How financial technology is transforming online shopping

November 05, 2024

*This article was written by Martha Pierson, marketing strategist and business development expert at Finturf.

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Fintech (financial technology) is making its way into every conceivable industry these days, and shopping is no exception. More and more solutions are becoming available every year that create opportunities for businesses to conduct transactions with ease. These solutions are opening the world of eCommerce to a much broader spectrum of the population than ever before, and helping businesses grow at significantly faster rates.

Fintech solutions refers to companies that set out to develop and provide innovative financial technology tools and services. These digital solutions help streamline financial operations for all sorts of businesses, from brick-and-mortar to eCommerce.

In this article, we will provide an overview of fintech solutions that are making transactions easier for people all over the world and helping shape the future of shopping.

Advantages of financial technology in online shopping

There are numerous advantages to using fintech solutions for shopping. These include:

Better customer retention

Businesses that use fintech solutions not only gain access to new customers, but also increase customer retention rates. When customers trust that a business offers easy and reliable payment solutions, they will be more likely to return to the same business in the future.

Streamlined operations

Businesses that use fintech solutions are able to integrate payment systems with other company systems, such as customer relationship management systems and inventory management systems. When they make sales, purchases automatically link to inventory in real time, allowing businesses to improve accuracy in making orders.

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Expanded customer bases

Businesses that use fintech solutions can broaden their customer bases significantly by allowing people increased access to payment systems. Payment options become accessible both to people who don’t have traditional bank accounts, as well as people in other countries who might not be able to make traditional payments due to national barriers.

Faster transactions for eCommerce companies

With fintech, eCommerce companies are seeing lower shopping cart abandonment rates thanks to streamlined checkout procedures, guest checkout options (as many people do not want to register on a site that they only use once), optimized product pages, and other website and app improvements.

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Fintech solutions driving the future of shopping

Advancements in solutions are expanding payment options for customers and driving the future of shopping. These solutions are becoming widespread globally and helping businesses expand.

DeFi

Decentralized finance, or DeFi, is gaining traction as an acceptable form of payment for shoppers. DeFi involves the use of cryptocurrencies or other digital payments to complete transactions. It allows people to make payments based on blockchain technology.

One advantage of blockchain is that it is able to sidestep third-party intermediaries like traditional banks and allow people to make payments directly. Not involving banks means that people can avoid paying fees in their transactions.

Another advantage of DeFi is that it is anonymous and transparent. People don’t have to worry about having their personal data compromised because it is encrypted on the blockchain. While Bitcoin and Ethereum are the best known forms of DeFi, many more are becoming popular, and many central banks are creating national digital currencies to make payments easier for their populations.

Mobile payments and digital wallets

Mobile payment solutions allow customers to make payments directly from their phones without having to use physical bank cards or credit cards. People can store their information on their phones and make payments with ease. Mobile payment systems involve traditional bank accounts, as well as other types of payments including loyalty cards and gift cards. They are a convenient way for people to avoid the use of cash and plastic.

Digital wallets are particular types of mobile payment solutions. Apple Pay and Google Pay are two of the best-known digital wallets. There are numerous countries that are developing their own digital wallets, and this form of payment is even becoming popular in places where the local currency is of poor value and undesirable for merchants.

Financing solutions

An increasing number of businesses are offering financing options to their customers to provide flexibility in making large purchases. For businesses in different industries, offering customer financing can greatly expand their customer bases by providing customers with different payment options. This way, their customers can choose from different options for repayment, thus allowing them to pay for large projects according to their individual circumstances and means.

This type of financing uses a PoS (point of sale) system in which customers can apply for financing at the time of purchase and make repayments according to agreements made with the contractor.

Payment gateways

Payment gateways are a secure way of sending money to make payments. They work by authenticating and transmitting data between senders and recipients. An essential feature of payment gateways is that they are encrypted and therefore secure from accidental data exposure. The better payment gateways will use fraud management solutions to further ensure protection.

Payment gateways are now widespread and there are many options to choose from. Shopify is a popular option for eCommerce startups, PayPal is big for general usage, and Clover is widely used among restaurants. Gateways vary in terms of the fees they charge, the minimum amounts they can process, and the deposits required.

Ethical shopping

Fintech is embracing the ethical demands of populations globally. As people become more concerned about sustainability, fintech is getting on board with retailers that want to prove their standards to people.

Companies that sell outdoor goods or items that appeal to environmentalists are utilizing fintech solutions that automatically provide consumers with detailed information about their sustainability levels and production standards. Solutions are increasingly able to track and report companies’ environmental impact, thus attracting much higher numbers of environmentally-conscious consumers.

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The future will see greater expansion still

As fintech solutions continue to grow in number and sophistication, they will become even more widespread. Customer satisfaction levels will rise with increased personalization, and there will be even fewer barriers to fintech solutions for people of modest means. For shop owners, the increased use of AI in fintech will allow them to predict future buying trends and adjust stock levels in advance so that they optimize their inventories. Blockchain will continue to improve transparency in monitoring supply chains, and this will help companies such as luxury goods suppliers confirm product authenticity.

Overall, businesses will increase their revenue with much greater speed.

Have article ideas, requests, or collaboration proposals? Reach out to us at editor@8fig.co – we’d love to hear from you.

Martha Pierson

Martha Pierson is a marketing strategist and business development expert at Finturf, with over a decade of experience. She shares practical tips and insights on trends in different industries to help entrepreneurs build and grow successful businesses.

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