While the pandemic whipped into gear last year as we struggled to let go of the “before times” and “don’t touch” became the rallying cry – consumers wanted it all but at arms-length. The journey to find the sweet spot for payment methods amidst social distancing and safety concerns, quite literally took off overnight.
The statistics speak for themselves with 93% of consumers considering emerging payments such as biometrics, digital currencies, QR codes and contactless, according to Mastercard New Payments Index. With a shift post pandemic of nearly 90% of in-person global transactions taking place at a contactless-enabled merchant as reported by Mastercard Data Warehouse. To meet people’s demands, businesses are forced to jump into emerging payment trends and adapt to this in the long-term.
In a recent BusinessWire article it was suggested that the payment shift is reinforced by the desire for consumer choice – with 84% of those surveyed saying that they expect to make purchases when and how they want to. As social distancing locked in, retailers moved their businesses online embracing ecommerce. Come 2021 research from Mastercard indicated that the adoption of new payment technologies is rising to accommodate consumers who want new, fast, and flexible digital experiences.
Mastercard Data Warehouse reported that contactless technology was the digital catalyst to explore new payment options and that more than 100 markets between the first quarter of 2020 and the same period in 2021, saw contactless grow by at least 50%. When looking for alternatives as consumers gravitated towards contactless transactions, it was noted that cash usage was on the decline. “The past 12 months has seen a rapid rate of change in the way we pay for things, get paid, and move money. The payments industry has had to adapt quicker than ever to meet this revolution in consumer behaviour,” said Mark Nelsen, Europe Visa.
A survey by Samsung found that 31% of people are turning to their phones to make mobile-based payments with other devices such as Garmin and Fitbits set to grow. As businesses embrace the innovation space, we see the likes of service provider Hellopay, servicing South Africa’s informal economy representing 98% of businesses in South Africa, partner with Mastercard to roll out Tap on Phone technology. After downloading the free mobile app on their Android phone, their device is enabled as a physical point of sale enabling small businesses to accept contactless payments.
According to research by ACI Worldwide the acceleration in the adoption of mobile wallets rose globally to 46% in 2020 with countries like Italy, Brazil, Mexico, and Malaysia being some of the fastest adopters of this payment option. In south east Asia and Africa, QR code enabled payments have grown in popularity. “Merchants aren’t always able to carry or operate a payments terminal, so QR codes offer customers a useful way of accepting payments whilst remaining socially distanced,” said Thibaut Genevrier, Revolut.
Since the start of the pandemic 70% of consumers have used a new shopping payment method for the first time according to Visa. Furthermore, with the rise in ecommerce people were exposed to other payment methods including buy now pay later. The growing popularity of this option is reflective of the decline of credit cards said Clearpay’s Damian Kassabgi. Credit card usage has been in steady decline in recent years with a spokesperson at Klarna stating that people who buy now, pay later have worked out that it’s better to flexibly schedule payments with no interest or late fees, than use a credit card.
One of the solutions the pandemic has helped with is the ability to fast-track payments that take place in the background according to Phillip Bruno at McKinsey, for example Amazon Go stores where shoppers are able to walk in an out of the shop with payment made automatically. He continued saying, “It isn’t really about the paying anymore, it’s about the checkout, such as ordering ahead, ordering in-app and curb side delivery. The act of paying is getting absorbed into the purchase journey. It becomes more about the experience of shopping or checkout and how integrated paying is part of that journey.”
Derek Cikes from Payflex in a recent ITWeb article pointed out that by democratising the payment landscape consumer-centric solutions giving shoppers the choice of how they want to pay, reveals the future of providing flexibility, transparency, spending control and convenience as part of a seamless payment experience. Payflex has seen this with demand in the uptake of their payment solution that allows shoppers to organise their budget by facilitating payment across instalments without the burden of interest and ancillary fees, increase from 12 000 to over 65 000 customers over the past year.
“Those businesses that can provide multiple ways to shop and pay are best positioned to meet expectations. Coupled with an innovative mindset that allows for less pain at point of purchase as retailers and brand owners put themselves in shopper’s shoes. Re-engineered approaches from financing platforms to companies like Square who offer checking-out account capabilities without requiring a bank account – this is going to be an exciting journey.” Mike Smollan, Chief Growth and Innovation Officer, Smollan.