By Marius Costin, Head of EMEA High Velocity Sales & US Global Account Team at PayU
The circumstances introduced by the COVID-19 pandemic created an unprecedented demand for online goods and services. Research shows that global e-commerce is expected to see continued growth, reaching a predicted revenue of almost $5 trillion by the end of 2021. This is in no small part thanks to the huge growth in e-commerce across high growth markets, with regions such as Latin America on course to reach a value of $187 billion at the end of the year.
As parts of the world begin their journey back to ‘normal’, merchants will be under increasing pressure to ensure that their payment methods and solutions meet the expectations of a growing number of global online shoppers. In order to do so, retailers must work with payment providers that offer a holistic model, taking into account consumer behaviour and preferences across each region they may wish to enter.
The accelerated shift to e-commerce
2020 saw the global demand for e-commerce services skyrocket. As customers moved online, so too did merchants and services.
In our recent report, “The Next Frontier: the most promising markets for emerging e-commerce leaders in 2021 and beyond,” we analysed online consumer spend in 19 countries across five continents in four high growth e-commerce sectors: beauty and cosmetics, digital goods, fashion & gallantry and education. Across these markets, some of which may have been overlooked in favour of bigger more developed economies, we saw significant growth in consumer e-commerce spending.
As e-commerce continues to grow, the need for global innovation in digital payments becomes ever greater to keep up with evolving demand. As a result, there will be a heavy focus on the customer experience within the post-COVID payments landscape. For merchants, adapting to the booming trend of online shopping is key. Optimising payment models for a seamless transaction experience is the first step in capitalising on the post-pandemic e-commerce boom.
Payments innovation across markets
Through our expert teams on the ground, who have both the global and local knowledge to help companies make informed and market relevant decisions, we are able to witness firsthand the impact that e-commerce has in a variety of high growth regions. Let’s take Latin America for example: during the first seven months of 2020, PayU processed more than 120 million online transactions in Latin America alone, reporting a 50% increase from 2019. Meanwhile, other regions including Africa, Central and Eastern Europe and Southeast Asia also reported increasing levels of disposable income within certain population groups, as well as a significant growth in mobile penetration. This creates a market of digital-savvy consumers with a high appetite for global online goods and services.
While there is huge potential in these regions, it’s also important to note that every market is different. Take Africa as an example. Data from our report shows that countries like South Africa saw retailers adapt to the shift to e-commerce quickly, with Checkers Sixty60 and Zulzi re-shaping the way that groceries were bought. Our report reveals that despite a ban on non-essential purchases, we saw significant growth in e-commerce, with more and more transactions being completed on mobile devices – up by 35% in 2020, as compared to 2019 levels.
According to the GSMA, mobile money is increasingly being used to conduct transactions for essential services throughout Africa. As such, it is becoming part of everyday life. For example, 1 in 3 monthly accounts now receive their salaries via mobile money, while utility payments account for 55% of the total value of bill payments processed via mobile money. Merchants looking to enter the African market who do not offer a seamless mobile payment experience stand to severely limit their potential revenue.
Meanwhile in Latin America, countries like Brazil are taking proactive initiatives to accelerate e-commerce growth. Its Open Banking agenda will boost financial system interoperability across Brazil and will promote financial inclusion while reducing the associated costs of accessing financial systems for consumers. On top of this, the Central Bank recently launched QR-code based instant payment solution (Pix) which is expected to account for 25% of all online payments in the next three years.
The pandemic has transformed the way that consumers are spending their money, and our report shows that high-growth markets have gained significant momentum over the past year. For merchants that are equipped to offer services beyond their local market, this opens up tremendous opportunities for growth.
Looking to the future of payments
It’s clear that global e-commerce shows no signs of slowing down as consumers worldwide continue to embrace the convenience of online shopping and services. A survey conducted by UNCTAD even found that more than half of respondents will shop online more frequently, regardless of the pandemic.
As we look ahead, access to a deep knowledge of payment preferences across regions and the ability to offer a seamless online shopping experience in the right geographies at the right times, preferably with fast and easy-to-use services, will be the difference between success and failure.