Payments is undergoing rapid change driven by significant shifts in consumer behavior in 2020. Real-time payments is picking up speed globally, the movement from cash to touchless payments has accelerated more than most would have predicted, and businesses that once processed the bulk of their payments instore have now had to set up online payments. Business are being forced to learn and adapt quickly.
The common factor in all this change is that technology is at the forefront. But with new technology and new payments approaches come new challenges. How can your business take advantage of the opportunities without being overwhelmed by technical complexities, how can it leverage technology effectively, and what are the key trends that companies should investigate?
Join Jason Krebs, Senior Fintech Product Manager at IR, and Stuart Matthewman, Head of Communications at IR to hear their insights on what payments trends matter and what you can do about it.
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Hi there and welcome to our session today: 2021 Payments Outlook Key Trends to Watch. I'm Stuart Matthewman. I'll be your host for today's session and I'm joined with Jason Krebs who's one of our key senior FinTech Product Managers here at IR. Jason, thanks for joining me.
Pleasure. Thank you.
Jason has got some wonderful experience across real-time payment platforms working in banking and financial top organizations that brings a wealth of experience to today's session. We're going to take a gaze into the crystal ball and see what is likely to be the key trends for 2021. Hasn't 2020 been a different year than anything we've ever - well, in our lifetime experienced?
The pandemic has impacted multiple organizations. There's not an organization or person who hasn't been impacted by the pandemic. Travel shutdown, in fact, whole cities' shut down. Payments, methodologies and transactions change literally overnight. We'll go into that during this presentation and how that covers what will happen in 2021. Jason has some slides and we'll talk through them.
Before we launch into today's session, just a bit of housekeeping. When you're watching the video, if you hover over the little screen, it will bring up some controls in the bottom right-hand corner. There you can access your streaming, reminding you to put it in high state depending on how it's performing. You can also access volume and go into full screen. So as I mentioned, we are having some slides today, that will also be made available as an attachment with the bonus slides but if you want to put it in full screen to read the full detail on those slides, that's how you do that.
This is an interactive session so we welcome questions or plays for any questions that you have and we have time for Q&A at the end of the session with Jason to cover some of those questions. I've touched on the attachments. I remind you again about those and how you can access those but there's an attachment button under the screen that you can see to exercise attachments.
And also at the end, we would ask you to give us a rating and leave us some feedback. We know that you're spending your valuable time with us, we really appreciate that. We're going to make these sessions as valuable for you as possible and really value your feedback. We see it as a gift and will help us colour future presentations as we move forward. if you can give us that feedback and what you'd like to see covered off in the future. So that's the housekeeping out of the way.
Without further ado, I'll put the slides up and let Jason walk you through the presentation. You’ve sent five questions through. As we run through this, no doubt, there'll be plenty of them and we'll either cover them as the session goes on or at the end where we have a lot of time so I'll just bring up the slides and pass it over to you Jason to take it away.
Great. Thanks, Stu. Appreciate that. Okay, the outlook for 2021.
In order to answer that question and do some crystal ball gazing, I'll look at it through three different lenses. What's going to happen in the market--we're likely to have in the broader market and hopefully, there's some green shoots there. What that might mean for trends in the payment industry? This year was a biggie for cashless payments and touchless payments. We'll touch on that, then what are some of the implications for those in payments as a result of those trends?
All right, so let's talk about the Market Context. Much has been written about 2020. It's been a turbulent year and there's very little firm direction yet on what might happen in 2021. But there are a few themes that are starting to emerge. 2021 is being viewed as the turning point where globally, we begin to manage and get on top of this pandemic and start the transition out if you like but the health crisis is beginning to bottom out.
We're even seeing trials and deployment of vaccines now. And so as countries successfully reduce their health risk to the citizens, and their protective measures can begin to be relaxed and removed. With greater freedom, people are able to get on and about with their daily lives and businesses that were once closed, can reopen as can industries. The winding back of these protections, however, will impact different industries in different ways and some will come online much more quickly than others.
I’m thinking here: things like hospitality and domestic travel that were put on pause during the pandemic will come online and start to bounce back again. But industries such as international travel and tourism have probably some way off yet before coming back online more fully.
But the view is that life won't go back to the way it was. The pandemic wasn't a spike or a flash in the pan. It was a protracted event. And because it has gone on for so long, many new consumer habits have emerged and these will now become permanent. As a result, there’s a new normal where consumer expectations have shifted and may now expect retailers and merchants to do things differently now on a more permanent basis; buying online and picking up in-store or having it delivered are no longer luxuries this thing is simply default options in a cost of doing business.
With that Market Context, let's have a look at some trends.
During the height of the pandemic, there was a huge shift to cashless payments and the need to reduce interaction with other people during the payment process. Against this backdrop, and the fact that the world is still going to be heavily impacted by COVID during 2021, we'll be seeing some green shoots of recovery than a transition out. These payment trends are likely to persist throughout 2021.
We saw a ramp-up in touchless experiences. The need to minimize personal interaction will likely prevail and have a long tail. Whilst many industries such as retail, we're leveraging things such as click-and-collect and buy online and pick up in-store, many are actually new to it. One survey suggests this has been a 200% increase in the volume of click and collect orders compared to pre-pandemic, and that 80% of shoppers are expecting to see more use of it in the future.
Even self-service checkout environments are being fast-tracked. And I don't mean self-service kiosks, I mean where shoppers can walk into a store, check-in on their phone when they enter the store, pick up the goods or scan the goods themselves using their smartphone and then check out without having to queue, without having to wait. This will become mainstream as sensors and the technology matures.
The other trend was cashless. Cashless payments boomed during the height of the pandemic. And once they are expected to normalize to a degree, it will lead to a new higher level and pre- COVID. online payments mobile In-app tap-and-go when your card or your smartphone, are mainstream but not just for high ticket purchases, also for everyday low value spend. And there's also a growing number of buy-now-pay-later offerings that are driving additional cashless payments too.
Lastly, invisible payments. They're on the rise, particularly for industries with high repeat purchase behavior. And with more digital payments, you can capture payment preferences and more customer data that can make future payments auto-populated and easier to do in the future. We're all aware of the kind of online streaming services that use that type of subscription model.
But what are the implications of these payment trends? Well, the first implication is all about keeping it simple. It's a good objective to aim for in normal circumstances, and are all the more important with so many first-time users of digital, visiting your site or your app and doubling down on the user experience than keeping it simple is key.
Too many merchants and retailers, their digital presence is their new front door. And just like a physical store, careful attention needs to be paid to providing that desired experience. But I don't just mean a slick interface, I mean performance-wise, too. Especially at that critical moment of truth when a customer attempts to make a payment, making sure systems are up and highly responsive, impacts the experience.
And just like we're seeing many digital wallet providers, we are seeing many buy now pay later providers. Clearly, you don't want to add any friction to the checkout process. So finding the right balance between providing payment choice, while it's not overwhelming the customer, and cluttering the experience and being able to track and measure payments activity by top 5 and by channel provides the insights into what's working on what's not. Omni-channel too. It's been spoken about for many years now. However, with many retailers and merchants impacted by reduced levels of foot traffic, many are redirecting their investment to aligning the product, service and payment experience across channels in order to simplify and drive consistency with how their customers engage with them. And with more goods now being delivered to households, logistics plays a bigger role. Ensuring inventories are well-managed and up-to-date during times when supply chains are interrupted, helps manage customer expectations on what's available. And then providing tracking status on that helps reduce items such as chargebacks from undelivered goods.
With more happening online, it's easier than ever to obtain information on your clients by having them register for an account rather than checking out as a guest. It saves them time on repeat purchases where the data can be reduced. Taking this a step further, many retailers and merchants are looking to offer set-and-forget arrangements and offering subscription payment options on routinely purchase goods and services.
Home delivery of coffee and printer ink subscriptions are booming with the whole move to working from home. To take advantage of this, it's important to partner with an acquirer payment gateway or even a shopping cart that can enable this and they can manage the security in the data management aspects of this for you.
The next set of implications is the greater use of and reliance on technology, making payments. touchless cashless and invisible is enabled by using various technology solutions. And just on the payment acceptance side alone, there's an ever-growing list of payment types and vendors to support. As a retailer or a merchant, it's important to understand how much of the technology and operational burden are you willing to take on? Leveraging your acquirer processor gateway vendor here might mean you pay more per transaction but it means you aren't doing all the heavy lifting to deploy and maintain these various technologies. And a byproduct of having access to your customers via digital means is the ability to provide value-added such as integrating a loyalty program where customers can earn and redeem loyalty points, which drives further engagement.
Some of the most visible areas where tech is playing a role is in voice commerce and using smartphones and digital assistance and the use of sensors and biometrics to make payments. Now we're all used to using our thumbprint or our face as a form of verification. But yet fridges and printers know what is running low, they can automatically reorder and make payments. However, with all the new ways to pay, there are more systems and more technologies than ever before that need to be managed, which adds to a lot of complexity.
Which leads me to the final set of implications to discuss today, the need for insights. For retailers, merchants and acquirers alike, 2020 was very much about survival.
Overnight, the world stopped, payments started. As they reopened, businesses did what they had to do, deploying tactical solutions just to keep going thinking it would be temporary in nature. However, the pandemic persisted for some time. So 2021 will be your time to examine 2020, the year that was--what worked, what didn't. A time to harden and optimize those tactical solutions and incorporate them as they are you. Look at how that scale for the future as business ramps up again. But to know where to start, you need data. You need the insights, you need easy to use tools to extract the data from disparate technologies and systems and put them in place in order to view, manipulate and uncover insights.
Companies that can perform the double click on consumer behaviors and payment preferences will be better informed to know where to invest and where to divest. And importantly, providing access to these insights across an enterprise into the hands of people who need it is priceless.
Replacing islands of understanding with enterprise-wide understanding can lead to much shallower in shorter learning curves and decision making in the norm.
And a chart from Worldline depicts this nicely. Future business performance is a function of how prepared a business is to adapt to changing circumstances, to a new normal. And having insights into your payments data helps you do that. It helps unlock customer preferences, buying habits, the experience they receive whilst making a payment, and even how your payments vendors are performing, which informs decision making and allows businesses to shift from simply surviving to thriving.
So the outlook for 2021 is more digital payments, more focus on user experience, and more use of technology. And the key location for those in payments, however, is how do you manage this increased complexity.
At IR, our value proposition is anchored around simplifying complexity. Our solutions purpose built for payments, and were across hundreds of millions of transactions monitored on a daily basis. And some of their key capabilities include real-time monitoring and troubleshooting, along with intelligent alerting and automation. This gives you real time visibility into the health and performance of your payment systems.
We have on-demand reporting with actionable insights so you can spot key trends and act. We've got dynamic baselining and learning where our system takes what is normal, it can also alert you to deviations from normal so that you can take corrective action. We've got customizable dashboards with a whole lot of visualization techniques, so you can see your data your way, all in one place.
Fantastic. It's been a big year and I think you've summed it up really well, in terms of sort of where we're heading to in 2021. You touched on the customer experience being important, then that's those frictionless payments, increase in digital payments and simplifying that complexity.
We have had a couple of questions come through this one's what's on it right now. In your opinion, how is the impact of the pandemic protracted the timeline innovation? So you mentioned click and collect this is often previously but has obviously increased? In your opinion, are we 2, 3, 5 years ahead of where we would have otherwise been, as a result of the pandemic?
Yeah, it's a great question. And I think you kind of touched on in the question. There are a lot of trends we're seeing now that the move to cashless that was already in place. The move to a lot of self-service, again, people were prototyping with that, I think that the pandemic, what it's done is condensed 3, 4, 5 maybe 6 years’ worth of BAU trends into 3, 6, 9 months off of 2020. So, it's not that we're seeing massive changes in innovation in completely new ways and new forms of making payments. It's just brought some trends that were there under the surface and really brought them into the mainstream and yet really compress the time scale of each shot that would normally take place.
As a follow up to that. If you think about the changes that have happened, where people have had to go contactless; like there's been no choice you've had to shop online as you can’t leave your house. What has it done in your point of view, from a trust perspective? Because there have been, obviously laggards in terms of taking up digital banking and shopping online. They've not had a choice now.
If you think about the payments industry and the consumer, what's it done from a trust perspective of people thinking I actually now understand that shopping online, I'm not going to get all my details stolen on, it is safe for someone to come and drop off my groceries.
Yeah. So trust is fundamental to the payments environment. You're giving somebody money in the hopes they give you the goods that you've purchased. So trust is fundamental to the payments behavior.
Having procured payment solutions from your bank—typically customers trust their bank, they also do trust some of the big tech payments providers—having a big brand name is certainly helpful. But I think what it's done, typically for those who are laggards to adopting new technology and trying new ways to pay, this has been a real catalyst for change and forced those laggards to try something for the first time. And if they have that good first experience, hence why the focus is on simplicity, if it's intuitive to use, and they have a good experience, then they're much more likely to come back and use that. They’ll go back to that same merchant’s website, use the same app, use the same payments methodology. Then, it's a virtuous cycle, a virtuous circle.
I think this has, again, compressed the timescales where laggards might have been a bit tentative, or simply not tried a digital payment method. The fact that some businesses have refused to accept cash has meant they've had to find an alternative payment method and become accustomed to it. And because the pandemic has gone on for as long as it has now, it's not like a case of where they've tried to use a new option once or twice, then going back to the old ways, they've had to persist. And so it has now built some entrenched consumer behaviors, and they'll continue to use those and repeat those entrenched behaviors, even once we transition out of here.
I know my mom certainly has; it's sort of dragged her into the 21st century.
Another question has come through. You talked about getting insights and looking at the data that you get coming in and talking about IR and what we do, does the software provide just monitoring? Or can they extract business data out of there to help drive the overall payment strategy?
Yeah, another good question. Typically, IR’s products have been used by an IT audience, particularly to look at your processing times and transactions per second. And the level of approvals versus declines.
But when the pandemic has happened, one of our products’ knock-on effects is—payments now is mainstream chatter within an organization. It's really elevated the presence of payments and how important they are to an organization. Where most IT teams still use our products, the conversations we're having of late are to other audiences, finance teams are very interested to understand payment volumes and fraud values, for example.
Treasury teams are very much interested in all the cash-in and the cash-out of a particular enterprise. What we're seeing now is that there's a heightened awareness more broadly within the enterprise about some of the around payments, data and some of the derivative information that you can access from that data. We're certainly seeing non-technical, more business-focused audiences start to use our product and show interest and start to explore their data in ways that they hadn't contemplated previously.
Yeah. Good question.
We're running up on time now. That's all the time we've got for questions today. If we didn't get to your questions, we will reach out to you directly. But thank you for joining us. It's been a fantastic session. As I mentioned, 2020 has been a year unlike any other we've seen in our lifetime. Obviously, you've taken a gaze into your crystal ball, what do you think's going to happen in 2021? It's a great overview. Jason, really appreciate your time today.
And we appreciate your time, as well. We understand your time is precious, and that you've spent some time with us today. So thank you very much for that. If you've got questions on anything that Jason covered today, if you download the slides in the Attachments tab, that's got our contact details so you can reach out to us directly.
We'd love to hear from you. Love to get your feedback there is a tab there where you can leave feedback now, you give us a star rating, and leave feedback on what we've covered. If there's things you think we missed, or there's questions that you have, you can also reach us that way. So we really appreciate that feedback. And if there's something you'd like to see us cover in the new year, you can add that in that feedback text, as well. We'll be having sessions once we get into 2021 and monitoring closely what Jason has said today.
Thanks again, everyone. I hope you have a great rest of your day, wherever you are in the world watching this from, appreciate your time and thanks, Jason.
See you next time, everyone.