The big shift: Consumer power and payment choice in a post-COVID worldMay 30, 2022
In March 2020, Interac began studying the impact of COVID-19 on Canadians’ retail habits.
Today, while panic buying has slowed and in-store shopping has returned, one thing is clear: Canadians’ retail expectations have changed. In a world of increasing local and global competition and decreasing margins, it is more important than ever for businesses to understand, meet and exceed those expectations.
Canadians moving from cash to digital payment methods
The move from cash to digital payment methods was well underway before the pandemic started. In less than a decade, the share of in-person cash transactions fell from 54 per cent in 2009 to 17 per cent in 2020.
When the pandemic hit, the shift accelerated. There was a 10 percentage-point drop in cash’s share of total transactions in 2020 alone.
While Canadian consumers are not making as many online purchases today as they did in April 2020, it’s clear a permanent shift has taken place. More than half of Canadians report using digital payments more frequently during the pandemic, and 60 per cent report they don’t want to go back to using cash.
Canadians want to support local businesses
More than half of Canadians say their desire to support local businesses is causing them to shift their spending by shopping closer to home. Shopping local is about more than convenience. Fifty per cent of people would pay more for the same product, and close to half would wait longer for delivery or pick up if it meant supporting a business in their community.
This, coupled with the shift to remote work, may be a lasting trend that will positively impact local business recovery. However, customers still expect convenient, digital payment options, even when shopping close to home.
Canadians expect choice and convenience when making a purchase
When Canadians are shopping, they expect a frictionless, digital experience. In fact, 66 per cent of Canadians said businesses that fail to adapt to digital payments would struggle.
Another element of convenience? Payment choice. Debit is an essential payment option for many Canadians, and 72 per cent believe consumers should have the option of using debit no matter if they are checking out online, making a purchase in-app, or paying in-store.
Plus, needing to find an alternate method of payment is another major source of friction, one that could lead to abandoned carts and lost sales (more on that below).
Focus on omnichannel payment experiences for your business
In today’s ultra-competitive retail landscape, one inconvenience can cause customers to abandon their purchase. Each abandoned cart represents the loss of revenue and profit and, potentially, a customer’s loyalty.
That’s why omnichannel experiences are essential for the future of retail. In an omnichannel experience, the customer is at the center, and they can seamlessly transition between brick-and-mortar, online, in-app or on social. This means creating a consistent experience for your customer, empowering them to shop how they want to shop and pay how they want to pay. When omnichannel retail experiences are done right, the payment becomes frictionless and increasingly invisible.
Focusing on omnichannel payments and the shift to digital commerce can give businesses a competitive advantage. The businesses that understand and deliver on consumers’ changing expectations, reduce abandoned carts, and increase customer satisfaction will come out on top.