Any trending insights about 2020 and payments revolution were interrupted by Covid-19 and called for the rapid intervention by FinTechs. Whilst you could say that the payments revolution has not stalled, its trajectory has changed - causing the data we have from 2019 - March 2020 to seek re-evaluation as we begin to get new economic data.
Instead, the payments industry is stuck in an overlap where trends for the year ahead must realign with prospects of a different future. An element that encompasses all sides of the payments industry for the immediate and long-term future centres around transactions.
For customers, businesses, PSPs and acquirers alike, challenges are focused around the ability to continue to take payments with ease, convenience and security.
So far, the payments industry has proven resilient and reliable. With businesses and customers continuing to get services as normal - at a high quality - due to the integration of SaaS and tactically rich services within the transactional services sector that coined ‘FinTech’.
As societies globally adapt, immediate results in transactions can most notably be seen across e-commerce, with brick and mortar supply chains suspended. With notable growth throughout March 2020 to May 2020 – the latest figure showing an 89% increase year-on-year worldwide and a 23% increase in transactional volume - industries initially marked year-on-year rises in fraud.
With eventual industry-wide responses, there is a small sign of adaption with May 2020 at last, marking a downturn in fraud across the e-commerce space. However, it is important to note that e-commerce still faces its own challenges to the prevalence of cross-border shopping; which has been affected by global supply chain issues.
More significantly affected industries include the tourism and hospitality industries; both experiencing disruptions to demand and supply chains as the pandemic travels throughout peak travel seasons.
With the quarterly GDP in the summer of 2020 estimated to decline by as much as 35-40%, the payments industry and financial sector remains uncertain, even as some verticals flourish over others.
To paraphrase McKinsey.com, the challenges of the payments industry are to be determined by the complex interplay of economic activity and consumer behaviour.
Whilst revenue growth in payments is expected to turn negative, there is undoubtedly room for the adoption and the switch in preference of payment types as consumer behaviour adapts to uncertain times.
As pre-coronavirus figures projected the revenue growth in global payments to reach 6%, these figures are more likely to fall by a negative of 8-10%. However, as the public fears a recession, we’re offering some small perspective in noting that these figures are less than those from 2008-09, where figures fell by a negative of 11%.
In a profile of our company, we asked Total Processing to give their advice to businesses looking to process during these unprecedented times.
What are some common misconceptions that you come across when it comes to businesses taking payments?
When it comes to businesses taking payments, we will come across various levels of misconceptions that usually stem from the one misconception that all PSPs are one and the same.
Beyond assuming that they can only accept payments via Mastercard and Visa; when looking to take payments, a business should really be looking for a range of processing solutions - from the point of setting up to the acceptance of a variety of local and cross-border APMs; to mitigative solutions throughout the longevity of a partnership.
There is a common misconception that a payment processor is a middleman that can often be cut out; however, investment in the right partnership results in access to long-term customer and technical support; and standards compliance to prevent any interruptions in service.
Businesses should be able to access a greater understanding and transparency around the fees they’ll be subject to throughout their processing and this can be done by establishing a relationship with their provider that allows them to access better rates and also offset the cost of doing business through various verticals.
What are the areas where businesses typically overpay when taking payments?
Businesses typically overpay and sacrifice their flexibility to conduct business their way through hidden fees and reserves established to protect providers that often use a blanketed solutions service.
The accreditation of a big name in the industry does not always equate to an even distribution of services to businesses across all verticals - and an upsurge in fees is often a protective measure more than a profitable one.
Where a business can often require technical and customer support on a frequent basis, this is charged by industry players as an additional bolt-on service at a higher fee. Total Processing can utilise a network of 300 banks to serve a variety of low risk and high-risk businesses with bespoke solutions that serve the objective of each business at a low rate.
There Is also the common misuse of fraud defence tools where there stands to be a better investment of preventative and tactical preventive measures that optimise transaction data.
Businesses can often find themselves overpaying for ‘extensive’ fraud suites and analysis tools that are marked up in lieu of the former investment of solutions.
Ultimately, actions such as these will offset the cost of refunds and chargebacks and can be retargeted into growing avenues such as digital commerce and marketing.
Why should businesses who typically take cash change their payment taking habits?
The use of cash was already on a decline. We’re in a stage where the pre-corona projections within the industry are being re-evaluated with the reflections of the influx of data that is coming in from the last few months of the pandemic.
A universal statement to be made here is one that asks merchants to change their payment taking habits in order to reach the level of consumers who simply do not pay with cash.
What has been obvious is that card and touchless/contactless methods have increasingly been favoured over cash as millennials and gen Z’s become the larger groups of consumers, and we should look to encourage that with the call to bridge the omnichannel gap.
Not only are consumers looking to pay any way they want via saturating APMs such as Apple Pay or Google Pay, but there is also a level of cross-border payments that can be facilitated in brick and mortar stores within the tourism sector - through APMs such as Alipay or WeChat Pay.
As society looks to its devices to cater to every convenience, it’s the popular expectation that payments should also fall under this umbrella. Consider this, how often do you leave the house with your wallet in tow?
On a global scale, it is really when we look outside of the EU and the Asian Pacific that we’re discussing cash with any existing relevance at all.
How should businesses’ behaviours change as they grow in regards to taking payments?
Whilst there is careful consideration to make statements that are triggered from trending actions that occur in vacuums such as lockdowns, the notable rise in e-commerce and the long-term adjustments that will have to be made in the wake of the coronavirus - do call for a push in e-commerce.
More specifically, as businesses that were initially just brick and mortar stores back in March, sprung up online; there is now a bigger emphasis to bridge that gap between the physical and digital when browsing and when executing a transaction.
Payment methods must now - more than ever - cater to convenience and tamper the significant uptake in fraud, that spiked during the lockdown period.
It is also important to note that this is a trajectory that has most likely been accelerated and not established by the pandemic - aligning with the preferences of consumers and cross-border browsers worldwide.
Additionally, cross-border browsing should be a common goal across any growing business; with the inclusion of a variety of APMs that target a global consumer within this decision. Bridging this omnichannel gap solidifies the cohesive infrastructure and scope of business to branch out on a domestic level too – catering to the customer journey with an omnichannel experience that can begin in-store and end online or vice versa.
Where does Total Processing have an advantage over other PSPs in the business?
Total Processing utilises its strategic ecosystem of acquiring banks and partners to assist businesses of all sizes, across all verticals to process at the lowest rates possible.
With this infrastructure of relationships, we proudly forgo a traditional blanketed approach to processing in order to offer high approval rates to a variety of business models and continue to work with them throughout their processing lifespan.
Our bespoke services are reinforced and assisted through tactically rich security measures underscored with PCI DSS level 1 compliance and 3D Secure 2.0, to facilitate the utilisation of payment data to the fullest extent whether it be via phone, online, or by POS.
Total Processing has been fortunate enough to have established its focus in e-commerce, fostering the continued of support of businesses throughout lockdown with notable services such as our niche and leading recurrence payments CRM, and our Apple Pay for WooCommerce plugin. We’re currently expanding each of our departments to strengthen our infrastructure, including our in-house technical development department.
What do you forecast for the future of taking payments?
At the beginning of 2020, numerous payment trends were announced. The forecast then is as uncertain as it is now. However, whilst decline is expected, uptake in the adoption of select payment methods is expected.
Recurring payments to be utilised as a financing option or subscription service should expect to see an increase in popularity across all verticals – not just streaming services.
Not only is this a popular payment preference in many European countries, but it is also a growing trend amongst the online consumer and a focal point of recurring revenue for merchants in uncertain times.
The omnichannel gap has seen a varied adoption rate depending on the industry your business is in. It can either be costly or cost-effective. Going beyond convenience for your customer, the touchless element of omnichannel services places this trend on the forecast for 2020 and beyond.
Fraud is on notably on the rise with the rise of e-commerce. As businesses take financial hits for a variety of reasons, the necessity of offsetting these costs means that revenue can be retargeted elsewhere in the business.
The rise of alternative payment methods was without a doubt, on a rapid trajectory without the demand for touchless payments and the rise in e-commerce. As payment preferences changed and cross-border commerce increased; the investment in APMs should already be on every merchant’s to-do list, especially as global supply chains are restored.
Pay by link is perhaps one of the easiest ways to bridge the omnichannel gap. Popularly utilised by recurrence billing providers such as Klarna; pay by link is set to make itself more commonly known in the brick and mortar storefront - especially as the hospitality sector reopens.