Why Is Implementing Alternative Payment Options More Important Than Ever?
Can we fast forward to 2021? This year turned out to be the year that all of us want to skip. But it is also a year that, many years from now, will be remembered as the year that changed the world. Some changes have been good, others not so much, but it’s an inevitable fact that we live in a completely different world. One of the domains that saw a significant change is finance, and this is not the first time that a virus changed aspects of e-commerce and banking. The 2003 SARS crisis was a huge turning point for China‘s retail leaders Alibaba and JD. In the same manner, COVID-19 will affect the e-commerce industry of not only this country but the whole world. While the world is slowly trying to get together, many businesses are trying to use this situation and make the most of it. As new financial trends are rising and the world is letting go of cash and embracing alternative payment methods, take a look at why new payment options are essential for both businesses and end-consumers.
New and revamped trends
The coronavirus pandemic changed the game for the payment industry as well, with new trends arising and taking over. Some of these are completely new, while others have been around for quite some time. The three most important (somewhat) new trends that will most definitely affect the way we shop are as follows:
Buy now, pay later
As the name of the service says, “Buy now, pay later,” or BNPL for short is a service that gives you the option of breaking up your payments into several installments, or simply paying them in full once the invoice comes. In this case, the due dates are quite strict and usually happen either monthly or every other week. In a survey by the popular and commercial lifestyle magazine Cosmopolitan, more than 50% of its readers admitted having used the BNPL programs before.
Even though contactless cards have been around for quite some time, it’s in the time of the pandemic that they started being used in some regions of the world. More than 80% of the people who took part in Mastercard’s survey said signing for card payments worried them and 72% said they would rather skip it. This can be perceived as somewhat huge, especially in the USA where signing for payments was still somewhat quite common. Contactless cards became extremely popular in supermarkets, and this trend became huge in the USA and also in several European countries such as Denmark and Serbia.
Buy online, pick at the store
Needless to say that online shopping surged during the pandemic. The option of sitting in the comfort of your own home, minding your safety while still, shopping was interesting to many. However, one of the “side-effects” of online shopping was the shipping time, as many had to wait for a couple of days until the specific product they had ordered arrived in their hands. But people who had more time on their hands would often buy a particular thing online, and pick it up at the store. The “Buy online, pick up at store” trend started just with the beginning of the pandemic, but it seems that it’s a trend that’s not going to go away so quickly. Not waiting in lines, yet still going out of your home for a short period to pick up the good you purchased sounds quite inviting. In the last week of may, buy-online-pick-up-in-store orders have increased by more than 240%. This is a fantastic way to click and purchase something yet pick it up whenever you want it, thus avoiding the crowds in the stores.
Could this be the end of cash?
Since the beginning of this year, cash has been regarded as a very probable source of transmitting coronavirus. This is one reason why many people worldwide are scared of using it, thus turning to alternative payment methods, such as credit cards or even e-wallets and other options such as SEPA or Sofort, depending on the country they live in. Plenty of merchants and businesses encourage their customers not to use cash and go with other options instead, which is more sanitary and faster. Banks would have to disinfect cash before issuing it to the public, something like banks in China. The post-corona world will definitely turn more to online, or mobile payments. There are plenty of consumers worldwide who never used the perks of financial technology but broke the ice during the pandemic. Jodie Kelley, the CEO of the Electronic Transactions Association, mentioned in a phone interview to CNBC that consumers pay more attention and are more conscious of what they touch.
Potential growth of e-commerce
Now that many consumers saw the benefits of online payments, e-commerce is going to become even stronger than before, changing the way we did shopping to a certain extent. Many famous brands have enhanced their online shops and added more payment options to their checkout page, allowing them to choose the payment method they want to pay with. As a result, this will create more traffic on their website and give the option to everyone, regardless of what payment method they like or prefer. While some industries will see a rise in traffic in the post-corona world, there are those industries that will still have to wait and see how the virus and the pandemic will affect them.
Needless to say that online shops will only be more important in the future. This pandemic might have affected us in plenty of negative ways, but no one’s really sure if, perhaps, it did a favor to the payment card industry as more and more people will turn to other payment options. Is this, indeed, the end of cash? With the rise in popularity of online shops, we should embrace as many alternative payment options as possible, as mobile payments are becoming huge. Giving people the option of paying in whatever method they find fit is a win-win situation for both e-commerce businesses and customers.