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The pace of change in payments

The pace of change in payments

By Alan Irwin, Head of Customer Solutions at Global Payments

A year has now passed since much of the world began to lock down and stay-at-home orders were issued. Easily transmitted by proximity and touch, the virus caused high streets and shopping centres to close almost entirely, and online shopping became the go-to medium for purchasing retail goods. Almost overnight, retailers found themselves under immense pressure to adapt and were reliant on payment technologies to provide the right solutions. By November 2020, 36.2% of all total UK retail sales were being conducted online versus 19.1% in February. Even when restrictions were periodically lifted, anxiety around spreading Covid-19 through touchpoints like card machines led directly to a huge increase in contactless payments.

It’s fair to say that prior to the pandemic, there was much chatter around what would be next for payments innovation. But really, it was mere lip service being paid to potential new technologies like QR codes and mobile wallets. Out of sheer necessity, the payments industry stepped up to the challenge of helping to support businesses as they had to rapidly establish or grow their digital presence to enable ecommerce and remote payments, and, ultimately, maximise chances of survival. As we begin to look to reopening the economy and society, these tactics will likely have a longer lasting effect on the future of payments innovation.

Adapting under pressure

The contactless payment limit was immediately increased and will now rise again to £100 out of sheer necessity to account for the demand for touch-free payments. You only need to look at data from the likes of UK Finance that reveals how contactless payments accounted for 37% of all credit card and 59% of all debit card transactions in November 2020.

Once considered just an Asia Pacific trend, there was also an explosion across Europe, the Middle East and Africa in the use of QR codes to decrease touchpoints. Quickly, they were adopted as an alternative to paper menus in restaurants and soon became a core feature of track and trace. It was not long before QR codes were enabling new pay-at-table solutions. Restaurants also capitalised on integrating SaaS (Software as a Service) solutions, such as Deliveroo, to reduce contact with customers and to reach them in their own homes during lockdowns. Retailers have set up ecommerce shopping carts and social selling technologies to cut out online middlemen.

Changing business models

You could even go as far as to say some brands have significantly revolutionised their entire business models, fuelled by payments technologies. The trend of going direct-to-consumer has taken off and Nike, Brewdog and Harry’s are good examples of this. These brands, big and small, who previously had a distinct distribution channel, e.g. through supermarkets, multi brand outlets or dedicated stores, have looked more deeply at their distribution models and used technology as an enabler to ramp up efforts around their social presence and communication, app, loyalty and websites and embed the payment process, making it almost impossible for consumers to want to visit a third-party physical store.

The benefits of the rapid change in payments innovation, in my view, can be seen through two lenses. Firstly, it enabled the consumer to pay seamlessly with contactless or online, thus driving a positive customer experience in a secure way. Secondly, it has enabled businesses to receive these payments easily and without excess cost which has taken away some of the potential complications involved in adapting their business models.

A new age of customer experience

New solutions that enable fast payments while maintaining social distancing have been quick to emerge. These solutions revolve around allowing merchants to view orders and transactions on mobile devices and computers, while customers send payments using their personal devices. This enables social distancing and secure payments while overcoming standard contactless limits on debit and credit cards. BrewDog is a great example of a large business that has been able to evolve quickly and implement a very successful cashless drive by introducing a pay-at-table app for customers.

Buyer journeys can now also be triggered from a host of technologies, from QR codes, NFC tags, web addresses and even links sent via text, email or a social platform. These solutions not only cater to the new environment, but also enable better customer service by opening up options such as line-skipping, curbside pick-up and direct delivery.

Lessons for the future

It is fair to say that we have all been astonished by our resilience, adaptability and the ability to innovate in a truly agile way over the past year. But how can businesses keep this up for years to come? We have now seen the full extent to which consumer habits can change very quickly, and the new habits formed over the last year are expected to remain in some form. As such, rather than looking at payments as the final step of the purchase, businesses should be continuing to look at how they complement the wider customer experience. Leaving a lasting impression and opening the door to future loyalty should be top priorities. One of the most effective ways to achieve this is by learning more about what customers really want from their experience and finding new ways to gather and analyse customer data will be crucial. But the pandemic has also shown us the immense power of partnerships and business support. That needn’t change now. Sharing expertise, know-how and technological solutions will lead to success for businesses big and small, and payments innovation needs to remain at the heart of this.

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