How is payment processing transforming in a digital era?

2023/02/01

The global health crisis of COVID-19 bought about an economic downturn along with a change in consumer behaviour towards payments.

A major shift took place with the decline of cash usage following hygiene concerns, with cash payments having declined by 16% globally in 2020, according to the 2021 McKinsey global payments report. Consumer payments migrated from in-store to online commerce which powered the adoption of emerging instant payments and gave popularity to emerging payments. There has been a rise in the popularity of Open Banking for instant payments, Direct Debit for recurring payments, PayPal, Buy Now Pay Later (BNPL) models, and even crypto.

The growing number of alternative payment methods like this continue to threaten and put pressure on the once relied-upon card processing networks like Visa and Mastercard, which consequently are fading into the background.

There has been a growth in the integration of new solutions and technologies into existing value propositions, putting payment processing closer to a commodity. In terms of competition, the payment landscape has become even more competitive with low barriers to entry resulting in an increasing number of new players in the market and at the same time consolidation of major players continues to happen through acquisitions and mergers.

The issue with large consolidations like this means there is a lack of focus on customer service for existing customers and the processing of new applications. With changes in systems, processes, onboarding, and risk management systems a toll will be taken on payments and reporting.

The move away from credit cards has also become more apparent, as we see in the case of tech-giant Amazon which announced its plans to stop using Visa card payments in favour of more digital options which offer lower transaction fees and more competitive benefits.

Merchants face everyday challenges to understand the importance of consumer choice and consumer behaviour that can directly affect the modern payments landscape. They are no longer reliant on one provider and can easily switch to different payment providers. They are also trying to reduce costs and increase reach as consumer preferences evolve.

We know that the pandemic caused a decline in the volume of travel and trade, however, reduced travel and an increase in global supply chain challenges emphasised the need for cross-border payments in the payment eco-system, in the McKinsey report they state that cross-border e-commerce transactions grew 17%.

Paired with this need, is the concern around regulations and compliance and the need to process data and payments with integrity and due diligence by adhering to global standards and requirements and having multiple licenses around the world to channel payments between countries and markets.

To remain competitive payment providers must ensure they meet expectations from merchants and deliver the key features viewed as standard must-haves from a modern payment gateway.

Automation and simple onboarding process
Alternative digital payments bring about the need that merchants have for simple onboarding processes which help to attract more sellers, reduce costs, and improve the payment experience.

An automated onboarding process is desirable to increase the stickiness of users of the likes of affiliate marketing, loyalty solutions, e-invoicing platforms, and B2B trade directories.

Staying connected across omnichannel solutions

To connect and appeal to customers, retailers have consciously decided to move from traditional credit-card payments to consumer finance solutions that offer a more modern and easier-to-use interface with better and more informed payment analytics.

Merchants need to stay connected with customers, and relevant by offering omnichannel choices like pay by link, pay by email and integration on hosted pages. And, in a social world the necessity to be linked to Google and social media platforms with embedded payment features.

For a seamless payment journey payments providers are also competing by offering customised solutions like QR codes, “tap to pay,” and link-based payments via shared URLs generated by merchants.

Keeping the focus on payment conversion

Real-time payments stand strong in the global payment ecosystem, these types of transactions including contactless, and wallets soared by 41% in 2020.

For online payments offering customers the preferred method of payment is crucial for merchants to reduce cart abandonment and encourage the completion of sales. They also need payment solutions that can send and manage payment reminders, and the ability to cascade transactions to an alternative payment option through dynamic transaction routing.

The one-stop payment partner you need

Payreto is an experienced leader in the payments industry with 11 years of industry knowledge and a unique triple white-label payment gateway proposition. The gateways offer access to 200+ acquiring banks and alternative payment providers and connectivity to a pool of financial institutions across the globe.

Plus you can quickly and cost-efficiently connect with more payment providers if required, whilst also enabling easy implementation of 3Ds v2, Google Pay, Apple Pay and Samsung Pay, in a modern admin interface that offers valuable insights and business intelligence capabilities.

Talk to Payreto today to see how they can help you build trust with merchants and streamline customer communications with 24/7 support, all day, any time and from anywhere.