Writing for Payment Expert, Rich Bayer, UK Country Manager for Clearpay, details why retailers and merchants should look to evolve with the digital-native times and embrace social media channels and shops to stay ahead of the curve and appease Gen Z and Millennial customers.
Digital connectivity, online shopping, and mobile usage have revolutionised consumer buying habits. While there’s still a place for brick-and-mortar stores, mobile-first shopping will continue to ring true.
This evolution has significant economic potential for the retail and the tech sector. As a result of changing consumer habits, mobile commerce retail sales are projected to grow to £109bn by 2027 – up from £96bn in 2024. Consumers are demanding a seamless, flexible payment experience that requires payment providers to innovate at speed to help retailers meet these expectations, or risk losing out to competitors.
It is, of course, Gen Z and Millennials who are leading this shift in consumer spending habits. These digital natives have grown up with mobile shopping, driven by convenience and digital fluency, and social commerce is playing an increasingly important role in shaping these consumer behaviours.
Platforms like TikTok and Instagram, which 40% of Gen Z respondents cite as major influences on purchasing decisions, demonstrate the growing importance of meeting consumers where they shop.
Payments providers and retailers are innovating to keep pace
As this shift towards mobile-first retail embeds further, retailers are leaning into payment innovations that support mobile and social commerce. This is critical for them to attract and retain these digital-native shoppers.
For payment providers, offering integrated and flexible solutions that enhance the mobile and social shopping journey is key, and innovation in payments must reflect the needs of retailers to meet consumers where they shop. Greater investment in social commerce strategies to drive engagement with digitally native shoppers and increase brand loyalty on the platforms they use is already evident.
Instagram introduced its “checkout” function as early as 2019, with TikTok following suit in 2023 with its “TikTok shop” functionality, both driving greater conversion rates and engagement for brands.
More broadly, changes in consumer spending preferences require retailers to continue to offer payment choice. Buy Now, Pay Later (BNPL) products that allow consumers to manage their spending by spreading the cost of purchases over the short term, are part of this mobile-first approach. The entry of BNPL shopping platforms, such as the Clearpay app, offer consumers a seamless journey on their phones, to search for merchants offering products they want and being able to pay for them quickly and easily.
The future of payments will be mobile-first
The digitally-native shoppers of today will be the leaders of retail tomorrow. This means mobile-first payments are set to dominate the retail landscape, so payment providers and retailers must embrace this approach to stay competitive and relevant in this rapidly evolving landscape.
This presents an opportunity for payment firms to go further and faster as they innovate for the next generation. Embedded finance options – including digital wallets and virtual cards – will further enhance the customer experience and allow for secure and seamless authentication at check-out, whilst rapid evolution in the way data, technology and AI has the potential to unlock personalised payment experiences and improve scam and fraud detection earlier.
It also brings challenges for the sector as it still grapples with online safety, access to data and the threat of more evolved, tech-enabled fraud activity.
Globally and in the UK, policymakers and industry alike are set to tackle these challenges head on through new laws and regulations which protect consumers whilst supporting innovation, but payment providers will need to be quick to adapt and evolve to these challenges.
For those who do, there is untapped potential to drive growth and be part of a generational shift which will shape the future of retail payments.
