The digital revolution has forever transformed the way we make and receive payments, borrow and save money. While the pandemic certainly accelerated the shift towards digital payments, the fintech sector is in no way ready to hit the brakes.
Now convenience, rather than COVID, is driving innovation, and in the coming years we’ll see more alternative payment methods grow in popularity and existing digital payment technology continue to evolve.
The rise of cryptocurrency
The first half of 2022 has been bad for the crypto market to say the least, with Bitcoin and Ethereum plummeting more than 50% from their all-time highs in late 2021. Despite this, mainstream adoption of cryptocurrencies is on an upward trajectory.
Approximately 15,174 businesses worldwide accept Bitcoin, and each day over $1mn is spent on goods and services with Bitcoin in the US alone.
Merchants across sectors have seen beyond the negative headlines, and broadly agree that accepting digital currencies means gaining a competitive advantage in the market. In fact, the majority of those who currently accept cryptocurrency as a payment method are seeing a positive impact on customer metrics, such as customer base growth and brand perception.
It’s incredibly difficult to predict where crypto is headed long-term, but in the coming months, changes in regulation and institutional adoption of crypto payments will give us an idea of what the future holds.
There’s only one thing we can be fairly certain of when it comes to digital currencies: they’re here to stay, and cryptocurrencies are already playing a pivotal role in the evolution of digital wallets.
What’s next for digital wallets?
Digital wallets are becoming increasingly central to the way we pay for goods, transfer funds, and store anything from boarding cards and movie tickets to loyalty vouchers.
By offering a way to record, store and transfer alternative digital assets, smart ledgers – or blockchain – will transform the way both consumers and businesses handle digital wallets. Combining this with easily adaptable, API-accessible wallet management systems, customers will benefit from a better-integrated digital payment model.
Meanwhile, many shoppers have also installed a QR code wallet app on their phone. This is linked to their bank account so in-person payments can be made with their phone.
QR codes have been in use since the mid-90s but have seen a resurgence because they are contactless, touchless, and easy-to-use – appealing qualities in a post-pandemic world.
Digital marketing firm Juniper Research has predicted that the use of QR codes for electronic payments in the US will increase by 240% from 2020-2025. In fact, the collective total of mobile payments surpassed $13tn last year, with most of that figure coming from QR code payments on the WeChat and Alipay apps in China.
Outside of China, QR code payments may still be something of an emerging concept, but as more retailers encourage their adoption with app-enabled loyalty programmes and promotions, more consumers will wake up to the convenience of using QR payments.
Ecommerce merchants will also see the advantages of using QR codes. They’re less obvious than the ways they can streamline and speed up in-store transactions, but the security and cost benefits of scanning QR codes for payment could mean the days of ecommerce companies saving credit card data for future purchases are numbered.
This can only be a good thing, since stored card data is what digital thieves are looking for when they hack into ecommerce servers. When a customer’s card information never leaves their own device, there’s nothing to steal.
Time to rebrand one-click payments?
When it comes to convenience, what could be better than paying with a single click? ‘Two-click payments’ might not have quite the same ring to it, but most consumers understand one-click actually takes them to a page where they can select a card from the ones they have pre-saved through Click to Pay.
Whether or not people feel misled by the name, it’s been a game-changer in reducing cart abandonment. Approximately 70% of shoppers globally add products to their online carts then abandon them before checking out, simply because they had to create an account or faced a long or complex process prior to checkout.
Furthermore, almost a fifth of users do not trust online sites with their payment information. With Click to Pay, they have the option to select the pre-saved cards of their choice. After that, Click to Pay provides the online retailer with the information necessary to complete the purchase.
The next step is to remove the ‘pay’ button altogether for truly invisible payments. The most well-known example is Uber. When you take an Uber trip, you don’t even notice the moment of actual payment.
Similarly, the idea behind the Amazon Fresh store in London is that when customers arrive for their weekly food shop, they can simply scan their phone, fill their bags, and leave with no interaction necessary.
In a digital world, payments need to keep up
We all know the consumer demands convenience, but too many businesses focus on the journey up to the point of payment.
By embracing digital and invisible payments, and keeping up with the pace of change in this area, you are recognising that convenience matters as much – if not more – when it becomes time to take payment.