Voice of the Industry

Payments trends from the past with major impact in the future – notes from MPE Virtual 2021

Friday 5 March 2021 09:34 CET | Editor: Anda Kania | Voice of the industry

The highlights of MPE Virtual 2021 compile the evolving trends in customer behaviour, contactless payments, and SCA’s new rulebook for a frictionless experience

The MPE conference, which was hosted online this year, was a virtual place where speakers delineated a comprehensive picture of 2020, while also providing their insights into how industry players can prepare for what the future holds. Although it’s difficult to make predictions in a very unpredictive environment, product innovation, customer behaviour, regulations and expansion strategies are ongoing topics to develop and watch for a better dynamic. Therefore, as a long-term media partner of MPE, we bring out to our readers the key takeaways that bring value to all the merchants, PSPs, issuers, acquirers and fintechs in the payments landscape. 

Cashless and omnichannel: a retrospective of the future 

We have come to understand (or admit) that all these trends around contactless and cashless payments and the surge in ecommerce shopping have been around for a while even before the pandemic. The COVID-19 just pushed these trends forward, therefore, most of the discussions revolved on what payment habits already underway will have a major impact in the years to come. 

The first session kicked off with massive data from a Mastercard survey on the future of acceptance, that revealed technological developments on electronic payments. If we used to hear in the past the ‘customer experience’ as a keyword, this time the focus was rather on business experience and the way SME merchants managed to upgrade their business by accepting contactless cards and e-wallets. Several key stats on seamless integrations of value-added services with payment acceptance are: 

  • 36% of acquirers and 31% of merchants believe BNPL will become a standard checkout option; 
  • 75% of acquirers and 57% of merchants believe personalized and instant rewards will be offered at POS;
  • 100% of acquirers and 88% of merchants foresee paper receipts replaced by digital receipts.

Furthermore, three key trends extracted from Mastercard’s presentation worth to be further explored: 

  • contactless has become the default payment method in Europe which has been made possible by the SMEs adoption;
  • contactless payments are extending a bit further into a contact-free experience throughout the entire interaction that consumers have with the merchants;
  • a smartphone is becoming the dominant point where a merchant interacts with a consumer and vice versa;
  • unified commerce is becoming more important than ever to future-proof merchant services.
Consumer behaviour and businesses’ priorities 

The pandemic has influenced the emergence of a new type of customer behaviour, the one that made a quick transition from offline to online. Therefore, the pool of demanding consumers has been enlarged, and experience is now more than ever a competitive differentiator. A Trustly survey on 10,000 consumers and 1,000 merchants from Europe revealed three golden rules to consider this year and even beyond 2021. 

Rule #1 Consumers want to be in control: 86% chase up refunds, 56% only spend what they have.

Rule #2 Consumers crave simplicity: 9 out of 10 consumers will abandon a purchase if faced with a complicated checkout procedure.

Rule #3 Trust builds loyalty and value: 38% of consumers prefer banking of identifications apps that use biometrics to confirm payment.

Moreover, despite all these talks about BNPL being highly embraced by Gen Z and Millennials, according to Trustly’s survey, both generations prefer debit to other payment methods, so they rather pay now, not later. 

Although most of the discussions regarding ecommerce and online payments, in-store shopping is here to stay. Brick-and-mortar establishments have a consistent target of consumers that, just like online shoppers, also look for convenience when it comes to paying. Lee Jones from Worldline suggests a strategy that involves a safe and convenient experience amid COVID-19, yet dynamic and engaging that involves:

  • having goods brought to the most favourable and safest spot for the consumer;
  • reducing queues by providing mobile and flexible checkout solutions;
  • having knowledgeable store staff assisting sales.

One of the challenges that many organizations face is how to knit together the different sales channels – online, mobile, in-store. From a payment perspective, a holistic approach is recommended – many journeys will often start in one channel and finish in another, so sales channels need to complement each other, instead of competing with one another. 

Latest updates on PSD2 and 3DS 2.0 implementation 

Merchants, issuers and acquirers are going through a transition phase which has faced some issues with the implementation of 3D Secure 2.0, requiring smart approaches to mitigate the risk of cart abandonment. As per Marco Conte’s insights, the UK, Ireland and Sweden are the best-performing markets, while Italy, Spain and Belgium are the worst-performing. This reality could be explained by the fact that the former countries are more experienced in online payments and technologies than the latter ones.

The last months have shown several 3DS 2.0 technical errors on authorization and authentication sides such as flagging transactions errors or misconfigured characters. Merchants have no control over the issuers’ authentication method, so delegated authentication was brought into the discussion as a valuable SCA alternative for many merchants who want to have more control over their end-consumers’ experience. 

The PSD2 compliance and everything that comes with it have often been put into a context where challenges hold sway over opportunities. Spencer McLain of Ekata revealed his perspective on ways PSD2 should be perceived as strategic for each party of the ecosystem. For issuers, it’s about staying front of wallet and monitoring compliance risks, for merchants is about minimizing friction and maximizing conversion, while acquirers have a big role to play, as they are facilitating exemptions on behalf of the merchants, which means developing new capabilities and differentiating themselves from their competition in an increasingly commoditized space. And all these strategies are enabled with the use of rich data, and real-time fraud prevention.

The bottom line 

Businesses of all sizes faced the music ‘played’ by COVID-19, and although the pandemic is not over, we can all agree that the emerging trends formed in the last 12 months are likely to stay relevant for a while. Inspired by the views of James Booth from PPRO, all payments players should consider the following aspects: 
  • a customer-centric model needs smart data and artificial intelligence in place;
  • embedded payments are the future of a frictionless experience;
  • real-time payments will be the norm;
  • reduced costs and risks for merchants will further drive local payment methods adoption;
  • ecommerce will continue to globalise. 
On top of all, the enabler of any innovative plan lies in building and employing the right technology. For further disruption, biometrics, AI, and IoT should be further upgraded for increased security, operational efficiency, and improved customer experience.

About Anda Kania

Anda is doctor in Political Sciences, currently exploring her research skills to discover the latest trends in the payment and commerce industry. Anda has used her position of senior editor at The Paypers to analyse the hottest topics, and to discuss them with thought leaders in order to get the pulse of the payments environment.

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Keywords: contactless payments, 3-D Secure, ecommerce, omnichannel
Categories: Payments & Commerce
Countries: World
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Payments & Commerce

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