The continued advancement of technology, along with the increase in consumer demand fueled by the need for speed, convenience, and payment security, has led to the emergence of more payment options.
With the continued advancement in capabilities of the payment processing industry, businesses must stay up to date with the latest trends to provide the best experience for customers.
Fortunately, this article sheds light on the top 5 payment trends to watch now and beyond. If you are a business owner, you should read on to see what payment gateway solutions to adopt in other to remain in business. So, join us as we begin, shall we?
Payment Trends Currently Making Waves
The top payment trends to watch out include:
1. Cashless Transactions Become Table Stakes
Cashless transactions are taking over and are expected to increase in the coming years; hence businesses need to prepare. Cashless transactions include mobile wallets, credit and debit cards, eCommerce transactions, and ACH transfers.
Going cashless is a part of a bigger revolution in the payment landscape where payment processing businesses seek to evolve their practices. Besides, customers’ demand for more customized digital payment options is driving the evolution of payment processes.
2. Digital Wallets Become the Standard
Most people have at least one mobile wallet on their devices. The increase in popularity is thanks to its contactless nature, convenience, and security.
Mobile wallets provide a safe, secure, and smooth experience at the point of sale. Experts project that digital wallets will continue to gain traction, thus making them a must-have for any business that wants to ensure secure and convenient customer payments.
According to research by Fiserv FinTech, the number of customers using digital wallets increased by 18% in 2021, bringing the percentage to 68%. Payment companies like PayPal and Square already include more features in their ‘super apps.’ These apps provide various services, including P2P payments, BNPL, and savings accounts.
3. Increase in Contactless Payment
Contactless credit cards are also becoming more popular. Retailers project them as since more as a safe payment option and are educating wary customers on how contactless payments work, thus increasing customers’ confidence in the payment option.
Contactless card transactions are faster than card chips; they also do not wear and tear as much as the former. Besides, they provide a safer option; they are processed with end-to-end encryption, and users do not need to swipe their cards and put themselves at risk of stolen data.
While not all financial institutions offer contactless cards, there are still a lot in use, with more than 190 million contactless Visa credit card users in 2020 alone and more expected to join in the coming years. Already, American Express has products with contactless technology, while other financial businesses, including Capital One, Bank of America, and Chase, have many contactless options.
When combined with digital wallets, contactless payments are the way to go, and with the growing acceptance, businesses that wish to remain relevant must begin to accept these payment options.
4. Peer-to-Peer Payments are Becoming More Popular
P2P payments such as Google Pay, PayPal, Venmo, Zelle, and Cash app are becoming increasingly popular and accepted as they allow transfer of funds from linked credit/debit cards or bank accounts to another user.
Although customers mainly use it to transfer money amongst themselves, eCommerce businesses can also adopt the payment option as it provides a convenient and seamless user experience.
P2P payment is only suitable for some businesses, yet some apps like PayPal offer pay-to-merchant (P2M) options. There are slight drawbacks, though, including longer processing time and less security. But while the payment option may only meet the needs of some businesses, its streamlined services are making more businesses accept the payment option.
5. Buy-Now-Pay Later Gains Global Adoption
The market is saturated with more buy-now-pay-later industry players, a testament to the growing interest in the payment option. BNPL enables customers to spread their payments like a personal loan. The terms and conditions defer, though, with some incurring interest, while some divide the payment into multiple automatic withdrawals with zero interest.
With the growing popularity, small fintech companies and industry giants compete with mid-tier and big banks to offer the best to their customers. The growth of BNPL stemmed from the growth in eCommerce, as more customers opt for installment payments owing to the high inflation rates occasioned by the covid-19 pandemic and other global unrest.
According to a survey by McKinsey, 30% of respondents benefitted from the BNPL payment option, while 29% reported that they would not have bought as much or not at all if there were no BNPL payment option.
Adopting BNPL could increase sales, especially when targeted around certain shopping seasons. Although it’s only suitable for some businesses, BNPL is making waves, and businesses will be wise to adopt the method.
Final Thoughts
In this era where speed and convenience are of the essence, innovative and fast payment methods are key to great customer experience. Fortunately, the payment industry isn’t showing signs of slowing down as more payments are cropping up every day.
From an increase in BNPL and contactless card payment option to an increase in digital payments, mobile payments, and P2P, the industry is developing, and more trends will emerge.
E-commerce businesses must thus be willing to adapt to the changes that come; this is the only way to ensure consumer satisfaction and business growth, sales, and profit.