Retail Payments Acceptance Presents Innovation Roadblocks

man online shopping

Among the many payment acceptance tools now available, embedded solutions provided by a variety of payment facilitators (PayFacs) have become increasingly popular among marketplaces and independent software vendors (ISVs), both of which leverage embedded payments to improve efficiencies and fortify customer engagement.

But as a recent report from PYMNTS Intelligence found, all three players are faced with a variety of challenges hampering their innovation efforts. The report, “Embedded Payments and the Retail Innovation Agenda,” draws on 2023 survey responses from nearly 300 industry executives and offers a snapshot of how PayFacs, ISVs and marketplaces are faring in today’s retail sector.

graphic, payment compliance

Survey respondents made it clear that current economic conditions cause the most widespread anxiety. Seven in 10 say borrowing costs and inflation specifically represent their biggest challenges. In fact, 38% of retail PayFacs and 41% of retail marketplaces say economic uncertainty hinders their ability to plan for the year ahead.

Workforce challenges are another stress point, with 31% of retail PayFacs predicting it will be their largest hurdle to overcome in 2024. Twenty-two percent of retail marketplace executives say the same.

Meanwhile, nearly half of retail marketplaces and almost 6 in 10 retail ISVs identify compliance requirements as the biggest obstacle they face as they try to innovate their products and services.

Where 37% of ISV respondents say navigating compliance regulations are a challenge, 59% of ISV respondents single out regulations the biggest challenge they face when it comes to bringing innovations to market — nearly double the 28% average observed across all ISVs studied.

Not far behind are retail marketplaces. Forty-seven percent of retail respondents say regulatory compliance is a challenge, while 27% saying it is the biggest challenge they face when bringing innovations to market.