3 Industries Experiencing a Payments Revolution

Ross McFerrin, VP Enterprise Growth, Trustly

In the past couple of years, remarkable evolution has happened in payments. What once was a necessary part of doing business has now evolved into a driver of top-line growth. For many industries, payments are a noticeable differentiator. The catalyst for payments innovation isn’t always the same. In some industries, the primary cause is changing workforce requirements. For some, it’s industry changes. For others, it’s shifting consumer behaviors due to the pandemic. 

For three industries, payments innovation has been critical to remaining competitive. Grocers, Quick Service Restaurants (QSRs), and Gas & Convenience stores aren’t always strongly associated with digital checkout experiences. However, that has changed dramatically in the past few years. Now, businesses are looking to delight consumers with an efficient, safe payments experience. Here’s a look at these evolving industries and how payments innovation is driving change: 


For grocers, the payments revolution stems from an enormous shift in consumer behavior. Many consumers started buying groceries online during the pandemic and continue to do so, even with COVID-19 restrictions lessening and in-store shopping becoming more feasible. In 2022, online grocery store sales are expected to hit $147.51 billion, a 20.5% increase since last year. It’s not likely to slow down, either. Statisticians have predicted that the market will quadruple online sales from 2019 to 2025. 

Providing consumers with a fast, reliable, and intuitive shopping experience is key to capitalizing on this growing market—and payments are a massive part of that. To balance the ultimate shopping experience with the cost of operational expenses, grocers must think through three critical elements: the development of digital ordering systems that account for repeat orders, the potential onboarding of third-party systems (i.e. Instacart, DoorDash, Uber Eats, etc.), and the inclusion of the right payment providers. 

When choosing which payment providers to integrate with, grocers should consider consumer preference and operational costs. Millennials and Gen Z buy more groceries online than any other age group. These younger consumers are more open and positive about alternative payment methods and are willing to remain loyal to supermarkets that offer their preferred payment on file. 

However, integrating with payment methods that depend on credit card systems (including digital wallets) could be costly for grocers. Processing costs for credit card payments range from 1.15% + $0.05 to 3.15% + $0.10 in interchange fees, plus an additional 0.14% to 0.17% in assessment fees. In grocery sales, supermarkets like to keep prices low to remain competitive, so these costs can be significant. The average profit margin of a grocery store is 2.2%—any increase in payment acceptance costs can be incredibly painful. Many grocers, such as Kroger and Albertsons, have offset these costs and made checkouts quicker by integrating alternative payment options for loyal customers, known as Kroger Pay and Albertsons Pay. 

Integrating additional payment options not associated with steep processing costs can go a long way for grocers. To create a win-win for merchants and consumers, merchants must find payment options that are fast, easy, and reliable, and also not associated with costly credit card fees. Open Banking Payments cut out the middleman and allows consumers to pay directly from their bank account.

Quick Service Restaurants (QSR)

In spite of the effects of COVID-19, QSRs that adapted to change, rather than resisted, managed to meet consumer needs and facilitate growth. Over the past 2 years, many consumers have opted to forgo in-person dining options in favor of pickup and delivery options. As a result, many QSRs incorporated more robust ordering and payment options. Consumers, therefore, became more comfortable with an all-digital experience and alternative payment options. They also developed high expectations for a seamless, omnichannel experience. 

It’s no surprise that we’ve seen the new norm for QSR ordering become in-app purchases. In addition to speed and convenience, these apps make loyalty programs more accessible for consumers. Nearly half of restaurant goers engage in a loyalty program of some sort, and as many as 34% say that improvements to the way they pick up and order food will have the greatest impact on their loyalty. However, these apps are in constant competition with delivery aggregators. In order to remain competitive, QSRs should consider continuously enhancing the UX for their mobile apps while incorporating convenient payment options that delight consumers. 

When choosing which payment options to include, QSRs should think out of the box. Incorporating a variety of payment options can help improve conversion by as much as 30%. Non-traditional options, like Starbucks’ shake-to-pay initiative, can potentially extend value to the consumer while reducing operating costs and queues. Other QSRs have taken notice. Chipotle has made significant investments in optimizing its app, including payment options, as a way to attract more digital ordering. It has paid off, too. Digital ordering now accounts for more than 50% of all sales at Chipotle. Open Banking Payments can help QSRs reduce operating costs by reducing the number of consumers paying with cards and driving loyalty by allowing consumers to pay using an entity they already trust: their bank account. 

Gas & Convenience 

The reduction in trips to the pump left many C-store operators looking for ways to offset revenue that used to be associated with gas purchases. Many did so by adding or stocking up on products that were traditionally popular. Additionally, more consumers looked to convenience stores for household and grocery items. Despite the overall drop in total industry sales in 2020, these factors contributed to inside sales creeping up 1.5%, and basket size increasing by 18.4%. 

An aversion to cash and consumer preference for touch-free solutions led to record high credit and debit card sales for C-stores in 2020. However, with the average purchase amount being lower than other industries, C-stores sometimes struggled with card processing costs. Aside from labor, swipe fees remain the largest operational cost for C-stores.

Fraud costs are also a major concern for C-stores. In fact, 43% of Americans said they’d change how they pay for gas because of skimming fears. New EMV technology can reduce skimming but is expensive and unrealistic for some C-stores. Even more, as of April 2021, major credit card companies no longer cover the cost of chargebacks from fraud committed at pumps where EMV tech is not available. This liability now falls on C-stores.

C-stores are beginning to look for payment alternatives that reduce harmful processing costs and can remain secure in the face of fraudulent behavior and skimming attempts. Open Banking Payments are a contactless option with processing costs roughly half that of credit cards. Additionally, bank-grade security reduces risk for C-stores and can give peace of mind to consumers who fear skimming attacks.

Payments in 2022 and Beyond 

For the Grocery, QSR, and Gas & Convenience industries, the payments revolution is here. Open Banking integrations make perfect sense for these industries. In addition to the reasons already stated, all three industries have traditionally been debit-heavy, making Open Banking a logical next step. Additionally, consumers tend to make consistent purchases within these industries which means that the money is already allocated and there’s no need to use payment methods that risk putting them into unnecessary debt. 

Grocery, QSR, and Gas & Convenience aren’t the only industries where payments will dramatically transform. The National Retail Federation (NRF) estimates swipe fees have increased from $20 billion a year since 2001 when the trade group began tracking them, to $110.3 billion as of 2020 – and show no signs of slowing. Merchants will want to integrate and encourage payment options that reduce these fees. This, combined with an increasingly cashless, digital society and the desire to pay with financial accounts, will pave the way for Open Banking and pay-with-your-bank technology.  

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