Payments

Payment experts break down which solutions will define luxury and fast fashion in the years to come

From BNPL to crypto, digital payments are taking the friction out of the payment process.
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Francis Scialabba

· 5 min read

Having a credit card (let alone more than a single credit card) was once considered a highly modern proposition, but as cash payments become less fashionable, digital payment solutions are picking up the tab.

And retailers don’t want to be left behind: From mobile payments to P2P, both luxury and fast-fashion brands are opening up a range of novel ways for consumers to pay for their purchases that make shopping both seamless and fun. Crypto, for instance, has emerged as a serious contender, especially when it comes to high-end fashion labels like Gucci and Balenciaga, both of which announced they will start accepting crypto as a legitimate form of payment.

Meanwhile, the likes of Klarna and Afterpay aim to help retailers capture a new customer tier, who aspire to buy luxury, but can now pay for it over time.

Which payment solutions will stand the test of time—and change the way luxury and mass merchants win the day? Per experts we spoke with, one thing’s for certain: Cash and physical payments are out to lunch. (However, when we polled readers on their preferred method of payment, almost half said they prefer paying with cash.)

Here are key insights from four payment experts on digital payment solutions that will shake up the fashion biz:

Easy peasy: Rory J. Cutaia, CEO and founder of Verb Technology, made the case for digital wallets that will hold equal importance both in luxury and fast fashion.As most consumers and retailers are now using mobile devices, options like Google and Apple Pay eliminates the “friction” from the payment process, Cutaia told Retail Brew.

  • “I think that [fashion] buyers are somewhat more tech savvy and sophisticated, so they’ve got their digital wallets actually set up on their devices, whereas people shopping for other kinds of products may not,” he said. “If you eliminate the friction from the process, and make it so simple for them to pay for something, they’re likely to spend more. So I think that that’s what you’re going to see happening.”

New recruits: Others like Hemal Nagarsheth, partner in the financial services practice of Kearney, sense a lot of potential in buy now, pay later (BNPL), brought about by the likes of Klarna and AfterPay as it has the ability to attract a younger tier of customers. (If you have thoughts about BNPL yourself, don’t forget to cast your vote here.)

  • “With BNPL, the potential benefit I see is specifically for luxury, versus more mass merchants,” he explained. “Given that the nature of luxury being more aspirational, we do see a different mechanism for those luxury merchants to connect with, especially the younger population. They like BNPL because they aspire, in many cases, to have a luxury experience and this could be a mechanism to drive affordability for that population…That gives you a little bit more flexibility as a merchant, because then…you don’t have to always rely on necessarily creating low-cost products or having heavy discounting or other levers that you might employ to try to get connected to that consumer.”

Coming together: Crypto is also a payment solution a lot of experts we spoke to would put their money on, especially for luxury brands. But what about fast fashion? Well, per an email from Swarooprani Muralidhar, head of Coresight Research’s India office, there will likely be a “confluence” of the digital currency when it comes to lower-end retailers.

  • “More than a trickle-down effect, we are likely to see a confluence taking place, as consumer awareness and adoption of cryptocurrency, the ubiquity of platforms, and ease of cryptocurrency payments grows,” she wrote. “Apart from Balenciaga, Gucci, and Tag Heuer from the luxury world, many retail and food service companies, including The Home Depot, Starbucks, and Whole Foods, have started accepting cryptocurrency in some form, while others are expressing interest in doing so.”
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Futuristic: But for Michael Olaye, VP and managing director of client services at digital innovation consultancy, R/GA, the real game changer will be IoT payments, which allow customers to approve a plan for payments to be made automatically based on feedback from a sensor or automated data source.

“[IoT] is one innovative payment method that has been spoken about for the last three years. It’s not integrated into society yet, but in the next five to 10 years, it will be almost everywhere,” he said. “Obviously, we’ve heard about all these gadgets such as smart fridges, and smart cars, and smart homes. As things get connected, as more devices get connected, as time goes along, these invisible payments…will become very critical in the way it looks, the ability to reorder products, the ability for your wardrobe to know when a season is coming up and be able to recommend clothing for that season. These are the things that I think will come before 2030.”—JS

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