If there's anything to take away from 2020, it's that any prediction has a wide margin of going wrong and it's very likely that 2021 will follow suit.
The Covid-19 pandemic has had a strong impact on the lives of various sectors of the economy, but perhaps none as profound as the one that has taken place in the payments ecosystem. With merchants rushing online en masse and consumers betting heavily on remote shopping, in the space of just a few months, new trends in the field of payments that had slow but secure penetration rates suddenly accelerated to become market leaders.
O e-commerce has skyrocketed, emphasising the importance of a safe online space, the contactless became the word of the year and the cashless payments and "buy-now-pay-later" have emerged as some of consumers' favourite transactions.
To realise the "pandemic" factor in leveraging these various trends, take the example of e-commerce. In 2020 alone, e-commerce grew by 23% globally, surpassing 4 trillion dollars (3.29 trillion euros), according to S&P Global Market Intelligence's Research 451 knowledge solution.
Even if, as is hoped, the pandemic disappears, nothing will ever be the same again. According to analysts, 2021 will be characterised by the continuity of the trends that emerged last year, but given the uncertainty brought about by the pandemic, these are expected to evolve or metamorphose into forms never seen before in a mix between a semi-return to the past and the advent of a new world in the field of payments.
5 Payment trends in 2021
Omnichannel adoption
Regardless of whether there continues to be an increase in transactions in e-commerceThe flexibilisation and strategic options adopted by retailers over the last year have probably changed the scenario forever. The impact of the pandemic on the retail will be around for a long time and the key will continue to lie in the contactless and online.
This increase in business flexibility, which is expressed by a combination of physical and online sales channels (omnichannel), has offered consumers a new market to explore. And consumers, already used to this change, don't want to go back to the past.
According to Research 451, 35% of consumers said that, even without social restrictions, they would continue to shop online. This research also showed that, of the 30% of consumers who bought online and collected the products bought in take-away mode, 96% of them said they were satisfied with the option taken.
Fraud prevention and the customer experience
With the transition to business models that favour the Internet, online fraud has increased significantly, but despite being fundamental, fraud prevention strategies must not neglect the preservation of a "customer-friendly" shopping experience.
In 2021, analysts expect that these and other technologies will continue to adapt to combat increased risk and meet customer expectations:
"in the context of a complex and constantly evolving trade ecosystem, the fight against fraud requires an articulated and diversified approach."
Aite Group analysts advise, when asked by Discover about future trends in payments.
In addition to the natural concerns about identity theft and potential fraud (85% of customers express some level of concern about these matters), consumers have repeatedly cited problems at the checkout as one of the main reasons for abandoning their shopping carts.
Remove friction in order to capture and building customer loyaltyThis requires a combination of strong verification protocols and personalised purchasing journeys, such as storing the data left by customers in a secure and manageable way, in order to reduce errors and speed up logins and/or checkouts, while offering automatic templates to speed up the process of filling in names and addresses.
Similarly, identifying payment card types by the first four digits and providing a personalised template for the card verification value (CVV) adds convenience and protects against potential fraud.
SuperApps and QR continue to grow
With the Super Apps Having made a splash in markets as powerful as China or India, these applications, which go far beyond payments, are expected to expand their presence globally. By incorporating, among many other things, payment methodsWith social networks and marketing in a single application, these apps are becoming more and more attractive, as can be seen from the path followed by several US companies:
"we have observed that several US-based market players are moving towards becoming super-applications",
says Research 451.
These digital shopping centres based on a single application also give customers access to a world of micro-merchants found on marketplaces or other digital platforms. So, as more traders of this type transfer their activities to these applicationsThis niche market, based on lower-value transactions, is expected to grow.
In general, SuperApps are dependent on the use of quick response (QR) codes in order to process transactions. Since scanning QR codes enables the transfer of a greater amount of merchant and consumer data than Near Field Communications (NFC)-based technologies, the trend points to a more intensive use of QR codes in payments globally this year. In addition to this trend, Research 451 analysts expect that additional features such as cryptocurrency purchases, investments and messaging could become part of the offer guaranteed by SuperApps.
Payments in several instalments will gain market share
The pandemic has had a strong impact on consumers' purchasing power, which has led many of them to look for more predictable and "wallet-friendly" payment solutions, such as paying in instalments with defined repayments.
According to the Research 451 study, 10% of consumers tried an instalment payment option for the first time during the pandemic, and 87% of them were satisfied with the experience. The option of splitting purchases into instalments, often interest-free, not only made it possible to buy higher-value products, but also made it more likely that customers would return to the shop.
However, some problems arose with "buy now, pay later" (BNPL) plans, which charged consumers no interest and spread payments over a few instalments. As in many countries this type of loan does not require checking the customer's effort rate, lenders were exposed to a high risk of default. It is hoped that these problems will be resolved during 2021.
Strong authentication comes into play
2021 will be the year that regulations on strong customer authentication (SCA) in online shopping finally come into force in the European Union. Designed to increase the security of online transactions, these security regulations have arguably become even more important with the growth of online shopping. e-commerce during the pandemic.
However, the implementation of these requirements has not been without controversy, as ensuring that the necessary customer checks are met by merchants and financial institutions has proved challenging. Originally scheduled to come into force in 2019, the launch of the SCA has been delayed in the EU until the end of 2020 with countries such as the UK or Denmark delaying or slowing down its implementation. Regardless of the deviations from what was scheduled, we will have to wait until the end of 2021 to see exactly what impact strong authentication will have on e-commerce and the payments industry.
* Article adapted from Discover® Global Network.
