2021: An evolving digital future for Payments and eCommerce
Oct 25, 2021 | By PYMNTS.com
Roy Barak, chief financial officer and chief operating officer of Vindicia, discusses how consumers are re-evaluating their spending as they emerge from the pandemic – and how the growth of digital payments has resulted in enhanced convenience, security, efficiency and flexibility for the consumer – and increased revenue for eCommerce providers. Read more executives’ insights in "The Way Payments Are Now Done."
A year ago, the world was hibernating in the midst of a pandemic. With people spending more time in the comfort of their own homes and looking to meet basic needs – as well as seeking novel entertainment experiences – the convenience of online shopping and digital payments proved to be more popular than ever. Statista reports that in 2020, over two billion people purchased goods or services online, with global online sales surpassing $4.2 trillion.
As consumers emerge from our hibernation, we see they are continuing to reevaluate their spending during an economic and political time that is still in flux and subject to continued change. Through it all, we see that the growth of digital payments has transformed the marketplace – and will continue to do so. The result? Enhanced convenience, security, efficiency and flexibility for the consumer – and increased revenue for eCommerce providers.
Reducing fraud and enhancing security
To ensure strong customer authentication (SCA) and proactively manage payment fraud, a two-factor authentication protocol called 3D Secure 2.0 (3DS2) has been implemented under the Payment Service Directive 2 (PSD2). Aiming to reduce fraud and enhance the security of online card payments, 3DS2 enables businesses to utilize digital payments and securely connect with customers in more places around the world.
In addition, the introduction of eight-digit bank identification numbers (BINs) more securely ties unique identifiers to each individual payment user. Fraud management – proactive and preventive rather than reactive – has never been as sophisticated as it is today, and the systems are only improving as we move beyond 2021.
New payment players and options
Over the past year, the market has welcomed new payment players and options. Stores are increasingly offering personal credit cards and membership programs that reward frequent shoppers with perks and privileges.
Buy now, pay later (BNPL) platforms like Afterpay, Affirm and Klarna enable online shoppers to break purchase totals into smaller payments with no interest or fees (as long as payments are made on time). eCommerce businesses are partnering with Google Pay and Apple Pay to run promotions that aren’t found on any other platforms – and some are even beginning to accept cryptocurrency as a form of payment.
Subscriptions and eCommerce
In the subscription space, savvy eCommerce providers have found new ways to personalize the consumer experience and reduce friction.
Retail Consumer Experience found that 63% of consumers expect personalized experiences from their subscription providers. To that end, many are allowing subscribers to self-bundle by picking and choosing aspects of their plans to meet unique needs, which sometimes even means down-selling to find a better fit. And many are also allowing consumers to temporarily pause their subscriptions in lieu of canceling. After all, it’s better to pause revenue for a few months rather than lose a subscriber forever.
Ultimately, these new digital payment trends will continue to provide more flexibility to consumers and add customer lifetime value for businesses. Vindicia helps subscription providers remain flexible by engaging with newer payment trends to meet consumers where they are and maintain their relationships.