The impact of the coronavirus pandemic has catapulted digital payments to the forefront of the payments industry arena
For some merchants, the accelerated growth of eCommerce has seamlessly aligned with business goals and changes have been implemented with ease. For others, adapting to the sizeable shift in market conditions has been more difficult and has involved introducing card and contactless payment options, or giving customers the option to pay over the phone.
It’s clear to see that the ways in which people pay for goods and services are changing, so we’ve compiled 5 payments industry trends that we expect to thrive in 2021.
1. Digital wallets
Although they’ve been around for a while, digital wallets (also known as e-wallets or mobile wallets) have recently grown in popularity to become a huge part of the way people make payments.
Digital wallets allow consumers to link their payment cards to their mobiles so that they can pay with a simple, contactless wave of their phone. Some popular examples of digital wallets include Samsung Pay, Apple Pay, and Google Pay.
With non-essential retail shops set to open again in the UK from April 12th, accepting payments with terminals that are compatible with digital wallets is a trend that most businesses will want to be ready for.
2. Cashless payments in general
Many people say that a cashless society has been on the cards for a while now, but there’s no denying that the pandemic has further accelerated our move from cash to card payments. With the rise in digital wallets, the speed and ease of contactless card payments, and many retail establishments opting not to accept cash between lockdowns, “going cashless” is now much closer to reality than theory.
According to the 2020 McKinsey Global Payments Report, the UK’s percentage of cash used in total transactions by volume went from 55% in 2010, to 23% just 10 years later in 2020.
Now, more than ever, it’s crucial to avoid complacency on accepting alternative payment methods. Customers will expect to be able to pay in a variety of cash-free ways, and it’s up to businesses to make sure that they can.
3. Online shopping
The prediction that the pandemic may have permanently altered people’s buying behaviours is a popular one. The once thriving UK high street has been under pressure for years, and retailers – including some former retail giants – have had to think again about how best to serve, and keep, their customers.
As a result, many businesses have enhanced their existing online offerings, while others have taken their trade online for the first time. According to the ONS, online sales increased by 46% in 2020, compared to the previous year. This is the strongest eCommerce growth to have occurred in the last decade.
As we ease out of lockdown, the recent acceleration towards an even more digital world is likely to have lasting effects, especially while the economy is in recovery. Many people will likely opt to avoid socially distanced bricks and mortar shops in favour of the superior convenience of online options.
4. Fraud prevention and 3DS
According to Statista, card-not-present fraud accounts for a whopping £470 million in the UK every year. With time spent online over the last year surging to record levels, more online transactions are taking place. Unfortunately, it therefore follows that fraudsters have a much broader scope of opportunity, making consumers more vulnerable when paying online.
To combat payment fraud, merchants must make every effort to safeguard and defend. It is anticipated that A.I, machine learning, biometric authentication, and detailed payments data will continue to become much more utilised as techniques to identity legitimate shoppers and counter fraudulent payments.
While some of the more advanced fraud prevention techniques may be beyond the reach of many businesses, it is essential to at least ensure 3-Domain Secure (3DS) compliance. 3DS provides consumers with an extra layer of security in card-not-present transactions, ultimately helping to prevent unauthorised transactions.
5. Loyalty programmes
With digital payments becoming the “new normal” for businesses, successfully engaging with customers on a digital level will be key to success.
Integration of loyalty apps and programmes – such as rewards, points, and discount vouchers – into the online payments process is already starting to emerge. Implementing digital loyalty schemes is a great way to take a proven, traditional concept to the next level in order to reward customers with immediacy and convenience in the aftermath of recent events.
According to a Harvard Business School study, increasing customer retention by just 5% can boost profits by 25% to 95%.
Our loyalty app, ‘Nominate’, offers merchants full control over customisable reward campaigns on a secure online platform to keep valued customers coming back for more.
The bottom line
With so many changes taking place across the payments industry landscape, updating and fine-tuning the ways in which businesses cater to the needs of their customers is essential.
If you would like to talk to a member of our team about how Valitor can help your company gain a competitive edge in payments processing, contact us today.
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