The overall impact of the global pandemic is becoming more prevalent. Most organizations have now returned to their pre-pandemic business models, and the payment industry is evolving to adapt to changes in trends for customers, partners, and other businesses, even as the world tries to regain a sense of normalcy.
The world economy heavily relies on major human movements. As the ongoing pandemic has infiltrated almost every industry across the planet with multiple cancellations, restrictions, and lockdowns, new paradigms in the modern payment industry are emerging. As we wait for the current crisis to end and go through the changes in corporate and consumer behaviors, we should all continue looking for a positive future.
How is COVID-19 Affecting Both the Retail and Consumer Behavior?
Since the advent of the global crisis, around 90 percent of consumers worldwide reported that their day-to-day purchasing behavior had changed considerably.
- The concept of online shopping is replacing in-store visits.
- The behavior of stocking up is affecting both the consumers and retailers. Due to bulk purchasing, stores are often left without any stock of essential products. This has prompted retailers to execute quantity limits on specific goods.
- Due to global public closures, luxuries like dining out have experienced a significant decrease. Moreover, the purchase of physical items like food and other items of necessity has also decreased.
- The travel industry is experiencing the effects of a significant downfall in overall tourism spending. This has negatively impacted the global payment systems that relied on foreign travel to ensure growth.
The overall rise in the concept of digital payments as the direct impact of the pandemic is quite clear. For instance, in Italy alone, e-commerce transactions have increased to as much as 81 per cent since February 2021. As the trend continues, other countries like the United Kingdom, France, and the United States of America are also experiencing steep rises in e-payments. As such, dealers and retailers have to deal with the challenges associated with the increased volume of payment processing requirements.
The Entire Outlook
Since the pandemic outbreak, both producers and consumers have started focusing significantly on the potential of modern technology. Most retailers are forced to focus on expanding unstaffed services and automated delivery. Even as the crisis ends, the respective set of modern technologies will continue developing and advancing.
Much more than ever before, digital payments have advanced to become a necessary utility –just like water and electricity for most consumers out there. With restricted movements, physical interactions have become limited, and the ability to make payments with cash has decreased. This is why payment providers are expected to pace up their game for ensuring that digital payment methods are always made available.
With real-time visibility, the ability to observe decline levels, transaction volumes, traffic, and errors as they take place, becomes critical. Highlighting and resolving issues is crucial, and transaction monitoring allows proactive instead of reactive management. This helps in pre-empting problems as and when they take place – before impacting the consumers.
The Importance of Analysis
As new and emerging payment methods keep coming up, payment environments become increasingly complex day by day. Even as the crisis passes, things will not return to how they were pre-pandemic. Consumers are going to think differently about interacting with retailers, and their purchasing behaviors will change forever.
Retailers will be expected to accommodate more advanced payment methods while allowing for an increase in multi-channel interactions. The overall customer experience will play a significant role in establishing loyalty.
Data will remain the key to success as far as navigating the rapidly-evolving modern payment space will be concerned. As a result, the ability to obtain insights from the vast mass of information for telling a story and guiding decision-making will become more critical than ever.
The organizations that equip staff with the skills and tools for gathering, categorizing, and translating data into intelligence will have better positioning towards responding quickly to changes. They will also make informed decisions as we continue navigating the unknown space.
Convenience Becoming Top Priority –Ensuring More e-Commerce Adoption
With the overall rush towards the concept of online shopping amidst the pandemic, e-commerce adoption is expanding into new demographics that were conventionally unwilling to use the same in the past. The pandemic has influenced or forced people to change their entire stance on online shopping and e-commerce.
It is estimated that in 2019, around 20-25 percent of people above 60 years old were online shoppers. In 2020, around 35-40 percent of the same demographic reported that they were making significant purchases online. It is a significant shift considering that older people were observed to be slower towards adopting modern ways and trends of executing business.
Changes in the PSP and Merchant Operations
During the pandemic, PSPs or Payment Service Providers came across multiple challenges that have impacted merchants, such as working remotely, people quarantining, and so on. As businesses affected by the crisis have lost revenues significantly, shut down, or stopped processing payments, PSPs have significant repercussions.
Additionally, PSPs must also ensure several changes to the approach because of increased risks and changing consumer behavior. They should also understand that they are expected to adapt to the situation while with the ongoing payment processing trends.
As consumer behaviors have altered dramatically, there is increased demand for digital services on merchants’ behalf. As a result, the merchants demand much more from the respective PSPs – like online payment gateway services, improved payment data & reporting, and payment acceptance methods (like APMs). Some providers tend to be more successful in adapting to the ongoing challenges while being quicker to react than others.
Conclusion
The shift to online payments will only continue increasing, and businesses must embrace this while optimizing the respective processes to cope.
