The great digital shift of 2020 and what to watch out for next

Tuesday 2 March 2021 09:01 CET | Editor: Stefana Ivan | Interview

We caught up with Matthew Jackson, PPRO’s Head of Partner Development in EMEA, to ask him about his views on cross-border digital payments during and after COVID-19

In May 2020, the volume of cross-border ecommerce sales into the US grew by 42% year-on-year. Over the course of 2020, the global volume of digital payments is expected to rise by 15%. With cross-border ecommerce and digital payments both growing rapidly in response to COVID-19, it is to be expected that cross-border digital payments will grow in volume too. 

Matt, what impact has the pandemic had on ecommerce and digital payments? 

It’s given both a massive shot in the arm, as you would expect. Throughout 2020, we have seen an acceleration toward ecommerce, as different countries and demographics shifted to shopping online. According to a recent study, in the first six months of 2020, the volume of global cross-border ecommerce grew by 21%

And more cross-border ecommerce means more demand for global digital payments. We’re seeing this in PPRO’s own transaction data. One recent report estimated that the worldwide market for digital payments will grow by 20% a year for the next three years

So, you think this shift in behaviour is here to stay? 

Absolutely. Take the UK for instance: recent research found that 74% of shoppers who switched to online shopping during lockdown intend to continue shopping online once things return to normal. This on its own is good news for merchants, but two related phenomena make it even more noteworthy.

The first is that many of these shoppers are from demographics who just didn’t shop online all that much before. Almost half of baby boomers have said they are shopping more online than ever. 

The second phenomenon is the impact of COVID-19 on brand loyalty. It’s disrupting it. Research by McKinsey found that 77% of shoppers had tried new shopping behaviours, new retailers, and brands during lockdown.

All of a sudden, people are now open to buying from new retailers, to trying new brands and all sorts of things. Take the baby boomers I just mentioned, for instance. In the UK, baby boomers are 21% of the population but own 36% of the national wealth. If you’ve got this incredibly lucrative demographic suddenly shopping with you online for the first time, suddenly open to buying new things in new ways, you don’t just want to take their money. You want to build a relationship. You want them to come back. 

What’s the key to achieving this? 

The key to attracting, retaining, and maximising the value of these new shopper demographics is creating the best possible customer experience. It’s more important than ever before for merchants to figure out what elements of their online experience are not optimised or introduce uncertainty into the buying process. 

Often, we see that the answer has something to do with the checkout or the payment process. 

31% of consumers say they will only shop at a site which they know offers their preferred payment method. In any market, this would be a significant sales barrier. In a new market, in which you’re trying to win the trust of consumers, it could be fatal. 

How will this shape the online shopping and payments markets? 

Everyone – from ecommerce merchants to the payment service providers (PSPs) who support them – can expect more competition than ever before. In this new world, agility is vital. Whether that is entering a new market to grow revenues or accepting a new payment method, PSPs will need to work faster for their merchants. 

If a PSP is stuck with cumbersome tech that makes it difficult to add a target market’s preferred payment methods, now is the time to fix that. There may not be a second chance. An important element to this is the ability to offer the widest possible range of local payment methods (LPMs) at the shortest notice.

Right now, over 65% of all ecommerce transactions worldwide are paid for using an LPM. That could mean anything from a locally-issued credit card to bank transfer or cash-based payment services. Whatever it is, if a merchant’s customers like to pay with it and you don’t support it, you’re going to lose out to a PSP that does.

This editorial was first published in our Cross-Border Payments and Ecommerce Report 2020–2021, which assesses the change of pace that occurred in 2020 and provides a comprehensive overview of the major trends driving growth in this space, being the ultimate source of information for players interested in selling across borders.

About Matthew Jackson 

Matthew Jackson is an expert in payments and business development. He joined PPRO in January 2019 as Partner Manager in the London Office and has quickly been promoted to Head of Partner Development for EMEA. In addition to managing a team of dedicated Partner Managers, he works closely together with key partners helping them grow and meet the demands of consumers around the world. With a broad experience of payments, he is very well aware of the trends and needs of the industry. 

About PPRO

PPRO enables integrated electronic payment processing on a global scale spanning the entire payments value chain from acquiring through processing, collection, and settlement. PPRO acts as a B2B payments hub, connecting PSPs and other merchant aggregators, such as acquirers and processors, with local payment methods. 

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Keywords: PPRO, cross-border payments, digital payments, consumer behaviour
Categories: Payments & Commerce
Countries: World
This article is part of category

Payments & Commerce