Optimizing Costs While Investing in Experiences

PYMNTS asked industry executives across the payments and digital commerce landscape to give us their take on the pivotal shifts, technological advancements and strategies that have shaped business in 2023. Their responses show critical trendlines to watch in the new year. Casey Klyszeiko, head of Carat and eCommerce at Fiserv, points to innovations that optimized efficiency.

In a year of strategic shifts, many businesses opened 2023 navigating a choppy macroeconomic landscape. Inflation was slowing but remained persistent, and global tensions continued to apply pressure to the supply chain. Meanwhile, consumer spending, the biggest driver of the economy, was showing a degree of resilience that was compelling online businesses to invest in new consumer experiences, an investment that would prove particularly wise if spending slowed and competition for dollars grew.

As a result, throughout 2023 we saw businesses prioritize two simple concepts: optimizing costs and maximizing payment choice. By accelerating innovation in these areas, businesses were able to operate more efficiently throughout the year, while building deeper, more unified experiences with consumers for the long haul. Here are a few innovative ways we saw this play out.

Advancements in Digital Wallets

Originally positioned as a tool offering consumers more convenience and simplicity at checkout, the utility of digital wallets has progressed significantly. In 2023, we saw large merchants increasingly use wallets within their retail-branded apps to create focal points for consumer engagement. By integrating omnichannel wallets within apps, retailers began to streamline disparate elements of the customer journey such as loyalty, rewards, financial services, and health and wellness. The result is a reimagined experience that allows businesses to create more value for customers, moving a retailer’s digital wallet from simply being a payment source to being a dynamic financial hub allowing customers to earn, shop and save through a centralized location, online and in-store.

A Rise in Pay-by-Bank

As wallets become a hub for more payment activity, merchants are capitalizing by driving adoption of payments options that can strengthen customer retention and streamline operational costs.

One leading example in 2023 was an increase in merchants deploying pay-by-bank solutions. As simple as the name sounds, “paying by bank” is just that — allowing a consumer to link their bank account information within a digital wallet to pay for goods or services. This account-to-account payment method allows the merchant to offer loyalty incentives or discounts to the consumer while also improving operational efficiency — a true win-win.

The Platformization of Business

From retailers and service-based businesses to niche verticals like rentals and logistics, industries of all types began uncovering new use cases for using software in 2023. This “platformization” of business is occurring rapidly and creating significant opportunity, with businesses embedding payment flows through software platforms to enhance buying experiences for their customers, streamline their own operations, and create new revenue streams within their business models.

As we work with our clients to plan for 2024, we’re having similar discussions around operational efficiency and customer experience — with more global brands viewing payments as a conduit to improving both. Whether that means delivering financial services through wallets, maximizing use of alternative payments, diving deeper into embedded capabilities or investing in digital experiences that streamline customer journeys, these calculated investments will shape the future of commerce.