As we move into the new decade, expect to see some clear trends on how businesses will approach their digital payments strategy.
While it may be hard to believe that the ecommerce industry is nearing its third decade, its much more believable looking back and realizing how many incredible payment innovations there were during that time span.
In the 90s we saw the launch of eBay, Amazon, PayPal, and Alibaba; the early 2000s we were introduced to Google, Etsy, and Amazon’s Prime service; in between 2009 and 2014 we experienced the unveiling of Stripe, Google Wallet, and Apple Pay, and from 2015 onwards we witnessed the both the Internet of Things and artificial intelligence dramatically change the way we interact with digital storefronts in the form of smart speakers, wearables, and chatbots.
Now that we’ve reached a new decade, there will likely be many more opportunities like the ones mentioned above for businesses to take advantage of to capture more of the market, and even though some of them may not be immediately identifiable, here are four things you should expect to hear a lot of buzz about this year.
Cross-Border Ecommerce to Soar
Global ecommerce was on pace to close 2019 at $3.5 trillion dollars, which was a continuous rise year-over-year, and 2020 shouldn’t be any different. While international ecommerce opportunities aren’t exactly a new concept, the scale in which the market is growing is getting larger, with this year expected to achieve record-breaking numbers.
The confidence that online shoppers have in transacting with international businesses is increasing. 48% of North Americans and 57% of Western Europeans make online purchases from a foreign website regularly, and in 2018, American-based ecommerce businesses sold close to $150 billion of goods to consumers in other countries. Customers are clearly gaining an appetite for going beyond their borders if the product and the experience is good enough, so businesses who remove unnecessary cross-border barriers from their websites stand to benefit tremendously this year.
Two such obstacles identified that are hindering more people from making global transactions are fraud prevention and currency variety, so businesses who are deploying the right technology to localize payment options and mitigate fraud attempts will not only be making their potential customers happier and more keen to transact, but saving themselves unnecessary management time as well.
The Rise of Generation Z
The first wave of Gen Zs – those born between 1995 and 2015 – are expected to make a massive impact on the ecommerce market, as they are predicted to account for 40% of the total US consumer base this year.
This generation has never experienced what life was like before Google, Apple, Facebook or Amazon, and as a result are incredibly tech savvy and accustomed to elements of the digital payments realm that may have caused previous generations to put up some resistance.
A good example of this is how they are interconnecting payments with social media; one third of Gen Z consumers prefer to make and share their payments on a social media platform, whereas only three percent of Baby Boomers would.
Generation Zs are much keener to taking a digital approach to their banking as well, with 69% of them using mobile banking apps regularly. On top of this, 68% of them are also using some form of peer-to-peer payments (P2P) – a larger percentage than any other age group.
Even though the oldest among the Gen Z bracket are just young adults today, 2020 is the year where the most flexible ecommerce businesses – ones that are offering various different forms of payment options and support – will make major gains from capitalizing off of their preferences, as these individuals will likely prioritize their digital wallets over their physical ones.
In the past, payments really boiled down to two simple elements: either you went to a physical store and bought something, or you entered your credit card information online and made an ecommerce purchase. This is beginning to change, and 2020 is poised to really shake things up in this context.
One thing the fintech industry is bracing itself to see significant advances on is the adoption rate of “invisible payments”. These are automatic payments being made directly from digital wallets to the business, meaning that neither cash nor a credit card is needed in a shopper’s buying journey.
We’ve already started to see some of the biggest companies doing this, such as Starbucks and Amazon, and the statistics supporting the adoption rates of these invisible payment services would suggest that this may completely disrupt the industry. In fact, invisible payments are expected to account for $78 billion in transactions over the next two years.
Already, software is rapidly evolving so that smaller businesses without the arsenal of resources that a behemoth like Starbucks or Amazon have can leverage invisible payments themselves. It is becoming much easier to integrate digital wallets and other forms of payments directly into third-party payment platforms. Not only does this increase a company’s ability to generate more transactions – particularly with a savvier crowd like the Gen Zs we mentioned above – but it also opens up the door to more enhanced ways of collecting customer data which can be used to further optimize marketing efforts.
An Integrated Approach
As technology continues to mature and evolve, the way we implement these assets becomes easier. This is no different when it comes to a company’s revenue stack, and it’s expected that ecommerce businesses will be on the search for solutions that can simplify their payment processes this year.
The average ecommerce business is likely leveraging multiple payment gateways, as well as working with more than one acquiring bank. By engaging these different processors, a business can maximize its uptime, as well as being able to accommodate as many types of transactions as possible (one gateway might not allow payments in a certain region, whereas a second one might, therefore many businesses use more than one processor).
What businesses are starting to experience is an overcomplication of time being spent maintaining these different platforms, which is ultimately resulting in them spending more time managing their revenue stack and less time on their actual business.
Fortunately, there are an increasing number of solutions that can integrate these applications smoothly and seamlessly, so instead of pooling more resources into maintaining several different platforms, this can all still be managed in one space, without any additional time or energy being spent.
Additionally, there are other benefits to implementing an integrated payments solution too, like less manual processes, a reduction of human error, and enhanced data analysis.
As we move through the early stages of 2020, there is no better time than now for ecommerce businesses to start putting a plan in place to engage some (or all) of the above elements. And while it may seem challenging to think about breaking into a new market, targeting your offering to an entirely new generation, accepting alternative forms of payments or integrating all of your various forms of payment software together, it can be done quicker than you might think.
There are experts out there who can help answer any questions you may have, or even provide you with support and solutions to address the four aspects we outlined above, like the team at PayMotion.
Remember – it’s not just about increasing resources to gain a larger foothold in the market. Businesses of all shapes in sizes that take a smart, intuitive approach to their payment management this year stand to benefit strongly.