How COVID-19 is altering the payments landscape for merchants
In just a few months, we’ve seen the kind of consumer behavioural shifts that usually take decades. As consumers have become accustomed to world-class products and services in the comfort of their own homes, ecommerce has grown in popularity over the last few years. The effects of the global pandemic, however, have dramatically accelerated uptake.
As the world faces an economic downturn, merchants can’t afford not to take advantage of this uptake. However, they face the challenge of how they take advantage of this growing customer base while still demonstrating excellent customer service and securing customer loyalty. For this, they need solid foundations.
One of the pillars of these solid foundations, in my view, is to ensure safe and convenient online payments. Without safety and security, trust is eroded; without convenience, the shopping experience suffers. Furthermore, for merchants selling in multiple geographies, understanding local market nuances and preferences is a critical step to enabling more customers to pay securely in whatever currency and by whatever method they choose.
This increases conversion and ultimately results in more customers completing their purchases and establishing or strengthening that customer loyalty we all pursue. Finally, increasing customer reach can be achieved through international expansion. Using local expertise to inform and execute expansion strategies into new markets can open up massive opportunities for growth and help merchants reap ever greater benefits of this accelerated migration online.
The digital security guard
With the shift to online shopping, online security has never been more important. As more users move online and more transactions are processed, the risk of fraud or cyberattacks rises.
More sensitive data is being shared and it is the responsibility of every member of the payments ecosystem to make sure customer data is protected. A sophisticated payments partner who can ensure security is at the forefront of product and process can remove concern for smaller players with more limited resources or expertise.
This level of payments security is crucial for new users who are overcoming trust barriers and venturing online for the first time. Without the assurance of their data security, these users will revert back to previous habits after this pandemic is over.
Understanding local to operate global
As online becomes an even more important segment for many merchants, providing the full set of payment methods relevant to each country and consumer segment is essential. One simple example: research by Go Global has found that 13% of online shoppers will abandon their basket if the price is displayed in a foreign currency.
There are around 180 currencies worldwide, not to mention individual payment method preferences differ market by market – and these consumer preferences can change regularly. Mordor Intelligence predicted that the mobile payments market is set to continue its relentless growth, at an estimated compound annual growth rate of 26.93% between 2020 – 2025. Having a payments partner who understands these preferences, has built them into their offering and can help to seamlessly integrate them into the shopping experience can be the difference between a winning international strategy and a mediocre one.
Most merchants looking to adapt to accelerating trends don’t have the time or resources to navigate the regulation and infrastructure of payment systems in each new market. A single API integration to a multinational payments provider is the most effective way to unlock new international audiences, without having to individually integrate each local payment method. PayU’s Payment Hub provides a single API to merchants via which they can enable payment methods specific to the markets they’re entering. This single connection grants merchants access to over 2.3 billion consumers and offers the ability to process over 300 different payment methods instantaneously while settling transactions in different currencies.
One example of the fast adoption of online payments is this statistic: in the second half of April, PayU saw nearly 1,500 new merchants sign up for our online payments solution in Colombia. April also marked the highest number of SME merchant registrations that PayU Poland has ever seen for our payment solution in one month. As lockdown restrictions are driving more people online, the e-commerce industry needs to be prepared to offer seamless online payments to maximise on its soaring popularity.
Another trend we see accelerating is in markets such as Eastern Europe and India which have generally been lagging behind in e-commerce and digital payments adoption. We are seeing a significant shift to online in these markets – what would have taken decades has been condensed in weeks. This has heightened the need to ensure businesses have solid expansion strategies along with the local knowledge and services.
Latin America is a prime example of a region poised to develop digital payments infrastructure and facilitate wider e-commerce adoption. Revenue from online shopping across platforms in Brazil rose to 20.4 billion reais (Bloomberg) in the first quarter, up 27% from a year earlier. That’s three times the 9% pace in the U.K., according to data compiled by Bloomberg.
But moving into new markets isn’t always smooth sailing. There are new consumer behaviours, payments preferences and regulations – and these are often nuanced and unclear to foreign players. Providers with local experience and local expertise can be the most resourceful in helping merchants build successful businesses in new countries.
Solid international expansion strategies are vital for reaching new growth trajectories. Players will be battling to take advantage of wider audiences. Only those who are set up and prepared to serve individual consumers in each unique market will prosper.
Paying it forward
The pandemic is expediting trends faster than anyone could have anticipated. As lockdowns around the world have driven consumers online, convenient, relevant and secure payments services for each market become a basic requirement. The pressure on merchants is immense to serve each individual consumer in the best possible way in the country, in the language and with the payment methods they are accustomed to. The right payments provider that can guarantee security, access to fast-growing markets and a plethora of relevant payment methods for each market is invaluable on the journey to higher growth and better consumer experience.