than in the previous four decades, impacting payment trends and consumer habits. Coming out of the coronavirus pandemic, Americans were already dealing with inflation, triggered by supply chain bottlenecks and product shortages. And after uncertainty around the Ukraine invasion, Treasury Secretary Janet Yellen stated to expect that “…inflation numbers will remain uncomfortably high.”
So, what does this mean for your clients? Simply put, when inflation goes up, one dollar buys less, directly impacting consumer habits. That certainly doesn’t mean they’ll stop buying altogether, but consumers will be savvier about their buying choices.
VARs and ISVs have the opportunity to help merchants understand how inflation is impacting payment trends and other buying habits and, more importantly, allow them to implement agile tools that cater to the budget-minded consumer.
Influence of Inflation on Consumer Habits
When consumers’ confidence in the economy decreases, their purse strings tighten. While it’s true that 95 percent of consumers plan to change shopping behavior if inflation continues, it’s important to examine what exactly this behavior change will look like.
For some consumers, this means limited discretionary spending as they brace for price increases. For others, it means delaying purchases or using credit as their go-to payment method. According to a recent study by market research firm, Numerator, half of all consumers will seek discounts and promotions.
How Merchants Can Pivot to Win More Business
The good news is that merchants can change their processes to include several tactics to win more market share during times of rising inflation.
Buy Now, Pay Later (BNPL)
Through third-party payment applications, merchants can quickly and efficiently offer consumers the ability to pay for larger ticket items over a period of time. As 49 percent of consumers plan to slash their discretionary budget, BNPL helps merchants drive sales while providing customers with the flexibility to receive merchandise at a fraction of the upfront cost and continue to make interest-free installments.
Optimize Checkout for Credit Card Payments
As rising prices increase credit card spending, merchants need to be positioned to accept a wide variety of credit card payments across all of their platforms, including in-store, online, in-app, on social platforms, and via mobile devices. Incorporating mobile wallets like Google Pay or Apple Pay is a relatively simple way for merchants to expand their credit card payment methods across channels while providing consumers a fast and convenient one-click checkout experience.
Embrace Promotions and Discounts
Budget-minded consumers are looking for opportunities to save–in fact, after a summer of soaring inflation, 20 percent of consumers are on the hunt for ways to save money. Merchants looking to keep (or win) customers can do so by creatively leveraging sales and promotions. Additionally, merchants operating discount or second-hand stores may see increased traffic and maximize their advantage using targeted marketing emails or well-timed SMS text messages to their customer lists.
ISVs and VARs: Provide the Agility and Efficiency that Your Clients Need
While inflation will rise and fall, consumer buying habits will evolve, impacting payment trends and shopping behaviors. At times when inflation is on the rise – or at any other time – give your clients the ability to adapt their businesses to changing trends, operate most efficiently and profitably, and maximize revenues.
The solutions you provide will help your clients survive trying economic times. Moreover, they’ll help your business continue to grow. Position your business as a valuable partner that can help merchants beat challenges created by inflation and keep revenues coming in.
