Cryptocurrencies and digital banks are just two factors that businesses can leverage to emerge stronger from the pandemic, predicts this expert.
With digital payments adoption having being fast-tracked three to five years, and e-commerce advancing by nearly five years ahead of the norm, experts predict online shopping levels that have risen exponentially during the pandemic will stay.
This means the world will continue to rely on digital solutions to access daily necessities, shopping, and entertainment. What does this mean for businesses and merchants? What else is going to gain traction?
If there is one thing we have learned in recent times, it is the importance of adopting a growth mindset, and the need to be able to adapt quickly in order to survive and thrive. To attract customers, emerge stronger from the pandemic and grow their business in the long term, here are five digital payment trends businesses can ride on in year 2021:
- Contactless payments solutions will become mainstream
Payments via apps and QR codes have increased in popularity due to their user-friendly nature, ease of implementation and low costs for set up and will only become more mainstream. With QR codes, customers can view the menu, order and pay for their meal at a restaurant without interacting with staff. This process is just as swift while shopping online, enabling consumers to scan payment at the checkout screen.
The widespread availability of digital wallets will allow consumers to transact without the hassle of handling cash or downloading multiple apps. As consumers continue to seek convenience and safety above all in the new normal, it is imperative businesses offer a seamless purchasing experience if they want to capture customers old and new.
- More cryptocurrencies will emerge
While mainstream sentiment and adoption around cryptocurrency has been mixed due to limitations mainly around usage and volatility, the overall shift to digital payments, whether digital or crypto, is advantageous for broader financial inclusion and access. The Bank of International Settlements found that one in 10 central banks (which makes up almost 20% of the global population), plan to issue their own digital currencies in the next three years.
The benefit of cryptocurrency is its ability to increase transparency and reduce fraud as a more efficient payment solution. Businesses that are quick to onboard crypto payments will be leading the pack.
- Digital banks will revolutionize the banking experience
Countries around the world like China, Japan, Singapore, the United States, United Kingdom and Sweden have issued licenses for digital banks, realizing the potential the latter have at leading innovation and enabling better outcomes for customers and SMEs.
With less overhead, they offer perks such as higher interest rates for deposits and lower fees for financial products without a middleman. The use of AI and machine learning enables digibanks to deliver services and products with speed, efficiency and personalization over traditional banks.
Digibanks will play a pivotal role in supporting SMEs, which make up 98% of the Asian economy but have traditionally been challenged for growth due to limited financing options from traditional banks. Their flexible offerings can tailor to this niche market of SMEs and entrepreneurs.
- Expect greater demand for economic support schemes
According to the International Monetary Fund the global economy shrank by 3.5% last year. To help rebuild the economy, governments across the globe have announced further support budgets focused on public health and vaccinations alongside subsidized wages for workers and financing for businesses.
Even with government intervention, the world is unsure of how long the economic slump will continue, with many consumers and businesses remaining conservative about spending, turning to affordability options like Buy Now Pay Later (BNPL) or PayPal’s schemes that offer flexibility to repay purchases in weekly, bi-weekly or monthly instalments.
Compared to credit cards, the perks of interest-free instalment schemes have made them an attractive option at checkout. Given the economic environment and consumer concerns over personal finances, we will see more of these types of solutions being offered by merchants, fintech, manufacturers, marketplaces and banks in the year ahead. For businesses, schemes like BNPL are a more manageable alternative arrangement to cover delays in payment.
- Rising digital usage will see increased cyberthreats
Google’s eConomy Report has found that nine in 10 new digital consumers in South-east Asia intend to continue using digital services going forward. This supports our 2020 Consumer Insights Survey in the Philippines that found over nine in 10 Filipinos preferring digital payments over cash.
Also, 99% of respondents planned to continue paying digitally even after quarantine measures are eased. Unfortunately, this increased time spent online has also given rise to more bad actors looking to deceive the newly initiated. Merchants can prevent cyberattacks by implementing the necessary fraud prevention and payment security measures while consumers can protect themselves when shopping online by enabling two-factor authentication or using digital wallets with data encryption capabilities.
While the industry continues to innovate and move rapidly, businesses with a growth mindset stand a stronger chance of overcoming obstacles and thriving long term. Those ready to pivot and embrace change will reap the benefits: emerging from this crisis stronger and more resilient.