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The COVID pandemic acted as a catalyst for a wide range of behavioural trends, accelerating adoption of a wide range of digital technologies from video calls to cashless payments.
Over a quarter of payments made in the UK in 2020 were made digitally, and this figure is set to increase even further.
For consumers who’ve had a taste of more streamlined and flexible payment options, there’s no going back. Options like instant click-and-collect or QR-code based ordering in bars have shown customers a new level of innovation, and it’s unlikely that they’ll be willing to give these new, convenient options up again.
For retailers and payment providers, this means that the pressure to keep up with rapidly-increasing customer demand has never been fiercer. With the cost of living crisis affecting consumer confidence and reducing spending, it’s never been more important to maximise conversion, and that means making payment as easy and seamless as possible.
So how can you keep up to date with changing customer priorities, and ensure that you’re offering the most innovative payment options?
Offer a range of payment options with payment orchestration
With so many different payment options out there, offering a choice is the best way to ensure that your customers are able to pay using their preferred platform. While this can get complicated, a new wave of “payment orchestration” services make it easy for retailers to offer a range of payment options by combining multiple PSP’s into a single platform.
While offering more choice is a benefit in itself, payment orchestrators take this to the next level by offering smart payment routing, directing customers to the lowest-fee options for merchants as well as automatically retrying declined transactions to minimise the risk of payment failure. While payment orchestration is a relatively new concept, it has the potential to streamline both customer experience and merchant processes to offer a win-win improvement in payment processing.
Create seamless experiences with embedded finance
Whatever payment options you offer to your customers, it’s vital that their experience of shopping with you is fast and seamless. The days of being redirected from a checkout to a third-party payment processor are numbered, and consumers increasingly expect to be able to make payments directly within your interface, with no interruptions or jarring shifts to another website and back.
Keeping up with customer expectations means investing in embedded finance functionality, integrating your payment services directly within your own platform via API’s (as far as possible, at least) rather than forwarding customers to another site to complete their purchase.
Embrace instant payments with Open Banking
Instant payments have exploded in recent years. Largely driven by growth in the Asia Pacific region, the instant payment market reached $70bn in 2020, and is expected to grow to $200bn by 2024.
Open banking technology has made instant bank transfer payment a realistic option for a new wave of consumers, offering high levels of security, with no need to share their bank details. Real-time settlement also means that payments are deducted from customers’ accounts instantly, giving them a high level of visibility and control over their funds.
Instant payments also offer some clear benefits over card payments for retailers, with instant receipt of funds helping to boost cashflow and a reduction in the amount businesses spend on card processing fees. Instant payments can also reduce the risk of fraud or chargebacks, making them a tempting option for businesses.
Look to crypto for longer-term innovation
While it’s still very much a nascent industry, cryptocurrency payments are high on the agenda for financial institutions across the globe. With Visa and Mastercard offering support for Bitcoin in 2021, and a new raft of crypto-funded credit cards hitting the market in recent years, a growing number of companies are beginning to accept cryptocurrency payments.
While cryptocurrencies such as Bitcoin or Ethereum fluctuate frequently, stablecoins like Tether and US Dollar Coin, which track against existing major currencies, are growing rapidly – according to McKinsey, stablecoin transactions worth $3 trillion took place in the first half of 2021 alone.
Beyond simply working as a currency, crypto has the potential to revolutionise payments in the form of Decentralised Finance, or DeFi. DeFi technology has been touted as a major disruptor, with the potential to reduce international transaction fees to near-zero and make it possible to transfer funds rapidly across borders without the need for traditional banking rails.
While it’s a way off yet, payments businesses are taking crypto seriously, and DeFi should be on the radar for any business who wants to be at the forefront of payment innovation.
Stay at the cutting edge with B4B Payments
At B4B Payments we’re proud to have been at the forefront of FinTech innovation for over 15 years, and now as part of the Banking Circle group of companies we’re better placed than ever to help you make your FinTech dreams a reality.
To find out more about how we can help you deliver innovative payment propositions, get in touch today.