In recent years, one of the immensely fast-evolving sectors was the payment industry. In the midst of digitalization, accelerated by COVID-19, fintech opens a vast field of revolutionary ideas and results in revolutionizing payments.
Let’s dive deeper into the trends that went mainstream during this year and predefined their stable future position!
The approach of businesses today, and consumers' shopping behavior generally have changed over the years, searching for alternate methods. Most businesses have turned to "online" to compensate for the losses caused by the lockdown. 2020 holiday sales statistics have proven that the future depends on online shopping, enabling shoppers to make payments from the comfort of their homes.
According to Mastercard SpendingPulseTM, e-commerce sales rose to 49% during the holiday period preventing businesses from catastrophic losses and enabling customers to choose holiday gifts from the comfort of their homes. In 2020, retail e-commerce sales worldwide amounted to 4.28 trillion US dollars and e-retail revenues are projected to grow to 5.4 trillion US dollars in 2022 stated Statista.
According to the PWC report “Payment 2025& beyond” 89% of respondents agreed that the shift towards e-commerce would continue to increase. According to research, and the lifestyle we are living in today, consumers are becoming more comfortable with making purchases online and via mobile- being able to prevent unnecessary and risky interactions during COVID-19.
Customers in their turn are offered an omnichannel experience, that extends their service propositions range. E-commerce is unbelievably flexible because it interacts with the last digitalization trends and in combination delivers an upgraded experience for the customers, and by introducing and interacting with various disrupting technologies such as voice search, AI, Internet of Things, E-commerce takes us a step toward securing its own place in the future market of innovations.
For example, nowadays that e-commerce goes beyond website notion borders and social media channels, such as Instagram, Facebook, Twitter, Pinterest have developed special selling features and buttons to facilitate transactions, meaning e-commerce has gained its own Customers that will stick to the new payment mode, even post COVID-19.
Transition to a cashless society
As e-commerce witnesses a surge, the move towards cashless payments is increasing thus the emergence of digital payments is promoted on the payment scene.
According to the European Central Bank, the total number of non-cash payments in the euro area increased by 8.1% in 2019 compared with the previous year and, and card payments accounted for 48% of the total. These statistics have drastically changed to 2020. According to Accenture’s report, UK cash usage declined 50% during 17-25 March 2020.
COVID - 19 prompted the digital payments offering innumerable benefits to payers and kept the lifeline keeping the economies running. In many terms, the future payment landscape is esteemed as a digital paradise by many.
Digital, embedded, and mobile opportunities, in particular, are providing the best services propositions in a remote-working economy. Another reason for the decline in cash use is the rise of contactless payments during the COVID-19. the surveys hold in April by MasterCard showed that of 17,000 consumers in 19 countries, 82% of respondents consider contactless payments to be ‘the cleaner way to pay.’
This led to a rapid decline in banknotes since "paper money" is no longer hygienic and isolation reduces the in-person payments, resulting in the new form of payments (online)
For example, COVID -19 favored the growth of contactless cards and e-wallets on the change of swipe cards having the same infrastructure as traditional cards. However, the NFC and RFID technologies have enabled them to connect with merchants as opposed to EMV chips and magnetic cards promoting contactless payment processing.
QR codes see an uptake as a safe and fast payment solution and are one of the most popular payment methods in China. As we see taking into account factors such as infrastructure, consumer behavior and rising revenue the adoption of digital payments will differ in regions dependent on the level of internet development.
In regions, for example, the USA or APAC countries, the transition to cashless payments is overwhelming with digital wallets and mobile and online banking becoming the main payment method as opposed to cash payments.
Most payments become mobile
With the evolvement of digitalization, the world started to transform from brick and mortar into online. It’s natural that with the change of customer behavior people also expect to implement all their banking and payment needs online.
E-wallets have grown in popularity due to extraordinary convenience, by storing multiple payment methods all in ONE device, enabling flexible and easy payments from smartphones. At first, the impression displayed shows that e-wallets have gained popularity amongst Generation Z and millenniums, generally with the segment, and closely interacting with smartphones and devices. However, the reasons behind the first adoption of e-wallets are much more serious and compelling.
E-wallets have fostered financial inclusion in regions that previously hadn’t had the access to banking services. With the hit of COVID-19, the unbanked layer needed to be properly addressed, and e-wallet proved to be a real-time payment saver for many families that had challenges to pick up their remittance payouts in the banks. E-wallets are known to maintain customer stickiness by offerings rewards, incentives, and promotions. In most regions with low-income populations, the advantages of such bonuses are life-valued and priceless.
According to a Worldbank report, Globally, 69% of adults – 3.8 billion people – now have an account at a bank or mobile money provider. Between 2014 and 2017, the share of adults who have an account with a financial institution or through a mobile money service rose globally from 62% to 69%. In developing economies, the share rose from 54% to 63%.
Thus, the number of people using this innovation is growing at a rapid pace, which adds to the global popularity of mobile payments.
Our lifestyle easily adopts new technologies, and their impact on the way we buy and pay is enormous. As we move into a more innovative future, we get into one integrated digital world, with faster and more efficient, and inclusive payments, that pave the way towards a cashless and digital economy.