What began as a mark of the Christmas shopping season in the US, the first Friday after Thanksgiving has become a worldwide shopping phenomenon: Black Friday. While it began as a day of price slashes, shopping frenzy and scraps over the last TV in Walmart, Black Friday is changing: it is going digital. 

In fact, Black Friday online sales grew 3.5 per cent to $65.3billion globally in 2022. But macroeconomic conditions across the globe may be putting continued growth in danger this year. As the cost of living increases for consumers right the way across the globe, many are being forced to tighten their grip on the money left in their pockets.

With this in mind, we hear from a number of fintech experts which explore what firms can do to ensure they enjoy the best success on Black Friday, and how consumers can avoid falling victim to bad decisions and fraud.

Changing shopping habits 

Despite the continued popularity of traditional payment methods such as debit cards (67 per cent) and credit cards (50 per cent) for holiday shopping, new research by payments platform Paysafe highlights a noticeable shift toward alternative payment methods (APMs).

Overall, 48 per cent of consumers favour digital wallets when shopping online during the holiday season, with 41 per cent regularly using bank transfers and 25 per cent embracing online cash payment solutions, also known as eCash.

Rob Gatto, chief revenue officer at Paysafe, explains that in order to capture the most consumer attention on Black Friday, retailers must embrace a wide range of payment methods: “There is more competition than ever between retailers to ensure they are the final shopping destination for consumers.

“Merchants who offer multiple payment methods and a seamless payment experience will create differentiation, cater to new audiences and increase conversion rates.”

Is Black Friday losing its shine?

Part of a broader trend of Black Friday losing its shine for shoppers, findings from open banking firm, Tink, show consumers are steadily more sceptical of the value it provides.

Thirty-four per cent are less likely to participate because they already get regular discounts throughout the year. And findings from merchants demonstrate this isn’t unfounded, as 48 per cent say the discounts they offer during Black Friday are not significantly better than other times of the year.

Meanwhile, despite 46 per cent of merchants saying that Black Friday puts their margins under significant pressure and 43 per cent agreeing that Black Friday no longer delivers the business benefit it once did, many feel they have no choice but to participate in Black Friday as 43 per cent agree that it is a ‘necessary evil’ for their business.

Tom Pope, SVP payments and platforms at Tink, comments: “It’s clear merchants and consumers alike are being hit with costs from all sides, and that will inevitably have a knock-on effect for Black Friday this year.”

Getting refunds right

One thing that a significant increase in sales volume on Black Friday brings is an eventual rise in the number of refunds. In fact, the recent Tink research estimates that one in three items ordered on Black Friday were returned last year.

A particular sticking point in the returns process is repayment settlement, as 33 per cent of merchants say the length of time it takes for a customer to get their money back is an issue in the returns process.

Pope also explained the importance of returns processes: “A smooth returns process can make or break the customer experience, especially when the cost of living cashflow issues mean consumers need their money back as quickly as possible.

“For merchants already working with major PSPs like Stripe and Adyen, Tink’s Pay by Bank solution can be swiftly added at checkout to turn a major peak season challenge into a strategic edge as we embark on the year’s most important quarter.”

Manuel Sandhofer, SVP and general manager for Europe at Nium, also explained the significance of offering real-time refunds: “Poor payment experiences are driving customers away from online sellers; those retailers offering refunds in real-time will see repeat business and better returns in the long run, not to mention reduced operational costs and improved cash flow.

“For too long, payouts have been overlooked as a crucial piece of the e-commerce payments puzzle, whether it’s retailers sending refunds to consumers or online marketplaces transferring money to their merchant sellers around the world. Ultimately, the platforms and merchants embracing global real-time payout infrastructure will be the real winners this Black Friday – and beyond.”

The risks of BNPL

As consumers adjust their online shopping habits and embrace new technology, buy now, pay later (BNPL) solutions remain at the forefront. However, despite the seemingly ever-growing prevalence of BNPL, knowledge about these services is still lacking.

In a new study, responsible lender Creditspring found that 31 per cent of people still don’t think that BNPL purchases can lead to debt. Worryingly, this statistic jumped to 51 per cent for those aged 18 to 24.

Similarly, 29 per cent of people remain unaware that BNPL is a form of borrowing, similar to using a credit card. Again, this is significantly higher for younger people, with 39 per cent of 18 to 24s not aware of the risks.

Recent research from TSB also revealed that 42 per cent of people plan to make purchases over Black Friday – with 56 per cent of those spending set to use a credit product. The research also shows that BNPL spending spiked over this period last year, with Black Friday spending 77 per cent more than the 2022 average.

Neil Kadagathur, CEO of Creditspring, commented: “It’s hugely concerning that shoppers remain unaware of the risks of relying on BNPL for their purchases ahead of Black Friday. After a couple of years of rising costs, savings pots have been wiped out and household finances have been stretched to breaking point and with Black Friday landing before most people’s payday this month, many view BNPL as a crutch until payday without being fully aware of the risks of doing so.

“If used correctly, BNPL offers flexibility to UK shoppers – however, lenders don’t communicate the risks of entering these agreements clearly enough and there is a worrying lack of transparency in the total costs that shoppers face or the impact of not paying.”

Is personalisation the key?

Around 66 per cent of UK shoppers expect a personalised experience from the brands they regularly shop with this Black Friday, according to new research from Twilio, the customer engagement platform that drives real-time, personalised experiences.

Twilio’s survey of 2,000 UK consumers also revealed a big opportunity for brands to engage with new audiences, with 36 per cent saying Black Friday is the day of the year that they are the most open to trying out new brands.

With this in mind, it is becoming increasingly obvious that brands must do more to ensure they keep their existing customers.

Sam Richardson, CX consultant at Twilio, comments: “Black Friday presents a unique opportunity for brands. Big discounts and limited-time offers mean that consumers are open to exploring something new – but this does mean the pressure is also on retailers to keep existing customers engaged.

“As this research shows, personalisation is key. Brands need to use consensually collected first-party data to make sure they are offering loyal customers relevant products and that they are made to feel special on this day.

“Customers don’t want to waste time trawling the internet for deals – instead, they deserve to quickly and easily see items they haven’t bought before and that complement previous purchases.”

Black ‘fraud’-day

Black Friday is synonymous with huge discounts and deals on expensive products. However, this can make scams significantly harder to spot, leading to greater fraud losses for consumers across the board.

As Emma Lovell, chief executive at the Lending Standards Board, explains, there has never been a greater need for collaboration in the midst of increasing fraud levels: “As the cost-of-living crisis continues to grip the UK, this Black Friday could be the most profitable one yet for fraudsters targeting holiday shoppers looking for deals, creating convincing bogus websites, false deals, and scam emails to drain victims’ accounts.

“Scams can have a devastating impact on customers, causing both financial and emotional distress, so whilst reimbursing lost money is an important part of the picture, preventative measures that stop scams from happening in the first place must be the priority to prevent a spike in fraud losses over Black Friday and Cyber Monday.

“Cross-sector collaboration between financial services firms, retailers, and e-commerce organisations is also vital going forward and will help to ensure that all sectors in the scam journey are sharing knowledge to prevent, detect, and respond to scams – and stopping Christmas from coming early for fraudsters.”

Asger Hattel, CEO of Signicat, a digital identity solution provider explained: “With fraud on the rise, providing security and compliance at every stage of the journey is a major challenge that companies face. This goes for instance for transactions like payments in many businesses including the financial sector, fintech, digital marketplaces and retailers.

“During peak shopping times such as Black Friday or the Christmas holidays, the number of transactions heavily increases, so the seriousness of any attacks on consumers or businesses will also increase in this period.”

Over a third (36 per cent) of shoppers in the UK believe they will be unable to pay off their holiday credit card bills in full, according to new research from Klarna, the AI-powered global payments network and shopping assistant.

Meanwhile, 56 per cent of all UK consumers are concerned about incurring credit card debt during the holiday season, according to the latest Klarna study. Because of this, 82 per cent of surveyees find the option of splitting payments into equal parts without extra cost (such as BNPL) useful during the holidays.

The new Klarna research is based on a survey of over 15,000 consumers across 15 markets including over 1,000 in the UK, and aimed to explore the key trends shaping the retail and payments sectors this holiday season.

However, BNPL was not the only technique that emerged as one that shoppers are looking to as part of their money-saving efforts. In fact, as many as 26 per cent of UK shoppers are exploring AI to enhance their shopping experience this holiday season.

Among those open to AI, finding deals and discounts (54 per cent), price comparison (51 per cent) and budget management (44 per cent ) emerged as the main attractions. For holiday shopping specifically, Klarna also found that consumers find the biggest value from AI comes from saving time (35 per cent) and uncovering products they might not have considered otherwise (23 per cent).

Is Black Friday the savings saviour?

Black Friday has also become an important date on the calendar for many in the build-up to Christmas. Sixty-three per cent of UK shoppers are sure they will shop, or are considering shopping, on Black Friday, slightly less than 2022 (67 per cent).

As much as 60 per cent are waiting for Black Friday deals to buy big-ticket items (electronics, jewellery or furniture), significantly up from last year, which sat at 47 per cent.

Forty-two per cent plan to only buy what they can afford and 41 per cent plan to only buy what they would have bought anyway, but at a cheaper price.

Raji Behal, head of Western and Southern Europe, UK and Ireland at Klarna, explained why BNPL options remain so popular: “Klarna’s new research unveils a broader narrative of financial mindfulness and careful spending this holiday season amidst a challenging economic landscape and credit card debt concerns.

“Over half of UK consumers are wary about credit card debt this season, with over one in three doubting their ability to pay off their holiday credit card bills entirely.

“Given this backdrop, it’s no surprise that 82 per cent of shoppers find interest-free payment options like BNPL appealing as they also lean into budget-smart choices, harnessing tech-savvy tools like AI to nab the best deals, and shopping sales events like Black Friday to save money on big purchases.”

Among those wary of using AI to help them shop during the holiday season, 33 per cent revealed that the joy that they get from shopping themselves is the most prominent reason for their reluctance.

The upcoming $2 billion Bitcoin (BTC) monthly options expiry on July 28 could potentially establish $29,500 as a support level. Some argue that the recent U.S. Federal Reserve interest rate increase to 5.25% had a detrimental effect on risk-on assets like cryptocurrencies. However, Bitcoin bulls believe that the full impact of a tighter economic policy takes time to influence the markets.

Looking back, the monthly expiry on June 30 did not cause significant volatility, given that Bitcoin had already experienced a 22.2% gain between June 15 and June 23. Conversely, the May monthly expiry triggered a 9% rally, with Bitcoin’s price rising from $26,100 on May 25 to $28,450 on May 29.

In contrast, the options expiry in April resulted in a 7% correction, as Bitcoin’s price dropped from $29,900 on April 27 to $27,800 on May 1. This data clearly indicates that the impact of options expiry takes a few days to consolidate but eventually becomes highly relevant for setting trends.

Bulls have regulatory and the ETF momentum on their side

There are multiple spot Bitcoin ETF requests from some of the world’s largest fund managers, including BlackRock and Fidelity. In addition, on July 26, a U.S. Lower House Committee approved a pair of bills aiming to clarify the distinctions between securities instruments and digital commodities.

The recent positive corporate earnings also support the bullish momentum in risk-on markets. Along with the latest Consumer Confidence data, they strengthen the argument that the risk of a recession is diminishing, at least in the short term. For starters, Meta Platform reported $32 billion in 2Q revenues, surpassing the market’s estimates.

Several other companies have also reported earnings above consensus, including McDonald’s, Coca-Cola, Google, Johnson & Johnson, Morgan Stanley and Novartis. As for the U.S. Consumer Confidence, the metric reached its highest level in 2 years, reaching 117 in July, up from 110.1 in June.

Data shows bulls were excessively optimistic on Bitcoin price

The open interest for the options expiry on July 28 is $2 billion. Still, the actual figure is expected to be lower because some bullish traders anticipated price levels of $31,000 or higher. This excessive optimism stemmed from Bitcoin’s price trading above the resistance level from July 13 to July 24.

The 0.56 put-to-call ratio reflects the imbalance between the $1.3 billion in call (buy) open interest and the $740 million in put (sell) options. Yet, if Bitcoin’s price remains near $29,500 at 8:00 am UTC on July 28, only $137 million worth of these call (buy) options will be available. This difference happens because the right to buy Bitcoin at $30,000 or $31,000 is useless if BTC trades below that level on expiry.

Bitcoin bears aim for sub-$29,000 to secure some profit

Below are the four most likely scenarios based on the current price action. The number of options contracts available on July 28 for call (buy) and put (sell) instruments varies depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit.

This crude estimate disregards more complex investment strategies. For instance, a trader could have sold a put option, effectively gaining positive exposure to Bitcoin above a specific price. Unfortunately, there’s no easy way to estimate this effect.

• Between $27,000 and $28,000: 1,100 calls vs. 10,000 puts. The net result favors the put instruments by $240 million.
• Between $28,000 and $29,000: 3,000 calls vs. 6,800 puts. The net result favors the put instruments by $110 million.
• Between $29,000 and $31,000: 6,500 calls vs. 6,600 puts. The result is balanced between put and call options.
• Between $31,000 and $32,000: 15,400 calls vs. 3,800 puts. The net result favors the call instruments by $360 million.

Note that the bulls’ best shot requires a 5.5% price increase ahead of the July 28 expiry to secure a profit. On the other hand, bears only need a modest 2% correction below $29,000 to come out ahead on the monthly expiry. However, the potential profit of $110 million doesn’t justify a large effort for the bears. Moreover, given that Bitcoin has recently failed to break the $29,000 support level, the most probable outcome for the expiry is a neutral area near $30,000.

When analyzing a broader mid-to-long term scenario, Bitcoin bears may have the upper hand due to the added incentives of higher fixed-income returns resulting from the reduced 3% inflation and increased interest rates. But, considering the overall bullish momentum in the economy, there’s actually a favorable outlook for Bitcoin to break above $31,000 in the following weeks.