Payments Technology Navigates Inflationary Headwinds This Holiday Season, Finds TSG/ETA Survey

BNPL usage rises as consumers seek budget-friendly options; free and fast shipping remain paramount

WASHINGTON, Oct. 29, 2024 /PRNewswire/ -- A seamless and budget-conscious payments experience is essential for consumers navigating this year's holiday shopping season. Inflation and economic uncertainty are shaping purchasing decisions, driving increased adoption of Buy Now, Pay Later (BNPL) and continued emphasis on value-added services like free and fast shipping, according to a new survey conducted by TSG (The Strawhecker Group) and the Electronic Transactions Association (ETA).

"Consumers are demonstrating resilience and resourcefulness in the face of economic headwinds," stated Jodie Kelley, CEO of ETA. "The payments industry is evolving to meet these changing needs by providing flexible and popular options like digital wallets, P2P, tap to pay, 1-click, and BNPL that empower consumers to manage their holiday spending."

"Savvy shoppers are prioritizing value and convenience this holiday season," said Mike Strawhecker, President of TSG. "Merchants who offer a frictionless checkout experience with diverse payment options and attractive shipping incentives are well-positioned for success."

Ease of use and affordability drive consumer behavior.

Consumers like using digital payment options.  Well over half of consumers are using P2P, digital wallets, 1-click, and tap-to-pay on a regular basis. On average, 82% of consumers have tried these payment options.  Since last year's survey, BNPL usage has grown 4%, driven primarily by Gen Z and Millennials. While digital wallet adoption remains high, usage has seen a slight dip (6%) year-over-year, potentially reflecting a shift in spending habits.

The survey found that BNPL is becoming a key budgeting tool, enabling consumers to manage their holiday spending. 70% of consumers plan to set a budget this year, but most anticipate exceeding it, highlighting the importance of flexible payment solutions.

Concerns over inflation impact spending decisions.

The survey revealed that rising costs (71%) and affordability (57%) are the top concerns for holiday shoppers. This heightened price sensitivity underscores the need for merchants to offer competitive pricing and attractive deals.

Younger generations (Gen Z and Millennials) continue to be early adopters of newer payment technologies, driving the growth of BNPL and demonstrating greater comfort with digital wallets. In contrast, older generations remain more focused on traditional payment methods and cost-saving strategies.

Most consumers plan to maintain similar spending levels as last year, but with a greater emphasis on finding the best deals and maximizing value.

ABOUT ETA: 
The Electronic Transactions Association (ETA) is the world's leading advocacy and trade association for the payments industry. Our members span the breadth of significant payments and fintech companies, from the largest incumbent players to the emerging disruptors in the U.S. and in more than a dozen countries around the world. ETA members make commerce possible by processing approximately $47 trillion annually in purchases and P2P payments worldwide and deploying payments innovation to merchants and consumers. Please visit electran.org.

ABOUT TSG: 
TSG (The Strawhecker Group) is a globally recognized analytics and consulting firm that supports the entire payments ecosystem, serving over 1,000 clients from Fortune 500 leaders to more than a dozen of the world's most valuable brands. Trusted by industry leaders, TSG's strategic services, market intelligence, and analytics merge to empower clients with actionable and accessible information. Please visit tsgpayments.com.

MEDIA CONTACTS:
Scott Talbott

ETA
[email protected]

Andy Nuss
TSG
[email protected]

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SOURCE Electronic Transactions Association (ETA)