It’s been nearly a year since COVID-19 changed the world as we know it. Here’s a look at how COVID-19 shifted consumer payment behaviors — and what comes next.
COVID-19 has dramatically altered the payments landscape — a landscape that was already in flux before the pandemic. Digital payments were continuing to triumph over cash as consumer behaviors and priorities accelerated in the direction of remote and digital.
Ecommerce payments technology continues to ramp up, but there are challenges to this fast move in the digital direction. For payments companies, the economics of consumer payments has changed, and success in the payments space now requires the ability to present high-value propositions that customers are willing to pay for. How will these significant shifts ripple into 2021 and how do payments companies prepare?
Focus on “Next” Normal Rather than New Normal
As with most things, payment trends and technology are fluid. While the pandemic has turned “new normal” into a buzzword, payments companies need to be focused on the “next normal.” In other words, what’s here today will not necessarily stay tomorrow. While consumer expectations have turned toward contactless and digital payment methods (mobile wallets, bank transfers, QR codes, etc.), traditional attitudes toward payments may still return after COVID-19 loosens its grip.
In the interim, hyper-specialization can be the ticket to success for payments companies looking for an edge. Both consumer and commercial customers may be willing to pay for options that satisfy their preferences and streamline payments. On the consumer side, Revolut Metal has catered to clientele by offering premium and metal memberships that offer customers surcharge-free ATM withdrawals, unlimited currency exchange, and access to crypto at low fees. Commercially focused fintechs like SumUp are serving micro-merchants with mobile point-of-sale (mPOS) technology.
Remaining relevant and preferred in the future circles around three main elements 1) a data-driven approach, 2) solid distribution channels, and 3) the removal of friction from the customer experience. Payments companies will need to rely on data to cater to evolving customer preferences and build products and services tailored as closely to them as possible. They will also need to find the right distribution mix via partners, resellers, and potential collaboration with competitors. Finally, consumers are relying on intuitive, frictionless payment experiences — ones that inspire trust while remaining invisible.
Omnichannel is Table Stakes
Between government-mandated lockdowns, social distancing requirements, and general apprehension toward in-person retail, digital consumer payments have soared. Even as economies and businesses began to re-open, digital payments held their ground as a seamless, touchless option for wary consumers.
Yet digital payments have morphed into something beyond the digital payments of yesterday. We’ve seen the convergence of various digital channels and methods of payments in order to better serve a customer base that is looking to keep its distance. The restaurant industry — one of the hardest hit by shutdowns — has relied on online ordering and payment options like Allset, a contactless, order ahead system. Paytronix and others have enabled contactless dining options where customers can view menus and order via a QR code.
Focusing on a single digital channel is no longer an option for payments companies — or the businesses they serve. Apps, online ordering, contactless POS, mobile order ahead, and other digital payment options are blurring together to offer consumers the easiest, safest, most convenient ways to pay.
Partnering to Strengthen Payment Processing
Payment processing is the backbone of successful payment systems. Companies now have the ability to entirely build, partner, or outsource payment processing capabilities. Which option an organization chooses will depend on the strategic significance to the company.
For many, working with an external vendor to build impactful technology without relinquishing control to a third-party. While this option requires a bigger up-front investment, organizations also have the benefit of foregoing expensive in-house technical expertise. Partnering can enable companies to do many things whether it is building a payment facilitator, enabling contactless payments, or enabling contactless authentication at POS terminals.
Partnering with an organization that can help build products or service capabilities that support a positive payments experience can help payments companies capture greater payments volume without increasing regulatory or operational overhead. It’s key to partner with a firm that can empower payment entities to keep up with innovation, adopt the latest payment processing technology, streamline paths to new revenue and embrace the changes to global commerce that have resulted from the COVID-19 pandemic.