As lockdowns were introduced around the world throughout 2020, the payments industry experienced a rapid increase in online transactions. The rate of e-commerce sales was already anticipated to grow before the pandemic, with the global online market predicted to reach $5 trillion this year.

What no one foresaw was the extent to which national economies would suddenly rely on e-commerce. As borders are reopening step by step, merchants will need to adapt to the changing landscape of global e-commerce to maintain this growth in online activity. 

As we look to a new year, I believe that there will be three notable changes within the payments industry. Firstly, payment providers will need to take on a more holistic and integrated role for merchants. Secondly, payment products and services will have a heavier focus on the customer experience than ever before, as competition and consumer expectations increase. And finally, I also expect that unsaturated, fast-growing markets such as Latin America and Eastern Europe will continue to attract more merchants, accelerating the shifting focus from the US and Western Europe. 

An integrated partnership that will help merchants grow

Across our markets at PayU, we’ve seen numerous e-shops report astonishing year-on-year growth in 2020, up to 500-1000% during April and May alone in some regions. This sudden acceleration has been mirrored across the industry. A new calculation by GroupM shows that merchants of consumer packaged goods have seen a shift in how their products are purchased. The study shows a 277% increase in e-commerce channels through the year.

Adapting to the unanticipated increase in online demand and meeting the requirements for scale has been a major challenge for merchants in 2020. In order to make use of the growth in e-commerce in 2021, merchants will rely on payment providers offering more integrated partnerships that will not only maintain but grow their business. 

For payment providers, this means offering innovative and heightened services for merchants. Challenges from 2020 will bleed into this year, so payment providers must be on hand to help navigate the growing sales opportunities, rising online fraud, evolving payment preferences and high consumer expectations. An integrated partnership will allow merchants a one-stop shop to generate seamless, safe transactions and address diverse consumer needs’ in terms of payment. 

Predicting consumer behaviour 

Consumers are becoming more demanding. And so they should be. Technologies such as AI and machine learning mean that almost every element of the customer journey can be customised or automated. According to research conducted by Capgemini, payment providers have already seen positive impact from implementing AI in customer-facing services. A 13% reduction in operations cost has been reported, with an increased revenue per customer of 10%.

As the global adoption of e-commerce makes the industry more competitive, it will be more important than ever for payment providers to enable complex data for merchants. Data that will help them predict customer shopping patterns, offer preferred payment methods and currencies and understand consumers’ financial situation. In short, it will enhance smooth transactions and increase conversions and customer loyalty. When looking for a provider, I predict that merchants will be less focused on what the payment service is and much more focused on what the payment service delivers. 

Tapping into unsaturated markets 

In a survey conducted by UNCTAD in late 2020, it was found that consumers in emerging economies have made the greatest shift to online shopping. Of the 3,700 consumers surveyed in emerging markets across the globe, more than half now shop online more frequently. Merchants will increasingly shift their attention to penetrating these unsaturated, fast-growing markets like Eastern Europe and Latin America where they can become market leaders.

In the second half of April alone, at PayU we saw nearly 1,500 new merchants sign up for our online payments solution in Colombia. Between March and May, we also saw the number of new onboarded e-shops in Poland grow three times higher than in the previous months. Merchants are already starting to respond to a sudden uptake and demand from local consumers; the opportunity to secure the business of brand new e-commerce users is enormous. 

With high-growth markets home to 85% of the world’s population, merchants will be able to access a large new pool of customers if they can tap into these geographies. Payment providers that can offer expertise in these local markets and access to some of the most exciting regions through a single API integration will be vital. This will help merchants adapt their payment methods to specific markets, prepare their payment forms in the local language as well as settling transactions in different currencies. With payment providers able to offer such simple solutions, there is little standing in the way of businesses capitalising on the enormous potential of new e-commerce markets. 

E-commerce will continue to shape the payments landscape 

This year will see a bigger focus on the consumer experience than we’ve ever seen. Integrated partnerships and future-proof technologies will further innovate the payments industry and continue setting our standards incredibly high. Payment providers that can prove their expertise in customer data and fast-growing markets will lead the way in the payments landscape.

2020 has been a pivotal year for the payments industry, and I am confident that we will be more prepared this year to face the challenges ahead and set the scene for a prosperous decade.