Payments Projections: Four Trends for the Holidays

Payments Projections: Four Trends for the Holidays

John Carroll

John Carroll

John Carroll is a writer and editor at TSYS who follows and writes about the payments industry. He has more than 20 years of experience writing and editing content for various news, marketing and technical channels.

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It's the most wonderful time of the year – and for merchants, card issuers and payment processors, it's also the busiest.

By some projections, American consumers are expected to spend nearly $700 billion on goods and gifts this holiday season. That means a lot of money will move throughout the U.S. economy, especially on popular shopping days such as Black Friday and Cyber Monday.

Despite reports of its demise, Black Friday, or the day after Thanksgiving, continues to be the busiest day for shopping and payments processing of the year, according to research and payments experts.

Holiday spending in 2016 was the strongest it's been in five years, according to research by Visa. The company's report also revealed that once again Black Friday was the biggest retail shopping day of the holiday season.

"Black Friday is still relevant for merchants and payments professionals if you create a good, user-friendly customer experience," said Luca Gagliardi, senior principal and payments guru at Accenture Research. "It's the day of the year when consumers usually spend more money, and it’s also an opportunity to be closer to your customers."

Black Friday has historically been the start of the consumer-spending craze that lasts through Christmas. Legend has it the phrase was coined in 1952 Philadelphia because of the street and pedestrian traffic that snarled the downtown shopping district on the day after Thanksgiving. The phrase also refers to the first day of the fiscal year when most retailers begin to make a profit, or move into "the black."

The iconic shopping day has turned into a marketer’s dream and regularly jump-starts the holiday season, which accounts for 30 percent of the annual retail economy. This year the National Retail Federation projects that holiday spending will grow between 3.6 percent and 4 percent.

The surge in consumer spending also means a corresponding spike in transactions to be authorized by payments processors.

"Black Friday is the most important day of the year for us," said Jason Kelton, senior director for systems operations at TSYS. "Not only is it our highest volume day of the year, but it sets the baseline for our systems processing throughout peak season."

Now that the discounts and door-busters are upon us, here are four payments trends to know this season:

Fighting web traffic over foot traffic

People are spending more time in the comfort of their homes buying gifts online rather than visiting stores. A recent study by Deloitte revealed that a majority (51 percent) of Americans’ 2017 holiday budgets would be spent on goods through digital channels.

Other findings from the study include:

  • E-commerce sales this holiday season will be up roughly 20 percent from 2016.
  • Respondents earning $100,000 or more expect 57 percent of their spending to be online and 39 percent in-store.
  • At 28 percent, and down three percentage points from last year, department stores placed a distant third behind the internet and mass merchants as a shopping destination.

Mobile is the new black

The same Deloitte study also reported that 36 percent of consumers plan to use a mobile payment app during the 2017 holiday season.

That means more consumers are getting comfortable with using mobile payment services. The speed, convenience and security of paying with a smartphone are major drivers of the increased adoption. Plus, a recent report from App Annie predicts that this year's Black Friday will be the biggest mobile shopping day ever in the United States.

"Mobile payments are catching on among consumers and merchants alike, and it's easy to see why," said Jason Oxman, CEO of the Electronic Transactions Association. "Mobile wallets like Apple Pay, Samsung Pay and Android Pay offer consumers a fast and seamless checkout experience while also adding extra peace of mind at the point of sale (POS) through advanced security features like encryption and tokenization."

Black Friday goes global

Despite being an American phenomenon, the popularity of Black Friday is growing on the international stage. Countries such as Germany, France, Sweden and the United Kingdom have jumped on the shopping frenzy bandwagon to help drive commerce and stimulate their respective economies.

A report by Adobe Digital Insights revealed that Black Friday would be the biggest online shopping day of the year for the aforementioned countries this season.

Accenture's Gagliardi added that the global expansion of Black Friday is driven by the combination of "non-U.S. consumers buying more goods through e-commerce channels" and more international merchants focusing on the popular shopping day.

Thanksgiving volume is growing

As most brick-and-mortar retailers now open on Thanksgiving Day and e-commerce sites remain open 24/7, the amount of money flowing on Thanksgiving is growing.

Indeed, what is normally a quiet family day of thankfulness before the storm of activity on Friday, has now become a bustling day of commerce. This year, large retailers such as Walmart and Target plan to open at 6 p.m. on Thanksgiving, while other stores such as Big Lots and Dollar General will open at 7 a.m. JCPenney will open at 2 p.m. on Thanksgiving, one hour earlier than last year, and three hours before rivals Kohl's and Macy's.

So despite all the skepticism, Black Friday is still by far the most important day of the year for retailers – and it starts earlier every year. It may just look a little different in 2017 with the uptick in e-commerce and mobile payments.

Four Payments Trends for the Holiday Season

The statements and opinions of the writer do not necessarily reflect those of TSYS.

Other Articles by John

John Carroll

John Carroll is a writer and editor at TSYS who follows and writes about the payments industry. He has more than 20 years of experience writing and editing content for various news, marketing and technical channels. His articles have published in the Atlanta Journal-Constitution, the Columbus Ledger-Enquirer, the Daily Report and Georgia Trend.

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