Social distancing disrupted all parts of life, and consumers’ habits and loyalties are no exception: where and when they shop, what they buy, and how they pay.
Unsurprisingly, there continues to be a huge surge in the use of digital payments. Some providers report a 50% increase in volume since the lockdowns began in 2020. But how much of this increase will remain as social distancing ends? How much of these habits and preferences stick?
‘Alternative’ payments are no longer alternative
The boom in fintech, coupled with the pandemic, has made local, digital, and alternative payment methods table stakes for the ecommerce sector. Globally, local payment methods have grown at exponential rates. In Indonesia, the mobile wallet OVO has seen a 267% increase in new users. Payment methods in Europe – via the bank transfer app BLIK in Poland, for example – have seen triple-digit growth as well.
In the US, Klarna’s transaction volume rose by 44% in the first half of 2020, as consumers got accustomed to flexible, short-term, interest-free payment options, with other Buy Now, Pay Later (BNPL) schemes globally seeing a similar development.
Whilst such growth in payment options reflects a change in consumer needs driven by the pandemic, it also reflects a longer-term trend away from traditional credit or debit cards to digital and online payments that better suit how many consumers live and shop today.
What ecommerce growth means for us in payments
Now more than ever, companies recognise the value of offering localised experiences to consumers worldwide. Unsurprisingly, this has caused a corresponding rise in the fortunes of digital payment providers and the specialists who enable their services. Local payment methods address not only the consumer’s preferred payment experiences, but also tax, compliance, regulatory, and other nuances in their respective market – thus gaining the trust and traction of local consumers.
We have seen this again and again: for instance, with M-Pesa in Kenya, Grab in Singapore, Boleto in Brazil, and so on. There is no reason to believe that this trend is starting to slow down. In the twelve months leading up to October 2020, 321 million people connected to the Internet for the first time. With billions of people still verging toward online, we expect to see strong double-digit growth over the next 5-10 years.
As new markets and new populations come online, providers will certainly develop new payment services for them. But here’s the challenge: when companies try to scale their offering to multiple markets or payment methods, it quickly becomes too time-consuming, complex, and expensive.
Infrastructure, not integrations
The most efficient way for payment providers to keep ahead of the rapidly evolving payment space is to work with a payments infrastructure partner such as PPRO. PPRO helps its partners grow their business by accelerating time-to-market and freeing up its partners’ resources for redeployment into other areas.
Companies work on Google Hangouts or Slack or similar tools, and there is a reason behind not building their own collaboration system: it is because everyone needs to focus on doing what they do best. We see local payments infrastructure the same way. The right provider should handle all the technical, legal, and commercial complexities, much of the cost, and speed up time-to-market for its partners.
The number one priority for payments businesses in the wake of COVID-19
The pandemic created an unprecedented opportunity to win new customers. But companies will miss that opportunity if they fail to create personalised, frictionless payment experiences.
Offering the end customers’ preferred payment method at checkout should be the number one priority right now. But it is not merely a question of quantity. Payment companies need quality integrations at scale. Focus on delivering that, and your customers will keep coming back long after the pandemic is over.
This article is part of the Payment Methods Report 2021 – Latest Trends in Payment Preferences, a comprehensive overview of the payment methods in scope for 2021, as well as best practices for checkout optimisation and customer conversion by addressing digital transformation, security, and localisation.
About Claire Gates
Claire leads PPRO’s sales and marketing efforts, making sure that they are highly integrated and have a strong go-to-market focus. Prior to joining PPRO, she was the CEO for Paysafe Pay Later, which she helped to expand across EMEA and North America. A fintech expert with over 25 years of experience, Claire has also held positions at American Express, Virgin Money, Mastercard, and Citi. She is a passionate advocate of workplace diversity, and she mentors several startups.
About PPRO
PPRO is the top global provider of local payments infrastructure, powering growth for payment service providers and enterprises with payment platforms. Companies at the forefront of payments technology leverage PPRO’s unified platform, expert services, and local payment methods to boost sales in over 100 ecommerce markets worldwide. In 2020 alone, PPRO processed over USD 11 billion for its customers, including companies such as Mollie, PayPal, Worldpay, and many others.
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