When Walmart filed to trademark “Hazel by Walmart” last month, observers finally had an answer to the head-scratcher from the retail giant earlier in the year, when it announced a fintech partnership with Ribbit Capital. The trademark described a fintech unit that would develop a wide array of financial services for Walmart customers, including credit cards, credit repair, financial portfolio analysis, and even “virtual currency transaction processing services.” It was just the latest move by Walmart in the payments and fintech space, following the company’s development of the mobile wallet solution Walmart Pay and a shoppable livestream partnership with TikTok.

Walmart’s big bet on fintech reflects a broader trend behind an expanding and evolving financial relationship between consumers and brands and retailers. The past several years have seen the introduction of new types of payments and financial relationships such as contactless and flexible payments, social commerce buttons and live selling, buy-online-pickup-in-store (BOPIS) and curbside pickup, crypto transactions and blockchain-driven experiences. These innovations increase flexibility, reduce friction, entrench the relationship between buyer and seller, and, perhaps most crucially, provide valuable data on consumers’ buying behavior, even their financial profile.

Meeting customers where they are: online

The primary driver of payment innovation is the growing share of commerce taking place online. As a blend between e-commerce and physical retail becomes the norm, payments on TikTok or WhatsApp are less a novelty and more a necessity. Brands and retailers are responding to the desires of a more digital consumer base that is fluent and interested in moving from channel to channel. 

According to McKinsey, alternative payment methods are a result of not just the ability to create digital solutions, but also”the rapidly increasing digital share of retail commerce.” Consumer use of digital payments grew 78 percent in 2020.

The proliferation of marketing channels offers an opportunity and a challenge: more places to reach consumers but also a great deal of friction if customers see an item they like on a digital channel but have to navigate to the brand’s website or physical store to get it. Innovations such as social commerce and live selling address this issue, meeting customers where they are online, as do payment methods such as one-click transactions and BOPIS.

“The big thing around the future of commerce is that checkout is happening everywhere,” said Mary Lague, vice president of research at Pilot44 Labs. “It’s going to be more important for brands to offer checkout in a seamless shopping experience on every channel.”

Ninety percent of retailers expect to offer BOPIS by 2025. The transaction innovation is not just a way to entice consumers browsing on the Internet with the appeal of same-day pick-up in-store. It’s also a sales booster, as 80% of customers who use BOPIS say they shop for other things when in-store.

Live selling has also emerged as another novel payment method, is when brands make sales via livestream on platforms such as TikTok, Instagram, or, in China, Alibaba’s Taobao Live. The practice has taken off in China, where it was expected to grow 100% last year and make up 9% of all online retail sales.

US and European firms want in on the action. Estée Lauder’s livestream on Alibaba’s Singles Day drew 500 million views and generated $28 million in sales. L’Oréal boosted its Singles Day sales by 700% through the same channel.

Live selling turns the sales process into an experience and offers the added benefit of a charismatic personality, often an influencer, showcasing the product’s appeal in real-time. This is perhaps why it’s been especially powerful at driving sales for beauty brands.

Turning payments into a revenue generator

Some payment innovations are allowing retailers to transform payments from a friction point in the customer experience into marketing mechanisms and revenue generators. 

As digital’s share of retail commerce has risen, online cart abandonment has become an urgent issue. Retail marketing firm Listrak estimates that customers abandon their cart before completing a purchase 81% of the time.

A major driver of cart abandonment is outdated payment methods that offer nothing in the way of personalization or deals to the customer but demand several minutes of checkout time.

“As soon as you introduce putting in your address, putting in a password — people drop off really quickly,” Lague said, noting that most cart abandonment occurs “because the checkout experience is too cumbersome.”

But savvy retailers are flipping the process on its head by offering multiple payment options such as Google and Apple Pay and flexible payment options such as Klarna, Affirm, and Afterpay that allow customers to spread out their purchase across multiple installments. Klarna estimates that its flexible payment solution can increase order volume by 30% and order size by 34%. 

Macy’s sees the value-add. The company is not only offering four interest-free payments to its customers via Klarna, it also invested in the fintech company. At the time of the announcement, Macy’s chief digital officer Matt Baer suggested that Klarna could expand the department store’s total addressable market by bringing in customers who might otherwise be hesitant to shop there. Klarna “will help us reach wider audiences looking for seamless alternative payment solutions that provide them with financial control and convenience,” he said.

Collecting data and driving experiences with it

By offering customers with new ways to pay, as well as credit services, loans, and even financial asset management, retailers open up a new and comprehensive world of consumer data. McKinsey predicts that these services, which can be grouped under the term embedded finance, will be a $7 trillion industry by 2030 and generate $230 billion in new revenue by 2025.

Walmart’s Hazel ambitions could see it become not just its customers’ go-to retailer but also their creditor and financial advisor. Similarly, Ikea took a 49% stake in its financial services partner Ikano Bank and expanded its consumer banking services. Becoming a customer’s creditor or financial manager offers a rare level of insight into consumers’ preferences and purchasing habits. The move would seem especially beneficial to Walmart, which has increasingly positioned itself as an advertising platform (Walmart is not alone, Target and several others are also building advertising businesses).

Creating currency flexibility with bitcoin and the blockchain

Companies are racing to establish themselves as leaders in the cryptocurrency space. Earlier this year, Tesla started allowing US consumers to buy cars with Bitcoin. Visa said it would allow payment settlements using crypto. 

“As more people look to pay for goods and services with crypto, banks and payments providers will have to evolve to meet rising demand,” said Vidya Peters, CEO of card issuing platform Marqeta, who sees an expansion in blockchain as well.

Blockchain allows businesses to create smart contracts that reduce management burdens, faster transactions, and cooperative loyalty programs across related but different companies, such as travel and hotel businesses, according to Deloitte.

Differences around the globe

But don’t expect innovations in payments and fintech to play out evenly around the world. Perhaps unsurprisingly, Chinese consumers have adopted new forms of payments at a rate greater than 50%, while South Africa sits around 10%, according to McKinsey. But that’s okay; countries vary in the currencies they use. Brands and retailers will need to shift their strategy by country, digitizing and testing in markets with more progressive consumers. And at the end of the day, many consumers will still prefer cash. Companies like Rappi in South America will be there to bridge the gap between companies and these laggard consumers.