As technology and business trends continue to evolve, so do the needs of business owners and consumers. And let’s face it, the pandemic was a key indicator that keeping up with the Joneses and offering customers multiple payment options is a sound business strategy. It’s essential for businesses of all sizes for the direct impact on revenue, customer satisfaction and being flexible with your customers when it matters most.

Additionally, payment processing trends affect the security and compliance of payment transactions. Therefore, keeping up with payment trends ensures that businesses can provide secure payment options while complying with ever-changing industry standards and regulations.

By adopting the payment processing technology we summarize below, businesses can provide customers with a seamless payment experience and give their business the tools it needs to be competitive and boost efficiency.

  1. Embedded Payments
  2. Buy Now Pay Later
  3. Subscription-Based Payments
  4. Real-time Payments
  5. Cash Discounting and Surcharging

Trend 1: Embedded Payments

Embedded payments, also known as integrated payments, have taken the payments industry by storm, and for good reason. So, what exactly are embedded payments and how do they work?

At their core, embedded payments are payment processing solutions that are integrated directly into a SaaS platform’s software, application, or website. This means that customers using the software can complete a payment without ever leaving the product or service they are using. Keeping it simple, think of a time when you ordered a pizza through a food delivery app like GrubHub. The payment process is embedded within the app itself, streamlining your experience rather than being redirected to a separate payment platform.

Another way to think about this is when you hand your card to the cashier in an automotive repair shop that uses software to manage appointments and provide estimates in the shop or via email. With embedded payments, shop owners can manage all aspects of their business and collect payments at the time of service or with features like text-to-pay all within the software. Even better, embedded payments help businesses say goodbye to reconciling nightmares and double entry as transactions are reported within the software.

The benefits are clear. Embedded payments can enhance the customer experience by providing a seamless and secure payment process within the software solution. This can help build customer trust and loyalty. Additionally, embedded payments can simplify payment processing, reduce errors and operational costs, and improve cash flow by helping customers get paid faster. Overall, embedded payments help businesses boost efficiency and revenue while enhancing the customer experience.

Trend 2: Buy Now Pay Later (BNPL)

Buy Now Pay Later (BNPL) is a payment option that allows consumers to make purchases and defer payment until a later date. BNPL providers offer customers an interest-free loan to make purchases, with the option to pay the balance off in installments over a set period of time. Customers can typically choose the number and frequency of installments that work for them, which can help make larger purchases more manageable.

Next time you are shopping online, take a look before checking out and think about how these options might look in different retail settings.

BNPL providers typically partner with retailers to offer their services at the point of sale, making it a convenient option for consumers to make payments on their own terms. This solution has become increasingly popular particularly for younger consumers who may prefer to avoid credit cards and traditional loans.

Offering Buy Now Pay Later to your customers can provide a number of advantages for both your business and your customers. By allowing customers to spread out payments over time, you can attract customers who may not have been able to make a purchase otherwise. For businesses, offering BNPL can increase sales and revenue by reducing cart abandonment rates and providing an attractive payment option for customers.

Trend 3: Subscription-based Payments

Subscription-based payments have become increasingly popular in recent years, particularly in the realm of digital services and products. The convenience and predictability of subscription payments make them an attractive option for consumers who want to avoid hefty payments up front or lengthy contracts.

For businesses, subscription-based payments provide a predictable revenue stream, which can be highly valuable for SaaS companies and other subscription-based businesses. Mainly, it helps businesses reduce the need for costly marketing and customer acquisition efforts by having monthly retainers with existing customers.

The trend towards subscription-based payments has only accelerated in the wake of the pandemic, as more consumers shift to online services and entertainment. As such, businesses that offer subscription-based payment options can take advantage of this growing trend and benefit from a predictable revenue stream and increased customer loyalty.

Trend 4: Real-time Payments (RTP)

Real-time Payments (RTPs) are in line with the expectations of how the world should process payments. No more waiting for deposits to hit or checks to clear. RTPs refer to an electronic payment system that enables immediate and instantaneous transactions between two parties. The most well-known examples of Real-time Payments in the United States are The Clearing House’s RTP network and FedNow, the Federal Reserve’s anticipated real-time solution projected to launch in 2023.

Unlike traditional payment methods that can take several days to complete, real-time payments allow for near-instantaneous transfer of funds. This is made possible by a network that connects banks and other financial institutions, allowing them to communicate and transfer funds in real-time.

With real-time payments, you can make and receive payments 24/7, 365 days a year, without any delays or interruptions. This makes it a convenient and efficient payment processing option for businesses and individuals.

From a speed perspective, the benefits of RTPs are clear. Payments are sent and received faster than ever before, giving small business owners exactly what they need, immediate cash flow. While speed is a primary benefit, the biggest impact is the reduction in money that’s locked up in the various stages of payment processing. The guarantee that funds clear instantly improves liquidity for small businesses and paints a clear picture of their finances in real-time.

Real-time payments also reduce the risk of fraud and errors, as funds are transferred within seconds. With a reduced number of transactions that require manual attention, i.e., a failed payment, businesses can also reduce costly, time-consuming reconciliation issues.

Trend 5: Cash Discounting and Surcharging

Cash discounting and surcharging are two pricing strategies that can help businesses offset the cost of accepting credit cards by sharing processing costs with the end consumer.

What is a Cash Discount?

Cash discounting is a method of offering a discount to customers who pay with cash, while customers paying with credit card pay the advertised rate. The advertised rate has a built in amount to help account for the processing cost.

What is Surcharging?

Surcharging involves adding a fee to the total purchase price for customers who pay with a credit card, while offering the lower advertised price to those who pay with cash. Surcharging is legal in most states in the U.S., while cash discounting is legal nationwide.

These methods can be used to encourage customers to pay with cash, which can help businesses offset the cost of credit card processing. However, it’s important to note that these methods come with legal and regulatory considerations that should be carefully evaluated before implementing them.

For businesses, these pricing strategies generate real savings and help put money back into the business that can be reinvested elsewhere. This can be especially beneficial for small businesses that operate on tight budgets.

If you are interested in implementing a cash discount or surcharging program, Clearent can support all business types with our industry leading cash discount and surcharging programs.

In conclusion

Payment processing technology is constantly evolving, and staying on top of the latest trends is crucial for businesses to remain competitive. The top 5 payment processing trends to follow in 2023 and beyond include embedded payments, Buy Now Pay Later, Subscription-based Payments, Real-time Payments, and Cash Discounting and Surcharging Programs.

These trends are not only shaping the future of payments but are also transforming the way businesses operate and interact with their customers. As we move forward, it’s important for business owners to embrace these trends and partner with a processing company who can help implement them to enhance customer experiences, increase efficiency, and drive revenue growth.

Want to see how Clearent could help your business? Connect with us to start a conversation.

Article by Clearent by Xplor

First published: March 09 2023

Last updated: May 30 2024