The shift toward digital payments will only continue. Learn how cloud technology supports payments providers in their mission to better serve merchant and consumer needs.
Consumers adopted digital payments at increasing rates prior to the pandemic, but it was 2020 that saw an unprecedented acceleration due to the impacts of COVID-19. Some became fearful of contracting the virus through cash exchanges, while others avoided store purchasing altogether and completed all transactions online. Regardless of their original motive, many consumers have quickly adapted to the convenience and efficiency of digital payments — and they’re not likely to go back.
This is backed by data; after soaring to $5.44 trillion in 2020, the global digital payments market is forecast to hit $11.29 trillion in 2026, according to ResearchandMarkets.com. With a compound annual growth rate of 11.21%, there are clear signs that this behavioral shift isn’t slowing down any time soon. If anything, customers are coming to expect more from the digital payment experience and from their providers.
For financial institutions (FIs), the pressure is on to serve the growing digital market without breaking the bank on technological maintenance. Fortunately, one product may be able to address each of these shifting consumer behaviors at once — cloud technology.
Consumer Challenges & Cloud Solutions
There is a great revenue opportunity for the payments providers that can capitalize on consumer behavioral shifts, but there are also challenges. In order to succeed, it is important to be aware of these issues ahead of time — and learn how to leverage cloud technology to resolve them.
The Need for Scalable Payment Processing
More consumers paying digitally leads to higher transaction volumes for FIs. While this is positive for the bottom line, many companies do not currently have the technology infrastructure to process these volumes; this is particularly true when it comes to spikes in demand, such as around the holidays or during major promotions. Without the right software support, there may be processing delays or temporary outages, which creates negative consumer experiences.
With cloud technology support, it becomes possible to scale processing power without the need to deploy additional expensive servers. Cloud frameworks have a built-in capacity for companies to leverage as needed. They also enable faster implementations so that each business can adapt in real-time without overspending. This flexibility is particularly useful during uncertain times like global pandemics.
Digitally Engaging Customers while Managing Fraud Risks
Today’s contact centers are overburdened with requests, with customers often having to speak to multiple agents before they can resolve their payments issue. In order to help companies recognize their customers no matter which channel they use, customers are encouraged to create accounts. The danger with creating these accounts is that they can be vulnerable to cyberattacks in the form of account takeovers, which may, in turn, lead to fraudulent transactions that must be raised with customer service. These two concerns can quickly become a vicious cycle.
With the right cloud infrastructure, payments companies can deploy software solutions to automate low-level customer queries so that employees can focus on the more important calls. Cloud computing can also power multifactor authentication (MFA) so that customer accounts are protected from fraudulent logins. When used in combination with tools like one-time passwords and real-time alerts, these improved fraud protections can not only minimize cyber threats but also reduce the burden on contact centers and improve their quality of service.
Shoppers today enjoy buying online due to its immediacy and convenience, but these features can be undermined by clunky customer journeys. If a merchant’s payments provider can’t support in-app payment integration, it will have to direct customers away from their original discovery location (such as social media apps) and into its own digital platform in order to complete the purchase. This can be frustrating at best and prompt cart abandonment at worst.
The ability to integrate purchasing opportunities into natural environments is known as contextual commerce. Cloud technology supports developers in creating contextual commerce opportunities across various platforms and channels, making it easier to scale.
Conversational & Contactless Purchasing
One disadvantage of purchasing through digital devices is the absence of the retail associate. To fill this service gap, merchants are exploring conversational software options. These enable customers to connect with an associate over text or chat to ask questions, receive promotional updates and make purchases. Yet enabling these services requires the right technology infrastructure and the capacity for integration. Once again, cloud technology is your answer.
Other shoppers enjoy the distance of digital transactions, particularly contactless payments. McKinsey’s 2020 Global Payments Report found that higher spending limits on contactless cards prompted a rise in adoption rates worldwide. Today’s consumers have come to expect everyone to accept contactless payments, including small businesses; making it imperative for payments companies to support these tools to retain SMB customers. Supporting a range of contactless options requires sufficient software, which is where the cloud is a clear solution.
Driving consumer spend while staying nimble and dynamic
Increasing contactless card limits is just one example of how companies are driving consumer spending; others include reward points and paid membership programs. As online competition gets tougher and merchants try to recover their losses from 2020, it is important to encourage consumers to spend — with or through their company. Rather than one method being the answer, it is about being able to respond to market changes with agility, which requires the software infrastructure to roll out programs quickly. With the support of a cloud network, new applications can be deployed and scaled without impacting other operations; companies can test and launch new products without needing to worry about the functionality of their platform.