Alternative payment methods such as e-wallets, supper apps, or bank transfers are now a top preference among consumers, and they also rival debit and credit cards. What is your take regarding their future roadmap?
The payment space is becoming more fragmented, with countless new initiatives being launched each year. In Europe, for example, there has been a clear emergence of ‘domestic champions’, new payment methods that quickly came to dominate their respective markets. MobilePay, for instance, is installed on 90% of all smartphones in Denmark, while in Poland, Blik has reached a milestone of 8 million monthly active users mere 5 years after launch. There are also Account-to-Account (A2A) payment providers and schemes (e.g. Ideal or MyBank), domestic cards schemes, and a multitude of Buy Now, Pay Later (BNPL) providers. A similar development can be seen elsewhere in the world as well: Pix, a Brazilian instant payment scheme, gained over 87 million users in just 6 months from launch.
While it is reasonable to expect some consolidation down the road, the payment landscape, especially for merchants active in multiple markets, will remain fairly fragmented and complex for the years to come.
How do you see the future of cards in the next ten years? Will they be overpowered by Account-to-Account payments or other APMs?
That being said, while extremely popular in their home markets, no other payment method currently comes close to Visa and Mastercard when it comes to international acceptance. Thus, card networks remain dominant in the cross-border payment acceptance space.
I estimate that while cards will not hold the same dominating position as they once did, we will still carry plastic cards in our wallets in 2031, and cards will still be widely issued and used.
What payment methods developments are driven by Gen Z and Millennials, especially in this emerging digital-first era?
Generally, since Gen Z and Millennials are mobile native generations, they tend to exhibit a strong preference for mobile native/mobile optimised payment methods at the checkout. I believe this partly explains the impressive success of mobile-based payment methods such as MobilePay, Swish or Blik.
The payment method possibly most driven by Gen Z and Millennials is BNPL. Some research from 2021 indicates that as much as 75% of all BNPL users in the US were from these age groups.
What are the countries where ecommerce surged significantly amid the pandemic? Moreover, what should retailers consider when it comes to payment checkout options and customer behaviour in these countries?
Ecommerce surged globally, having received a major stimulus from the pandemic. While some countries, generally with lower previous ecommerce penetration (e.g. CEE countries), experienced a more profound growth than some of the more mature markets (e.g. the UK), the overall trend is that ecommerce is rapidly growing almost everywhere. An interesting phenomenon is a growing number of older shoppers, who were previously reluctant to shop online, but have been suddenly plunged into ecommerce.
When adding payment options, the merchants should provide choice, but not too much of it as to confuse their customers. In terms of checkout experience, some shoppers, especially older ones, require a bit more engagement from the merchant. Merchants should have the ability to accept payment outside their traditional checkout, for example by allowing their customers to initiate payments by clicking on links in their e-mails. ‘Payment links’, as they are known in the industry, have become an important tool in the payment toolbox.
How can TrustPay support retail businesses in staying relevant by handling both global and local payments?
When selecting a payment provider, merchants should ask themselves the following basic questions:
a. Do we get a relevant payment option mix?
Offering the right mix of payment methods is central to the success of any merchant and after more than a decade in the payment space, TrustPay can guide its merchants to offer the optimal payment option mix.
b. Is the provider actively adding new payment methods?
The payment landscape is changing rapidly and it is not likely to settle down anytime soon. Merchants need to be able to react quickly to changing preferences of their customers. Many legacy providers struggle to keep up with the pace of change, TrustPay however, launched a brand new, 3rd generation of its core system, which allows us to integrate new payment methods in a matter of weeks, rather than months as it is often customary in the industry. We are currently launching a new payment method almost every month.
c. Does the provider understand the business of the merchant and the payment space in general?
Technology and payment methods are crucial, but the provider needs to be able to properly assist the merchant throughout the relationship. To name a few examples, TrustPay assists its merchants with proactive approval ratio optimisation, proposes new relevant payment methods or assists with risk management.
Overall, as payments are becoming more complex, merchants need a provider with an excellent understanding of payments and their continuous development, one that can guide them and assist them. With over a decade in the market and countless long term relationships with its customers, TrustPay is certainly such a provider.
About David Rintel
David is the CEO of TrustPay. A fintech enthusiast, he has been with TrustPay since its inception in 2009. David has successfully led TrustPay’s growth from a small local start-up into a successful European payment player with an experienced team of almost 100 people and customers throughout the continent.
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