Gustavo Ruiz Moya, CEO, SafetyPay
Covid-19 has placed financial pressure like never before on companies and consumers. Banking institutions are forced to facilitate alternative payments and transfers with new automation, due to the increased number of e-commerce transactions and new consumer trends. A large proportion of people around the world made their first online purchase ever this year, with more than 13 million Visa cardholders making payments through e-commerce for the first time between January and March. In part, this was because of changing consumer behaviour, but also because of established e-commerce systems that created seamless experiences for the end-user.
Robust digital growth makes alternative payments a dynamic sector for consumer demographics that are still developing and a draw for new merchant competitors – yet it also introduces a unique set of challenges.
Combatting future financial challenges for merchants
Ensuring financial inclusion for the future is an ongoing challenge for global merchants trying to expand their reach. SafetyPay provides alternative payment options for underbanked consumers. Two major hurdles to be overcome here are being able to offer multiple transfer platforms for customers making online purchases without compromising their financial information, and providing vouchers for customers to confirm their digital payments in real time. Both of these must be considered and executed to build customer trust, and ultimately a successful payments solution – and a successful bank.
Data security is something customers actively seek – they don’t need to be persuaded to take approaches that don’t compromise their financial information, accessing their banking information via apps and secure sites on their mobile devices. And banks, companies and start-ups alike are rushing to adapt to these shifting consumer preferences.
However, some are still struggling to solve this dynamic. For example, Amazon’s global decision to delay shipments of non-essential goods has led to significant behavioural changes for both consumers and merchants: 28 per cent of global consumers have moved away from Amazon as their preferred website for online shopping since its change in shipping policies and payment methods, a figure that rises to 39 per cent for millennials. Similarly, 39 per cent of consumers would prefer to connect directly with merchants, and cut out marketplace websites.
How much overall business could be lost for merchants such as Amazon by not accepting alternative forms of payment or presenting alternative distribution channels? Our research at SafetyPay shows that three billion people worldwide do not have credit cards, and two billion do not even have a bank account. In Latin America, for example, e-commerce represents $109 billion in sales, and is projected to grow to more than $200 billion in the next four to five years, while e-commerce and alternative digital payments represent close to 38 per cent in total digital sales.
Working together to avoid losing business
Working alongside merchants is also crucial to solving digital payment challenges. Partnering with other digital banking companies and establishing multiple distribution channels for commercial transactions is an excellent start. Simple communication and accessibility are also critical toward helping merchants connect with consumers and understanding their needs and preferences. A detailed personal banking strategy that recognises cross-border payments needs to be included when developing for a future post-pandemic. Countries are learning from each other to establish rapport and build new target audiences to help improve their business strategy – which starts with the implementation of digital wallets and alternative payment options in their markets.
The future depends on consumer behaviour and merchant preparation
There are several encouraging signs for digital payment growth, however there are still some bottom-line financial issues to be addressed. Most merchants need to answer the age-old questions – “Do we have the cash flow for this?” and “Do we have the capital to survive?” – and if the world is to accommodate the future of consumer transactions, purchasing popularity and digital trends, building a new digital banking strategy during this pandemic is the first big step.
As 2021 approaches, will digital payment options continue to be a choice or a mainstream behaviour? It is too early to predict long-term trends, but we can try to prepare for them. As we exit the pandemic, it will be important to keep a close watch to see if people will slip backwards or move forwards with digital behaviour. The pandemic will have depressed consumption overall, but if merchants are prepared, there will be promising bright spots up ahead.
To learn more about SafetyPay, please visit our website at www.safetypay.com