To suggest that COVID-19 has transformed the future of business would be too obvious. But, in certain industries like retail, it is hard to fathom just how much change the pandemic has ignited. The crisis has expedited society further into the digital world; technology that was predicted to be adopted in five years is now on track to be embraced in mere months.
Shoppers have been forced to go from wandering aisles to navigating websites, and we are seeing new user groups embracing e-commerce and digital payment methods at a much faster rate than anyone ever thought possible. It’s important to note that these new consumer habits are taking root and will become preferences that persist long after the pandemic.
There’s unprecedented urgency for merchants to be proactive as the usage of digital payments spikes. Offering preferred payment methods unlocks a whole new world of opportunities, literally. The retailers seeing exponential growth are the ones who have tailored and localized their payments offering to a global audience.
COVID-19 Has Catapulted Demand for Digital Payment Methods
Shoppers have heightened expectations for frictionless shopping experiences. Social distancing is facilitating the surge in e-commerce, increasing demand for digital payment methods over traditional cash and card payments.
Ahead of the virus, the world was on a trajectory to becoming a digital-first society. Some regions were ahead of others; for instance, from the PPRO Payment Almanac, 56% of online transactions in China were already conducted via e-wallets, compared to 23% in the US. However, now PPRO is seeing increased demand for these types of payments in every region.
Addressing Millions of New E-Consumers
The global digital payment revolution has previously been led by Gen Z and Millennials, but COVID-19 has forced older shoppers to embrace digital. We are seeing increased e-commerce adoption by Baby Boomers; E-Marketer anticipates a 5.8% increase in the number of online shoppers aged 45 years and older, equating to nearly 5 million brand new e-commerce users.
New needs have sparked a shift towards online shopping and away from brick-and-mortar. For example, groceries have seen a meteoric rise in online ordering; according to PPRO’s cross-border engine, online purchases of food and beverages are up 285% since the start of the pandemic.
With new curbside and buy online, pick-up in store (BOPIS) programs, the typical cash and card payment methods will be harder to maintain. Now, merchants must offer e-commerce, and implement digital payment options at checkout. Recent data shows up to 80% of shoppers across Europe's three largest markets will now make at least half of their purchases online.
We are also seeing the rise and popularity of pay-later apps like Klarna and Afterpay to help offer relief from the economic impacts of the virus. Shoppers need flexible payment options. For merchants, extending many different payment options that cater to different consumer groups can provide diversification and enable growth.
Merchants Must Get Ahead of Digital Curve
This accelerated push towards digital puts retailers at a pivotal crossroads. A failure to offer a variety of digital payment methods can severely limit their customer pool.
COVID-19 will eventually lead to a digital arms race to create the best possible online experience. The merchants that understand this and make the checkout experience a top priority will succeed, and those who stick to their guns will be left behind. This is evidenced by a recent PPRO report, showcasing 42% of U.S. and 44% of UK shoppers abandon a purchase if their favorite payment method isn’t available.
While COVID-19 has put a large strain on global economies and consumers, it has also birthed a new age of innovation. New offerings like the rise of Facebook owned, WhatsApp payment features or PayPal and Venmo enabled QR code checkout are showcasing the acceleration of this trend. Financial technology is helping to keep humans connected and provide access to the goods and services they need. Digital adoption will only proliferate, so the time is now to get ahead of the curve.