As the dust from the pandemic starts to clear, the retail landscape has been transformed. Digital platforms are now an integral part of the retail experience, whether it’s the purchases or the payment methods themselves. This allows for brands with global aspirations to scale quickly and reach consumers who are borderless.
In many parts of the world, digital transformation represents the growth of social economic consumer groups, internet infrastructure, and the prolific usage of smartphones. However, these trends are in different stages in different regions. Therefore, it’s important now more than ever for businesses to ensure their payment capabilities match the region in which they serve.
The future is m-commerce!
The distinct line between “traditional” retail and e-commerce is opaque. Whether shopping online or in-person, for household supplies or clothing, traditional purchase behaviour tends to be routine and considered (as opposed to a one-off purchase). And such transactions are almost invariably conducted with a preferred payment method.
Many consumers are now embracing the concept of using smartphones and tablets when it comes to paying for services and products, whether they intend to spend their money or not. In fact, 1.31 billion people are predicted to use a mobile payment app worldwide by 2023. Apps are convenient and fast with automated payment authorisation installed. Apps have been found to convert three times better than mobile websites. Uber and DoorDash have built their business around this on-demand model powered by apps that function like commerce utilities – these tend to be more spontaneous purchases made whenever the need arises.
Apps have also bridged the gaps across these models. Beside their standard POS business, Starbucks and McDonald’s enable mobile orders using attached accounts for payments, with real ‘brick-and-mortar’ fulfillment. They help to simplify payments by allowing consumers to use a digital wallet to link a credit card or bank account, rather than manually inputting the information when making a payment.
These models require electronic connectivity and, in almost all cases, cannot be performed with cash.
Are the days of the plastic card numbered?
While plastic cards may be used like cash, this payment behaviour is quickly being supplanted by even more convenient payment methods. Credit accounts connected to store accounts are becoming increasingly popular, with Amazon’s one-click purchase capability being the pinnacle in convenient, connected commerce.
Such transactions are thought of as “pull” transactions, since they pull the necessary funds from a store of value somewhere else. In this case, the web browser serves as the “wallet.”
This purchase behaviour is common on phones as well. But m-commerce can also be conducted with “push” transactions that authorise payments from a range of connected accounts. This is extremely popular in Asia, frequently utilising QR payments. Enabling such local payment preferences is critical for conducting m-commerce in these regions.
It’s worth noting that app-based m-commerce is extremely effective in driving conversions because shoppers engage with their phones in such a habitual way: messaging, scrolling through social and news feeds, playing games (which are themselves often a form of m-commerce with their in-app purchases.) This almost reflexive behaviour lowers barriers to purchase, as does completing purchases utilising local preferred payment methods.
NFC “touchless” payments systems have been the standard in the EU and UK for some time. These might involve phones or “cards” but tap into a range of payment methods. The regional nature of these patterns underscores the importance of familiarity that is the foundation of local convenience.
The blurred lines between banks and payment companies
Today, ‘digital’ is redefining the primary banking relationship. As electronic platforms enable increasingly efficient commerce, the distinctions between banks and payments companies are beginning to blur, with digital payment platforms beginning to function like banks. As a result, relationships between the local payment methods and the consumers who use them will become even tighter.
For merchants with their eyes firmly set on growth, implementing the right local payment methods at checkout – supported by the necessary infrastructure – will be key to unlocking the opportunities cross-border trade has to offer.
As the migration away from traditional payment methods across the globe accelerates, younger generations are leading the change to more convenient electronic payment methods. This means the move to truly cashless commerce that does not rely on credit cards is inexorable and will accelerate, relying on a growing range of electronic local payment methods.
Without a doubt, the way that consumers shop has changed forever. As we move away from cash and towards a world of digital payments, retailers must now look past their websites or even their apps, all the way into their customers’ wallets.