It’s no question that 2020 brought a year of challenges. However, in the midst of these unprecedented times, the impact of the pandemic also resulted in many opportunities for many businesses.
With the rapid rise of online transactions and heavy reliance on technology, fintech continues to play a key role in transforming industries now more than ever before and has become instrumental to consumers as well as businesses that flourished by embracing technological advancements.
Ecommerce grew by 46% in 2020 – its strongest growth for more than a decade, according to recent ONS data. The boom has also fueled online competition and with a myriad of alternative payment methods available to suit any customer preferrence how do businesses and merchants keep up?
We take a “merchants’” perspective at some of the top trends in 2021…
1. Digital Wallets and Frictionless Payments
A significant shift in consumer behaviour has revolutionised how we make payments and terms such as digital wallets and frictionless payments are becoming mainstream. But what does it actually mean for merchants?
Frictionless payments break down the barriers commonly found in a checkout process, aimed to drive growth for businesses and build smother and efficient customer experiences.
In the past year alone methods such as digital wallets, in-app purchases, auto-renewal subscriptions, contactless payments and one click payments have grown tremendously in popularity, and so much more is yet to come in a form of wearable technology and QR code payments, which are predicted to represent 27% of all digital commerce transactions in 2024, according to 2021 Commerce and Payments Report.
With the hygiene issue of handling cash, contactless payments and digital wallets are now accepted as the ‘new normal’ of paying. Contactless payments accounted for 41% of all card transactions last year. According to Juniper Research, the usage is set to increase with half of the world’s population expected to use digital wallets by 2024.
Businesses will need to recognise this ‘new normal’ of payments and consider investing in a cost effective solution that enables them to accommodate a multitude of options to match the ever changing consumer expectations.
At Paydock we have mastered this via our unlimited connections capability. Merchants that are already using our platform can simply plug into any of our growing number of connected online payment services and supercharge their payment experience by using our specialised, PCI-DSS compliant SDK widget, which enables to deploy multiple versions depending on merchants’ payment product needs and provide a focused and dynamic payment experience irrespective of the payment type. You will be pleased to know that we have dozens of your favourite payment gateway and acceptance services already connected and are adding more constantly. Click here to see our current list.
2. Advances in AI and Machine Learning Technologies
Artificial Intelligence (AI) and Machine Learning (ML) have proven as powerful analytics tools. As competition grows resulting in price compression, gaining as much advantage over the competition as possible is crucial, and these technologies play a critical role in enabling businesses to retain revenue and stay afloat.
Businesses that embraced these technologies demonstrate a measurable competitive edge by improving overall customer experience and satisfaction.
While ML can play a part in critical areas such as fraud detection, AI could be significant in terms of helping businesses optimise conversion rates by enabling merchants to analyse, understand and impact touch points that capture consumers’ attention from beginning of process to the end.
The role of AI from payments experience point of view for both consumers and merchants is equally important. Starting from ensuring good connection to avoid declined transactions will most certainly provide a better payments experience for consumers leading to guaranteed revenue conversion through the most cost efficient path for merchants. For example, Paydock’s routing engine enables merchants to build a suite of configurable rules in an ‘if-this-then-that’ arrangement. This enables a truly ‘hands off’ experience for merchants as multiple payment gateways are managed via the Paydock dashboard rather than through heavy integrations and or code base changes. To find out more about our real time routing engine click here.
3. The rise of subscription models
Subscription modelled businesses such as Netflix, Mindful Chef, Hello Fresh and Freddie’s Flowers have boomed as a result of the pandemic. This, combined with the general outlook of the younger generation who increasingly lean more towards experiences and less towards owning things has led merchants and brands like Fabletics and Adidas to follow suit.
While it is most certain that merchants will continue to drive and capitalise on this trend as they navigate through the pandemic and growing digital and experience-driven demand, it is worth considering implications from a payments point of view. For example, in order to continue enjoying the benefits of fees collected through recurring subscription payments, merchants will need to consider removing frictions that could prevent these recurring payments. Merchants with a strong digital strategy will certainly have the edge in an increasingly competitive environment.
Paydock’s recurring engine provides autonomous recurring payments across your Paydock-managed payment gateway infrastructure. From infinitely flexible interval and frequency options to configurable retry engine, merchants that use our platform have total control over their recurring payments collection. You can find out more here.
4. Greater focus on cybersecurity
Cybercrime and risk of fraud have grown tremendously in the past year in particular. Cybercriminals are becoming increasingly sophisticated and keeping up with the pace too. With a 33% increase over lockdown, the rise in fraud is starting to affect the ecommerce industry, with consumers feeling reluctant to buy from online merchants.
In order to eliminate these risks and ensure trust in online payments, businesses must be equipped with the right tools that can help them detect and prevent such threats and fraudulent activities. While there are multiple solutions available, merchants could strat by focusing on installing a multi-layered solution into their payments strategies, consisting of different mechanisms such as machine learning/artificial intelligence, profiling and smart use of a third party intelligence via an orchestration engine.
With an impressive number of third party specialised fraud prevention services available in the market, a challenge the merchants face is consuming their services and coherently absorbing these into their payments solution.
A key tool we see today is tokenisation, which converts sensitive cardholder information into a unique digital identifier in the form of a token for the merchant. Utilising tokenisation is an important way for merchants to regain lost power and stay in control without any limitations.
At Paydock, our PCI-DSS Level 1 compliant vault enables merchants to stay agile and secure by storing sensitive credit card information and in return providing a special vault token. This vault token allows our merchants to route, update and charge without exposing sensitive data. To find out more about our vault please click here.
To find out more about Paydock, speak to one of our friendly experts today at [email protected]