What's changing in the way consumers pay - the merchants' perspective part 1

What changes have you noticed in terms of the way your consumers pay?

Sami Louali, EVP Financial Services, Jumia 

We have noticed three main trends. The first one is an accelerated shift towards online payments since COVID-19 kicked in, with a continuously decreasing share of cash on delivery payments. Many of our customers used JumiaPay for the first time during the pandemic, mainly for safety reasons – they wanted to avoid exchange of physical cash. Online payments have also enabled contactless deliveries, where the delivery agent puts the package in front of consumers’ doorstep during collection. The second trend we have noticed is an increased demand for fast/ instant refunds. Rightfully, our users are becoming more demanding and want to get their money back quickly in case of a cancellation or product return. Refunds back to debit and credit cards still take too long for many of the issuing banks in some of our countries. This is improving over time, but it can still take a few days or even longer. 

The last trend is an increased demand for Buy Now, Pay Later (BNPL) solutions. Our customers want to pay in instalments (30 days, 3/6/12 months, and so on). They are even often ready to pay a fee for such services, even though the goal should be to offer these solutions for free – or at a very affordable price. The trend is global, it has started in countries such as Egypt, and it will develop across the continent in the coming years.

Faheem Bakshi, Vice President of Payments and Exchanges , Kinguin 

Prepaid card adoption – Other than wallet or credit cards, this is something our customers, who are gamers, love to purchase. They simply go to a shop to buy a prepaid card and redeem it on our platform. 

Payment token adoption – We have seen a surge in customers who add payment tokens to avoid sharing their payment credentials or details on their next purchase. 

Customers expect personalisation – Customers who are frequent visitors to this platform are not treated as new customers. That’s why we have changed the customer’s checkout experience and added the last payment used as the first option at the checkout. 

Familiarise with 3D 2.0 – While in the past we had more complaints that transactions do not go through with 3-D Secure, now customers already maintain their banking structure to comply and have a smooth transaction while making a purchase.

Carlos Madrona, Internal Control & Compliance, Payment Methods and Fraud  Director, Mango

The pandemic has clearly marked a before and after, but not only this. The new generations are changing the world of payments; countries, where before the classic payments methods dominated the market, are affected by a disruptive behaviour of the new generations that force us, the merchants, to understand these customers. Offering customers to pay with what they use is not so much what they have, and they normally articulate through the mobile device. That said, new players have appeared on the market that are fully aligned with them, offering security, immediacy, and technology, with an exquisite user experience. Allowing to pay is no longer enough for us, we have to make the payment experience enjoyable. On the other hand, some clients do not belong to this group of new generations. We also have to provide services to them, in addition to agility and security, not in the payment itself, but in a secure environment.

Melissa Gentile, Global Payments Manager, TIDAL

With the dawn and evolution of ‘alternative payment methods’ such as digital wallets, direct bank transfer methods, and peer-to-peer (P2P) banking apps, there are more options available to consumers that increase both the convenience and security of online transactions. Moreover, the adoption of payment methods like Google Pay (GPay) & Apple Pay in the US and SOFORT, iDEAL, Klarna, and many others abroad have become increasingly apparent in day-to-day consumer behaviour. The recent boom to ecommerce from stay-at-home orders and the sudden shift to contactless-everything due to the pandemic only served to strengthen this new inclination.

We see a significant shift in the mix of payment methods in all the regions where we operate, with buyers choosing simplicity and convenience. Any feature that simplifies shopping online today is very quickly adopted – less friction and security are key. It has been my opinion that these two things don’t sync up when thinking about e-payments in the gaming sector. The formula was simple: security steps add friction to the payment flow, decreasing conversion. However, that has changed too. Entertainment still attracts people despite its complex externalities. Moreover, consumers are becoming more educated about online payments and loyal towards extra friction as a result of security. However, thanks to new regulation and technology, the payment flow can now be frictionless and secure. We did not see a huge drop in conversion rates due to the SCA, as we had anticipated (although the impact is still very visible). Buyers are ready to accept extra friction prioritising their data and payment methods’ security. The main drivers of the change in the payment methods mix in our case are Asian and European markets where cash methods are being replaced by online payments, specifically card payments, QRcodes, and online banking. North American and CIS markets, which are known for their high penetration of cash/ATMs and mobile payments (SMS/DCB) show more modest changes in payment behaviour.

Attila Doğan,  Head of Product, Global  Payments & Fraud, Wayfair

There are probably a few recent events and ongoing trends that are impacting the way consumers pay today. Consumer behaviour in both North America and Europe has undeniably changed as a result of the pandemic. Prolonged periods of lockdown in the physical world have accelerated trends of consumers to shop online and we are noticing a new demographic that previously showed reluctance to ecommerce. What is really interesting from the Wayfair point of view is that even with restrictions easing and the economy opening back up, those new consumers continue shopping online and we expect this trend to continue. 

Another significant event has been the enforcement of Strong Customer Authentication (SCA) in Europe. Outside of North America, Wayfair operates in Germany and the UK and as part of PSD2, Germany started enforcing SCA earlier this year, which has led to some shoppers choosing alternative payment options. While I would expect SCA to mature over time, either by consumers feeling more comfortable with it, or by issuers improving their UX or new concepts such as delegated authentication becoming an alternative, at this point, consumers are choosing alternative payment methods where the added friction of SCA is preventing a seamless buying experience on cards. Finally, on general trends, we do see an increased demand for Buy Now, Pay Later (BNPL) products. BNPL is here to stay and what became popular in Scandinavian countries only a few years ago has now become a key component of our payment method selection in all markets.