The payments trends that merchants should watch out for in 2021

Making predictions for the year to come is difficult at the best of times. 2020 has been proof of that as we entered unchartered territory across a year that will be remembered for the COVID-19 pandemic, its impact on commerce, and the way we pay for goods and services.

The biggest challenge on all businesses into 2021 will be how they continue to adapt and react to the ever changing new normal we are all experiencing. With the COVID-19 pandemic accelerating the shift to online and cashless payments, due in part to increased social distancing, as well as the national and local lockdowns and restrictions, many businesses have had to adapt quickly.

With this due to carry on into 2021, it is important to look at what the new year will bring for the realm of omnichannel across many sectors, including transport, parking, petrol, retail and vending. Here I share the 2021 trends to watch out for.

Contactless

Mobility as a service driving the transport sector

Due to the social distancing and lockdown measures, we have seen a real change in public habits when it comes to transportation over the last three months. In the last three months alone, we have seen commuter journeys across the globe reduce by at least 70%, while longer-distance travel has fallen by up to 90%. With it, cash withdrawals for payment has drastically reduced by 60%.

Technological advancements, alongside open payments, have unlocked new possibilities across multiple industries. Furthermore, travellers are expecting more as part of their basic service. Tap and pay is one of the biggest evolutions in consumer payments. Bringing ease and simplicity to everyday tasks, consumers have welcomed this development to the transport journey.  In-app payments are also on the rise, offering customers the ability to plan ahead and remain assured that they have everything they need, in one place, for every leg of their journey. Many local transport networks now have their own apps with integrated timetables, payments, and ticket download capabilities. These capabilities are being enabled by smaller more portable terminals for transport staff, and self-scanning ticketing devices are streamlining the process even further.

Ultimately, the end goal for many transport providers is Mobility as a Service (MaaS) – providing an easy and frictionless all-encompassing transport system that guides consumers through the whole journey, no matter what mode of travel they choose. Payment will remain the key orchestrator that will drive further developments in the transportation and MaaS ecosystems in 2021. What remains critical is balancing the need for a fast and convenient payment with safety and data privacy in order to deliver superior customer experiences. 

 

Fuel retail and the transition to EV

The Electric vehicle (EV) charging market is moving quickly and represents a large opportunity for payments in the future. EVs are gradually becoming more popular, with registrations for EVs overtaking those of their diesel counterparts for the first time in European history this year.  What’s more, forecasts indicate that by 2030, there will be almost 42 million public charging points deployed worldwide, as compared with 520,000 registered in 2019.

Based on our experience and expertise in this industry, we know that fuel and EV payments can present a complex challenge. The current alternating current (AC) based chargers are set to be replaced by their direct charging (DC) counterparts, but merchants must still be able to guarantee payment for the charging provider. Power always needs to be converted from AC to DC when charging an electric vehicle, the technical difference between AC charging and DC charging is whether the power gets converted outside or inside the vehicle.

By offering innovative payment solutions to this market segment, we enable service operators to incorporate payments smoothly into their omnichannel customer experience. We allow businesses to easily develop acceptance and provide a unique omnichannel strategy for EV charging payments. From proximity to online payments, it will support businesses by offering a unique hardware solution optimized for PSD2 and SCA. It will manage both near field communication (NFC) cards and payments from cards/smartphones, as well as a single interface to manage all payments, after sales support and receipt with ePortal et eReceipt.

 

ePayment solutions in parking will continue to grow

Since they have become routine, cashless, contactless and mobile or embedded payments are now preferred when it comes to completing the check-in and check-out process. They are a time-saver and a more seamless way to pay.

Drivers are more self-reliant and empowered than ever before, having adopted technologies that work to make their life increasingly efficient. COVID-19 has given rise to both ePayment and omnichannel solutions gaining in popularity. This has been due to ticketless access control based on license plate recognition or the tap-in/tap-out experience, as well as embedded payments or mobile solutions for street parking.

These smart solutions help consider parking services more broadly as a part of overall mobility or shopping experience. Therefore, operators must rapidly adapt and scale new operational practices; accept electronic payment, update new contactless limits, introduce additional payments means, refund the user or even to reflect changing customer expectations to keep pace.

 

Retailers adapting to more connected retail consumers

Today’s connected consumers shop in an entirely different way from their predecessors, switching between digital and physical shopping platforms repeatedly throughout the buying cycle. Although the impact of COVID-19 has meant that shops have had to close throughout the year at various times, the thirst for the in-store experience remains. According to research, a total of 80% of consumers reported using a mobile phone in-store to check product reviews. This represents a significant shift in the power dynamics between the consumer and sales associate.

The use of smartphones and the 4G internet connection enables shoppers to access such a broad range of product data that it gives them the “insight advantage” when talking with sales staff. To make the most of this in-store mobility, retailers need a smart, flexible, easy-to-use device that allows store associates to combine several payment services onto one system, with rich product and customer insight.

Those stories that get it right will continue to thrive in any foreseeable future and will be helped involving high-tech solutions and tokens such as Shop and Go, or automatic RFID-based no-wait scanning and payment, to increase convenience and consumer options. Omnichannel transactions, such as click-and-collect, will reconciliate these two worlds and even boost online purchases.

Additionally, tokenisation is a cornerstone of this new omnichannel era because it provides a common and secure identifier in the nebula of channels, payment platforms and connected devices. For instance, drivers may soon have access to in-car payments without having to even pull out a credit card or device. Wearable devices, like glasses or watches enable customers to pay without having to reach for their wallet or phone. In this context, tokens will prove one of the main drivers of all these payment innovations that benefit both consumers and merchants.

Throughout 2021, we expect retail will become part of ecosystem-driven business models that achieve high levels of loyalty through enhanced assortments, services and personalization, all driven by real-time data.

 

Touchless user experiences set to reshape the future of vending

The vending industry has been aware of the potential of cashless for some time. The COVID-19 pandemic has accelerated this trend towards contactless, touchless and alternative payment methods (APMs) as consumers try to avoid less hygienic payment methods. This has resulted in 50% of customers thinking that cash will disappear completely at some point in the future.

In fact, a recent report by NAMA & Michigan State University Study indicates a 37% increase in customer spending when paying by card, while an Oracle report suggests 86% of consumers say they are willing to pay more for a better customer experience. Therefore, it’s no surprise then that card-based payments, including mobile wallets and in-app payments are on the rise and driving payments. Those unattended kiosks or vending machines that don't accept all forms of card-based payments are at a disadvantage.

Providing a seamless customer experience requires businesses to expand their technology footprint to enable quick and secure transactions, accept e-Wallets, and reduce customer waiting time. This is key to ensuring customers return to make repeat sales. There are multiple use cases that demonstrate how this can improve the customer journey.

Many emerging technologies can also improve the backend of vending, working with telemetry providers to offer features such as improved on-the-go stock management and maintenance notification technology. Therefore, the touchless market can not only cater to consumers’ evolving needs, but also provide the flexibility and reliability that consumers are relying on as the world around them is changing.

 

QSR on a business transformation journey

Quick Service Restaurants (QSR) is another sector that has seen the contactless trend continue. This year, store owners have been forced to embark on a business transformation journey that includes a robust digital infrastructure. This has enabled them to pivot to off-premise service formats to meet the changing needs of customers. Many have turned to store or curbside pick-up, a new click & collect model for QSR to limit the damage to the industry especially where restaurants closure has been imposed. Meanwhile other players, Panera Bread among them, have followed the 2019 KFC example by experimenting with a subscription model.

The adoption of emerging technologies has already presented plenty of growth opportunities in the sector. Some QSRs have utilised facial recognition for when customers are wearing masks to improve checkout convenience and comply with safety measures, as well as provide increased reliance on contactless, while others have harnessed QR code technology as a touchless alternative. As a result, WeChat Pay, for example, witnessed a 26% increase in QR codes usage in Q1 2020. And, according to MasterCard, 75% of transactions are now contactless in Europe.

Responsive, integrated digital experiences are increasingly being used by QSRs to build deeper relationships with their customers. Online ordering has witnessed a huge increase in demand compared to 2019, driven by lockdown restrictions in most countries. What’s more, restaurants looking to adopt an order and/or pay-at-table model can take advantage of this feature too, providing easier payment options to customers thanks to the array of third-party apps now available.

Loyalty is also going digital as a result of the pandemic, whether that’s by loyalty benefits collections, or redemption. The likes of Nando's, Subway, and Starbucks are just a few of the players that have partnered with Apple to integrate their loyalty program with Apple Pay, enabling guests to pay, earn and redeem their benefits as part of a one-tap experience.

As more QSRs begin to realise that a digital approach meets customer demand, ensuring speed and flexibility in delivering services at highest standards even if they can’t be physically present, these trends are likely to persist after the pandemic ends.

 

Tackling 2021 the right way

In 2021, I think that many of the previous trends we saw emerging in 2020 will continue to be accelerated by the ongoing COVID-19 pandemic. We expect to see an even greater shift towards a cashless society across all these key sectors, making the buying experience quicker and more convenient overall.

As a result, merchants and operators must make the consumer experience their top priority as trends shift towards simplicity and convenience, ensuring online and mobile payments processes are as secure as possible.

To find out more, visit www.ingenico.co.uk/omnichannel

 

Lee Jones

About the Author

Lee Jones, Director of Sales – Grocery, QSR and Selected Accounts for Northern Europe at Ingenico, a Worldline brand

Lee is the commercial leader for Ingenico, a Worldine brand, in Northern Europe. Lee and his team have an unparalleled track record of helping organisations deliver a reliable, secure and fuss free checkout experience. 

Having held a variety of leadership roles with market leading technology companies over a 20-year period, Lee is passionate about driving solutions that deliver real value to his customers.    

Leading Ingenico into new markets, where the introduction of cashless payments is just starting to emerge, while supporting existing customers in their ambition to meet and exceed shopper expectations is something which highly interests Lee.  Lee is proud of the trust customers have placed with Ingenico and his team. Being able to help organisations reduce the cost, complexity and burden of PCI while assuring their revenues and enabling them to increase their customer satisfaction scores is at the heart of the Ingenico strategy. 

Worldline

About Worldline

Worldline [Euronext: WLN] is the European leader in the payments and transactional services industry and #4 player worldwide. With its global reach and its commitment to innovation, Worldline is the technology partner of choice for merchants, banks and third-party acquirers as well as public transport operators, government agencies and industrial companies in all sectors. Powered by over 20,000 employees in more than 50 countries, Worldline provides its clients with sustainable, trusted and secure solutions across the payment value chain, fostering their business growth wherever they are. Services offered by Worldline in the areas of Merchant Services; Terminals, Solutions & Services; Financial Services and Mobility & e-Transactional Services include domestic and cross-border commercial acquiring, both in-store and online, highly-secure payment transaction processing, a broad portfolio of payment terminals as well as e-ticketing and digital services in the industrial environment. In 2019 Worldline generated a proforma revenue of 5.3 billion euros.

www.worldline.com