So much has changed since writing last year’s payments predictions report and I feel we’re in a very different place from the one we were in 12 months ago. I certainly never expected to be writing this amid a global pandemic with half of the population refined to their homes or in a countrywide lockdown!
The payments industry has seen huge change due to COVID-19 which has created new trends, halted others in their wake and fast tracked some solutions by years. But which of these trends are here to stay and how will they reshape the future of the global landscape? In this blog we’ll discuss what’s been happening and posit predictions for 2021.
Non-cash Transactions Career
I’ll begin with one of the biggest changes caused by the pandemic which is the transition of cash to contactless cards. Some consumers, who prefer to pay in cash, are being forced into using payment methods that they wouldn’t normally entertain. Since the pandemic began contactless payments have soared as a vast number of shoppers used contactless cards for the first time. Contactless payments were already common in markets like Europe and Australia and in Europe it has been predicted that contactless transactions will account for 27 percent of all point-of-sale (POS) transactions (in value) by the end of 2021. This figure has increased from only eight percent in July 2019.
With social distancing part of the new norm, consumers are now keener than ever to pay as quickly as possible with a touch free transaction. Consequently, retailers need to make it a priority to invest in and embrace technologies that transform the payments experience and meet their customers’ safety expectations. Increased adoption of digital payments methods was expected despite the pandemic, especially in growing markets such as APAC and the Middle East and Africa; Asia Pacific alone is forecasting a huge 19 percent compound annual growth rate (CAGR) driven by high growth in India and China.
Online shopping of course has continued throughout these challenging times and has also seen huge increases. A recent study of 500 Australians found that almost one-third (32 percent) of shoppers planned to continue buying at online stores they first visited during the crisis, so a telling sign that some of the new habits may stick and continue into 2021 and beyond. I expect digital shopping to continue to grow throughout 2021 as the shift away from physical stores to digital shopping has been accelerated by roughly five years, according to recent IBM data.
Predicted Boom in Fraud
The rise in alternative payments also comes with its own challenges as it presents an opportunity for fraudsters. Due to the pandemic, 2020 has seen a huge increase in work-from-home and this is also another opportunity for cybercriminals. It has been predicted that cybercrime will have a global impact of $10.5 trillion annually by 2025. The spike in online shopping is also leaving some retailers vulnerable and is exposing weaknesses in their online offerings as bad actors try and gain access to personal data and customer accounts. The Federal Trade Commission (FTC) recently reported that Americans have lost more than $145 million to fraud related to the coronavirus, the global figure will of course be much higher, and the full effect is not yet known.
New Trends in Demand
Curb side pick-up is in my prediction of one to watch for 2021 as it became popular in 2020 as brick-and-mortar retailers had to be creative with lockdowns in place and find new ways to do business. It is forecasted that in the US alone, curb side pick-up will become a $30-35 billion sales channel.
Autonomous stores also look set to make headway too as a US AI (Artificial Intelligence) technology company recently announced plans to expand to 330 autonomous stores by 2021. The cashier free technology which was introduced by Amazon in 2016 has had its challenges but other developers are now appearing on the market with their own version of this technology and it will be interesting to see the take up of this lucrative AI power.
Finally, I must mention the effect on the biometrics market as paying with a biometric card is rising in popularity as it is seen as a safer way to pay. A recent Swedish consumer study identified that 75 percent of respondents want their next card to be enabled with biometric capability.
As we start to recover from the effects of the pandemic, I envisage we may start to experience things returning to normality around May. This is very much dependent on the vaccine availability as this initiative will vary across the globe as vaccines are distributed at different rates. As of this writing, the UK has begun vaccinations on its citizens with the US not far behind.
No one could have predicted what lay in store for us in 2020 and no crystal ball can tell us what lies ahead. But I’m sure it will continue to be challenging at times but with challenge will come opportunities and I have a good feeling about what is in store for 2021 (no pun intended!).
John Tait is Global Managing Director of TNS’ Payments Market business. He is responsible for identifying and driving growth across the Americas, Europe and Asia Pacific regions, and is focused on meeting the unique requirements of TNS’ customers.