THE RISE OF ALTERNATIVE PAYMENT METHODS: WHY MERCHANTS NEED TO DIVERSIFY PAYMENTS

Capgemini has recently released its World Payments Report 2021, which has some interesting information on changes in the digital payments ecosystem, and underlines why companies serious about growth need to offer alternative payment methods and partner with an experienced online payment service provider. 

The report underlines how pandemic-induced transformations and changing consumer habits and expectations inform the next-gen payment methods that will soon drive digital payments growth. This requires firms to future-proof with value-added and embedded experiences, which can only be achieved through an increased focus on customer experience and collaboration with synergistic payment partners.

Payments 4.X and the rise of alternative payments methods

According to the report, a new era of payments – Payments 4.X – is shaking up the payments ecosystem as digitally enthusiastic consumers, looking for convenient, lifestyle-embedded payments, continue to favour contactless payment options. In this new, experience-driven era, alternative payments methods like instant payments and e-money are set to account for more than 25% of global non-cash transactions by 2025.

Changing customer payment habits

The global non-cash payments industry saw declined growth as a result of the pandemic, with private consumer expenditure (PCE) in the EU declining by 4.1% in Q1 2020 compared to Q4 2019. However, as consumer spending starts to recover post COVID, global GDP is projected to rise 4.3% in 2022 before settling into a 3% growth rate between 2023 and 2025. But having experienced the convenience of contactless payments during lockdown, consumer demand for payment methods like these will continue to rise.

Consumers are coming to expect payment solutions that:

• Allow for faster transaction settlements
• Offer foolproof security
• Boast better CX
• Are hyper-personlised

Alternative payment methods like digital wallets, mobile payments, and instant transfers all meet these customer expectations, and these expectations will continue to drive innovations in alternative payment methods.

While next-gen payment solutions like buy now, pay later (BNPL), invisible, biometric and cryptocurrency are only just starting to see adoption, the unprecedented push for digital solutions seen during the pandemic has changed customer engagement forever, and businesses can benefit from proactively preparing for evolving consumer preferences.

Future proofing with Payments 4.X pillars 

To meet customer needs in the new payments era, businesses need to prioritise their technological capabilities and the payment support they need to offer their current and future customers. 

An effective approach to ensuring you deliver a superior customer experience now and in the future, is leveraging the Payments 4.X pillars of:

• Data
• Shared infrastructure
• Robust platform capabilities
• Embedded finance 

Effective payment gateways that support alternative payment method integration can offer businesses the capabilities to monitor and analyse their data through a single, user-friendly interface that pools data and scales with business growth. Solutions like these can support merchants in future proofing their payment offerings, and as noted by Capgemini Financial Services Strategic Business Unit CEO, Anirban Bose, “high-performing Payments 4.X early adopters will become tomorrow’s embedded finance leaders.”

Prepare for the payment ecosystem of tomorrow with an expert payment services provider

The payments industry is facing intensifying, multi-dimensional disruption where customer preferences, as well as retailer requirements for instant payment confirmation, smooth reconciliations, and seamless cross-border transactions, are accelerating transformation in the space.

The transition to digital channels continues to progress, with more than a quarter of small to medium businesses confirming that they use e-commerce to sell their products or services online. As digital payments continue to rise, the future payments landscape will welcome companies that leverage innovation to diversify their payments. As such, merchants need to ensure their payments services providers can provide innovative solutions that address all their technology and data needs, thus driving profits and overall customer experience. 

The right online payment service provider will care as much about your growth and expansion as you do, and work to identify and highlight the payment services your most valuable customers are using, to help you align with the right markets and get ahead of the competition.

Achieve payment perfection with an expert payment service provider

The Capgemini report is an interesting and recommended read for merchants dedicated to growing their business within specific markets on a digital level.

The way the world is paying for goods and services is evolving at a rapid rate, and those that are slow to adopt new approaches are in danger of being left behind by their shifting consumer base, now looking for more convenient alternative payments methods.

The right payment provider will work with you to help modernise the way you do payments, while providing you with expert industry and market insights along the way, helping to grow your business with you.

The right partner will also take the weight of complex financial compliance from your shoulders, leaving you time to focus on growing your business and forming new, stronger relationships with clients and suppliers.

Summary:

If anything, the latest Capgemini report indicates that the rise of alternative payment methods shows no signs of slowing down, and that digital transformation efforts on the part of merchants is an ongoing consideration that shifts with changing customer habits. To prepare for a hyper-digitised future filled with customer expectations driven by convenience, businesses need to keep their payment offering on the cutting-edge.