As the payment sector continues to navigate the pandemic, ConnectPay CEO Marius Galdikas detailed some of the new trends and innovations that he believes will soon dominate the industry.
The current circumstances called for implementing novel solutions in the payments market to accommodate the heightened demand for cashless options, as well as the need for flexibility to combat pandemic-induced uncertainty. But what are these novel solutions?
Buy now, pay later
Delayed payments are a budget-friendly shopping option, which may expand as COVID-19 threatens income security, hence the appearance of buy now, pay later shopping services. Enabling consumers to pay in monthly instalments eases uncertainty about a large one-off expense, decreasing perceived risk for the consumer.
The new service from PayPal, known as ‘Pay in 3’, allows the purchase of goods priced between £45 and £2,000 in three equal, interest-free instalments, automated during the purchase timeline. It arrives on the tails of Pay in 4, an equivalent service for the US market.
“Flexibility is key at the moment,” said Galdikas. “Consumers are unsure about the future, which has resulted in stricter budgeting – the priority is covering day-to-day expenses, after all.
“Bi-monthly payments create less pressure, as smaller instalments are more manageable to pay off, and it doesn’t come across a single huge hit to savings. I think we’ll see more business adopting such an approach, catering to the customer’s reassurance.”
Payments via super apps
A super app is an umbrella app, which accommodates a multitude of services ranging from food delivery to taxi services, and so on. The pandemic pushed these applications to expand their versatility even more, as they started to integrate various payment options, for example carrying cashless point-of-purchase for multiple vendors.
Super apps like Alipay or Grab stemmed from simple beginnings but took off for their utility. Convenience remains paramount, so the trend – first sparked in China – is now expanding across the border, aiming to present streamlined payment options at the customers’ fingertips.
“This perfectly illustrates the current trend towards a one-click future, where any purchase, request, or transaction is a single-tap away,” noted Galdikas. “With customers rooting for simplicity-backed efficiency, such applications are very likely to continue growing in popularity.
“In addition, super apps could help define new layers of consumer behaviour, expanding market reach for payment providers, and present new key insights to reflect upon.”
QR Code Boom
Using a physical-space 2D code is quite easy and versatile, as it can facilitate donations, micropayments or other point-of-purchase tools. It is why QR codes have become one of the most popular tools during the past few months of the pandemic, when consumers and businesses saw mobile wallets in a new light.
So far, the integration of physically printed codes and e-wallets has taken over the Southeast Asian markets, but US-based providers are yet to catch up with the trend. The tech has been around for more than a decade, only waiting for the current use case of cashless purchases.
“A QR code is an easy addition to extend the use of electronic wallets into the physical space of shops or venues,” explained Galdikas. “The main appeal is that there is less complexity in its integration, making it ideal for small-scale vendors to jump on the cashless payments trend and offer their clientele a safer option to settle their purchases.”
As the popularity of cash wanes, substitutes are gaining traction, such as mobile point-of-sale, or mPOS. MPOS tools work in place of card payments, and harness the already well-accepted mobile wallets. A good example would be the prevalence of ApplePay, a common trend for Western consumers who use the app to replace credit cards.
The pandemic fueled their usage even more, with supermarket POS terminals showing a 59% increase in ApplePay usage since May 2020. When you throw in the obvious role that cashless payments have to play in the fight against COVID-19, Galdikas is not surprised.
“Increased security and convenience add to the potential growth of Apple’s wallet or, as a matter of fact, any other mPOS usage,” he said. “Cashless payments are still playing a key role in limiting exposure to coronavirus threats. Thus using a mPOS equals spending less time at the store, which adds to its general appeal of usefulness.”
As electronic payments grow both in volume and complexity, the threat of fraud inevitably follows. Therefore, monitoring consumer identities, cross-border remittances and automation, as well as various point-of-purchase options becomes more of a challenge.
For Galdikas, this is where biometrics steps in as an additional layer of security for combating potential identity abuse scams. Utilising unique consumer characteristics or real-time location data enables the verification of a user’s digital identity, preventing scams or account takeovers.
“Biometrics has been recognised as a crucial part of security at all levels,” he stressed. “Reflecting on the SCA law stating mandatory two-factor authentication for all online transactions and contactless payments within the EU, biometrics is outlined as one of the key safeguards for authorisation.
“With the common threats becoming more technologically sophisticated, reliance on biometrics will only continue to increase as it is harder to fake.”