The pandemic's impact on every element of daily life has been monumental over the last two years. Work, education, healthcare, and commerce have all become more digital, alongside several more industries and sectors. One area that has seen huge transformation is payments, which is embracing digitalisation at a faster rate than ever before. The pandemic highlighted the importance of adapting to the new digitised landscape and staying ahead of the competition. But how exactly can businesses achieve efficiency through financial services and payments?

While relevant to all merchants, for online retailers specifically, tech innovation within payments can help significantly increase conversion rates. This is particularly true when taking into consideration consumer spending habits. According to our research, which surveyed over 2,000 UK consumers about their shopping and payments habits in March 2021, 28% of respondents said they’d like to use cash less after the pandemic than they did beforehand, with 13% saying they don’t want to use cash at all.

Payments should be viewed as a potential commercial advantage for online retailers rather than a tactical process. If properly implemented, the payments process can become an inconspicuous part of the consumer shopping experience, providing reassurance and trust in the brand they are purchasing from. Additionally, with the right payment partner, merchants will be better placed to increase their conversion rates, payment acceptance and overall profitability.

The ability to design a seamless payment journey can result in a consumer's first purchase becoming the beginning of a long-term relationship with a brand.  It’s crucial that retailers come to terms with this if they want payments to be the start of a meaningful, long-term relationship with their customers.

The impact of shifting consumer behaviour 

Consumers today have evolved beyond typical cash and card transactions. In fact, our research found that PayPal (34%) and debit card (33%) were the top two preferred online payment methods. PayPal was, however, a particular favourite for Gen X (46%), and of all respondents, Gen Z was the most likely generational group to say they prefer to pay by digital wallet (11%). Additionally, 1 in 4 people (25%) think they will use their phone to make payments in stores more often after the pandemic. 

Retailers would do well in partnering with a payments company that is at the forefront of the acceleration of eCommerce. With the rapid increase of mobile wallets, social commerce and emerging payment methods such as Buy Now Pay Later (BNPL), it’s clear that the pace of change is far from slowing down. Increasingly, more digitally savvy consumers expect a seamless experience and frictionless transactions – and retailers who are not agile enough to respond will lose out.

Reaching more consumers in new markets

The impact of a constantly evolving fintech landscape is also creating an opportunity for retailers to expand their reach across borders. Consumers in high-growth markets are increasingly gaining access to financial services simply through mobile devices. Over the last ten years, 1.2 billion previously unbanked adults acquired access to financial services decreasing this figure by 35% - this is largely due to the growth of mobile money accounts. Research shows that the percentage of adults in emerging economies who own a mobile phone in 2017 climbed to 83%, with 69% having access to a bank account and/or mobile wallet from 2014 levels. The increased adoption of mobile wallets signals new, untapped opportunities that merchants could target to reach more consumers and expand their presence in new markets. 

This trend will continue to grow as fintech innovation creates a spike in cross-border commerce. By the end of 2022, experts predict that 22% of all eCommerce transactions will be made of cross-border sales. As we look to the future, fintechs across the globe will be working tirelessly to ensure that mobile and cross-border payments are seamless and accessible by increasingly more and more consumers. Furthermore, cross-border expansion requires in-depth knowledge of the local market. Merchants looking to expand internationally would do well in partnering with a payments provider that can reduce the cost of cross-border processing fees through local capabilities, partnerships and expertise in each country’s unique regulatory requirements and payment protocols. 

Adapting to customer demands is crucial to remaining agile and competitive

While this article explores the benefits for online retailers, all merchants can capture the latest wave of digital consumers and deepen their relationships to maximise sales by staying agile and quickly adapting to changing demands. Payments can provide a competitive advantage in addition to being an operational process. Merchants who can leverage payment data and gain a deeper understanding of their payment flows are well equipped to increase their revenue, and provide more memorable customer experiences.

However, unlocking that revenue requires an understanding of the nuances behind consumer behaviour, the necessary technologies, as well as the local expertise for cross-border growth. Merchants of all sizes have a unique opportunity to capitalise on massive shifts in consumer behaviour. Businesses must work with a PSP that can help guide and provide the insights needed for them to build an effective payment strategy for growth, with the latest tech developments in mind.