As we approach 2023, businesses are navigating a landscape of mixed signals. Inflation has slowed yet remained persistent, showing up in everyday purchases like gas and groceries, while global tensions remain high and the supply chain has yet to fully stabilize. Conversely, consumer spending, the biggest driver of the economy, has shown a degree of resilience that is compelling brands to invest in new consumer experiences, an investment that may be particularly wise if spending slows and competition for dollars grows.
So how will businesses respond in this uncertain moment? We see multiple trends coalescing around two different themes: optimizing costs and offering more choice will help businesses navigate choppy waters, and accelerating innovation in these areas will help businesses build deeper, more unified experiences with consumers for the long haul.
Carat is the operating system that large merchants use to create innovative customer experiences and maximize efficiency. Based on years of experience developing commerce solutions for the world’s largest companies, here are four trends our team is preparing leading global brands to address in 2023 and beyond.
Omnichannel commerce trends
1. Payment choice will help businesses meet consumer needs
Consumers prefer, and, in some cases, need, to pay in a myriad of ways ranging from tapping their digital wallets to paying with government benefits. From enabling payment options like buy-now-pay later (BNPL), PayPal, and pay-by-bank across channels, to allowing consumers to receive payouts instantly into the account of their choice, businesses increasingly view payments as an opportunity to maximize customer choice and create loyal experiences. As consumers navigate economic headwinds in 2023, offering more payment choice will provide much needed optionality and flexibility as they look to pay and be paid using options that best fit their financial needs.
Think of the gig economy worker who wants to be paid wages daily, the mother of four needing to use her EBT card to order a grocery delivery online, or the insurance claimant that needs funds quickly to remediate damage from a flooded basement. Each consumer has a unique payment preference driven by a real-life need. Brands will increasingly invest in payment choice in 2023 to create experiences that drive loyalty as they enable people to navigate their financial lives.
2. Businesses will optimize payment flows to protect against economic uncertainty
In addition to solving for consumer payment needs, companies are taking a hard look at where they can optimize their own costs and investments. This means introducing lower cost payment types, reducing manual processes with cloud-based solutions, and tapping into emerging technologies that boost authorization rates while reducing fraud and risk.
- For lower cost payments, flows like pay-by-bank are well positioned to gain momentum in 2023, following a broader trend toward real-time payments. By allowing customer bank accounts to be securely accessed as a direct payment option for everything from recurring subscription purchases to IOT payments, businesses will be able to reduce their cost of acceptance on a given transaction. That cost savings can benefit the brand’s bottom line and be re-invested to boost the customer experience and increase loyalty.
- Streamlining accounts receivable (AR) and accounts payable (AP) payments by closely integrating them with ERP systems will create efficiencies, enhance data protection and optimize collaboration with customers and partners, which improves cash flow.
- And finally, businesses will continue investing in fraud mitigation. During challenging economic times, history shows an increase in both first- and third-party fraud. Pairing AI/ML with robust sets of payments data will be pivotal for businesses needing to secure their digital borders in the next year.
3. Business will move their payments data to the cloud
To unlock new value from their payments data, businesses will tap cloud solutions to achieve new levels of access, analysis, and efficiency. Enabling seamless and secure data transfer via the cloud will modernize how payment data flows to decision-makers and guide business decisions.
By leveraging data in real time across business functions, companies will innovate at speeds expected in today’s rapidly changing commerce landscape. With ready-to-query payments data, businesses will also enhance consumer experiences by integrating real-time payment data into the checkout process, strengthening loyalty and rewards programs, improving decisions for embedded financial services, and fortifying fraud mitigation.
Similarly, companies will need to take advantage of enhanced access to real-time data and use it to identify customer trends that can lead to a competitive advantage.
4. Businesses will enhance digital wallet experiences to deepen consumer loyalty
As competition heats up, retailers will invest in branded digital experiences, turning to their own wallets to create value by streamlining financial experiences and driving deeper customer relationships. One example is how brands can leverage their mobile applications to streamline payment experiences across multiple wallets within their digital environment. This functionality allows consumers to store and move funds between multiple financial purses, including loyalty, prepaid, financial, and health/wellness, within the retailer’s digital wallet. Doing so allows brands to create engaging experiences and offer more services within their digital ecosystem.
To illustrate, a merchant could provide cash back into a stored value account, a healthcare wallet can hold funds to be spent at a pharmacy, or a consumer-packaged goods company can provide rewards into a consumer’s digital wallet for purchasing their product at that retailer.
The ability for large retailers to extend functionality across multiple purses within their digital wallets will help brands improve customer experiences in 2023, drive loyalty and engagement, and deliver more value to the consumer.
Carat experts know how to generate positive ROI
Gazing into a crystal ball to predict what will happen in 2023 will not offer all the answers merchants need to thrive in the next year. But merchants who invest in payment choice and optimize payment processes will be best positioned to accelerate innovation and build better experiences for their customers. And partners like Carat are here help these businesses scale and secure ROI that has a positive and tangible impact on the bottom line.
While there may be some ups and downs in 2023, we see a bright future for companies interested in long-term solutions that focus on creating new and differentiating customer experiences that encourage loyalty and drive growth.
To learn more about our omnichannel commerce solutions, contact a Carat expert today.
