With 60% of Americans Planning to Use Them Over the Holidays, ‘Tis the Season for Digital Payments

With forecasts estimating that retailers will rake in upwards of $1.1 trillion in total sales this winter -- up from $1.09 trillion last year --  it’s no wonder that companies are doing whatever they can to capture the massive inflow of money this holiday season.

And while much of the excitement this time of the year revolves around retail, where as much as 30% of annual sales take place, an often overlooked segment are the companies making these transactions possible.

From the ability to send money to people instantly with our smartphones via peer-to-peer payment apps like Venmo, to companies like PayPal doing away with the need to manually key in credit card information every time we make a purchase online, Fintech companies continue to have a dramatic impact on the way the world interacts with money. 

And make no mistake, the ripples these company’s innovations create are felt beyond the P2P and B2C sectors. With the continued consumerization of IT, and flow of digitally savvy generations through the workplace, the B2B payments ecosystem is inevitably impacted by these waves.

With no better time throughout the year to analyze how payments are being made and impacting society’s views and behaviors, the team at Billtrust commissioned a research study encompassing responses from over 1,000 Americans, balanced against the US census by age, gender, location and income. Here’s what we found.

With estimates that online sales may jump as much as 18% to $149 billion during the holiday period, it’s no wonder that 74% of our respondents expect to do most of their holiday shopping online. And when it comes to transacting on mobile, with 51% of respondents expecting to purchase the majority of gifts this holiday season with their smartphones, we can expect to see mobile driving even more revenue this holiday season, outpacing last year’s 30% of online revenue.

Not surprisingly, millennials lead the way when it comes to mobile shopping, with 57% saying they expect to do the majority of their gift purchasing via mobile devices. But make no mistake, the older generations are getting more comfortable with shopping on-the-go too, with 40% of those over the age of 54 saying they expect to purchase the majority of gifts this holiday season with their smartphones.

Let us not forget about another common way that money is used during the holiday season: when it becomes the gift itself. Up until a few years ago, there were two main ways this occurred -- cash or check. And while cash still wins out, with 1-in-3 respondents saying this is how they will send money as a gift, it looks like less people will open cards with checks in them this year. We found that P2P platforms like Venmo are the second most likely way (29%) people plan to gift money this year. And when it comes to receiving, 1-in-4 respondents say that P2P platforms are the number one way they’d prefer to receive money as a gift. Only 12% said they’d prefer a check. This isn’t surprising as when asked how many times they have used a paper check to pay for something in the last six months, 44% said zero and an additional 28% said only 1-3 times.

With the rise of digital wallets and mobile payment apps reducing the time and effort it takes to make a purchase, it’s not surprising that nearly 60% of American consumers expect that they will use some form of digital wallet or mobile payment apps to purchase gifts this holiday season. In fact, nearly 1-in-3 expect to use these technologies more this holiday season than they did last holiday season.

Again, this shift holds true beyond digitally native generations, with 57% of Gen X and 51% of Baby Boomers saying that they expect to use digital wallets or mobile payment apps this holiday season. Even further, 26% of Gen X and 27% of Baby Boomers report that they expect to use digital payments more this holiday season than last.

And while solutions like PayPal and Apple Pay reduce the touch points needed to make a transaction happen, we’re also seeing a shift towards truly touchless payments. More than 12% of the total population say they plan on using voice payments (Amazon Alexa, Google Home, etc.) this holiday season -- in line with projections of voiceless payment adoption reaching 14% for the entire year. With 15% of millennials expecting to use voice payments this holiday season, we can expect the younger generations to continue to play a significant role in ushering us into a time where the payment exchange becomes an invisible part of a transaction.

It’s no secret that brands are shifting into overdrive to deliver excellent customer experiences this holiday season. From optimizing websites to account for the increase in mobile traffic, serving up personalized deals, and providing unbelievable shipping turnaround times, no part of the transaction experience is being overlooked. And for the most savvy of brands, this means the payment experience too.

41% of consumers say that, in general, when a brand provides flexible payment options, it impacts my perception of the brand positively, and nearly 1-in-5 (19%) report that if a brand does not provide flexible payment options it impacts their perception of the brand negatively. With customer experience expected to overtake everything, including price and product quality as the top brand differentiator by 2020, brands can simply not afford to overlook any touch point of the experiences they provide, including payments. 

As we head into the most wonderful time of the year, these findings give us a picture of not only what’s on the horizon for B2B and P2P payments, but also what’s in store for the B2B ecosystem. At the end of the day, just because we go to work doesn’t mean that we stop becoming consumers. The experiences and views that are shaped by how we consume inevitably impact what we do at work. This is part of the reason why we’re seeing a shift towards digital B2B payments as organizations begin to understand their benefit beyond saving time and resources associated with processing antiquated payment methods, but also as a powerful enhancer to the overall customer experience that they provide. And as these findings illustrate, this transition will only accelerate in the months ahead.