6 Payment Trends Affecting Businesses in 2021
The pandemic created rapid changes in how people interacted with the world, how they shopped, and even how they paid for purchases. As social distancing rules were imposed for public safety, the demand for contactless payment systems grew. The pandemic also accelerated emerging payment trends, as merchants and payment channels evolved to meet consumer demands and the evolving threats of the COVID-19 virus. Here are six payment trends to watch in 2021:
As the pandemic hit and people struggled financially, the purchasing power of consumers took a hit. Many customers looked for deferred payment options that allowed them to buy now and pay later, via a series of payments spread out over a period of time. Merchants responded to this demand by adopting deferred payment models that allow their customers to have their product or service today and pay for it over time, often interest-free. Once an option only for larger purchasers, this past year led many merchants to offer this option for smaller purchases as well. We will see the demand for deferred payments continue to grow as consumers become accustomed to having the option.
With many customers preferring reduced physical contact during transactions, the demand for digital payments has grown. Digital means of payment, such as tap-to-pay, digital wallets, and e-commerce solutions are quickly replacing cash and check payments. In the US alone, digital payments via mobile wallets were up 20% in 2020 compared to 2019, and we expect to see that trend continue.
eCommerce and Embedded Payment
The pandemic saw many consumers turn to online shopping for the bulk of their shopping activities. With many cities and states enforcing lockdowns and limits on what businesses could remain open, retailers turned to online storefronts and increased their e-commerce offerings. Consumers of all ages moved their shopping and payments online and set up eCommerce sites with embedded online payment options. This streamlined the shopping experience as well as the purchase and payment processes. As we head further into 2021 and 2022, demand for eCommerce and embedded payment options will remain high.
Real-time Payments and ACH Transactions
Unlike other payment systems that require set processing times, real-time payments and ACH transactions allow for the instant transfer of money from bank to bank, rather than via card networks like Visa and MasterCard. The financial stress that the pandemic brought on for many led to an increase in demand by consumers to access their funds as quickly and seamlessly as possible.
In a group already accustomed to using P2P apps for instant payment, these consumers are also looking for their banks to provide more real-time payment transactions.
The peer-to-peer payment model allows users to transfer funds from their bank account or credit card directly to another registered individual using an app. Originally more popular with younger consumers, who often used it to settle or split dinner bills with friends and families, the pandemic led to many consumers moving to P2P as a contactless way to replace cash and checks. With many apps offering additional financial services via P2P apps, such as the ability to make and track investments or do online trading, P2P apps will continue to gain and retain new users.
The globalized economy has shown a need for fast, secure options for transactions across borders. While the pandemic brought a decline in cross-border payment activities, as we come out of the pandemic that is reversing and we expect that cross-border transactions will continue to grow throughout 2021. Businesses will continue to search for payment options that help streamline their cross-border transactions.As the economy continues to grow and shift, innovative services in payment solutions will continue to evolve. PayTech Trust works with you to create innovative solutions to meet your unique payment processing needs. Contact us for more information on how we can help you.
At PayTech Trust, we offer secure merchant accounts and web-based solutions for businesses of all sizes. With our collaborative suite of services and world-class cybersecurity protocols, PayTech Trust has the experience and the expertise to help your business move safely into the world of online credit card processing.