The payments landscape has evolved rapidly during the past 18 months.
The boom in e-commerce as people have been socially distancing due to COVID-19 has resulted in consumers thinking differently about how they pay online.
And the checkout has taken on new relevance in stores as well, with speed and convenience now even more critical for shoppers.
Paysafe have recently released a report as to how the payments landscape has shifted during COVID-19, and what this means for the future of online and in-store commerce. Danny Chazonoff, Chief Operating Officer at Paysafe here shares some key insights from that report.
Many of the trends we’ve seen during the pandemic are not new; instead, the pandemic has accelerated some of the shifts that we had already identified pre-COVID-19.
And the majority of businesses have already reacted to changing consumer preferences by upgrading their checkouts to a degree. But, as we now start to look beyond the pandemic, they must consider if consumers will continue to keep up their rate of online spending beyond the pandemic, and how the increased exposure to eCommerce may have changed consumers’ spending habits in the long term. These were the two focuses of our recent Lost in Transaction report – a survey we commissioned among 8,000 consumers on how their payments habits have changed in the past 12 months. Here are some of the key takeaways from the research:
There will be something of a rebound in in-store shopping post-COVID-19, but we will not see a return to pre-pandemic levels. Overall, 44% of consumers plan to reduce the amount of spending they do in stores in the future compared to pre-COVID-19, although only 9% say they now plan to shop exclusively online in the future. This ‘online only’ figure spikes in the US (15%) and UK (11%), and is significantly lower in Austria (4%) and Germany (6%). And the roll-out of the COVID-19 vaccines will have an impact on how and when consumers will return to the high street. More than half (57%) of all consumers plan to reduce the volume of in-store shopping they do until they have a vaccine, and 8% say that they will not visit any stores until they are vaccinated.
Approximately a third of all consumers are planning to permanently reduce how much they do other in-person activities as well, such as attending concerts or sports events (34%) or going to bars and restaurants (31%). And where consumers are returning to stores and venues, how they check out is increasingly important. 43% of consumers have noticed which businesses have made efforts to update their checkout in the wake of COVID-19 and which have not, and 39% say they are less likely to shop in stores that haven’t made efforts to make the checkout process safer.
Online spending habits have changed
Increased familiarity with online payments, and shopping more with online merchants they do not have a relationship with, has changed the way some people want to spend online. While debit and credit cards still remain the most popular online payment methods overall, 86% of consumers said that they had changed the way they were paying online during the past 12 months, and 59% of consumers told us that they had tried at least one new online payment method in the same period.
Overall, more a third of consumers (38%) say they are more familiar with alternative payment methods than pre-COVID-19 and 31% are now more likely to use them. For example, 23% of consumers used a digital wallet for the first time in the past 12 months. When asked why their payment habits had changed, being able to track their spending more accurately (26%), wanting a more secure experience and greater protection from being a victim of fraud (25%), and exploring new technology generally (22%), were some of the main reasons given by consumers.
Confidence in online payments security
Having made more transactions online, consumers appear to be more confident in the security of online payments than this time last year. 37% of consumers believe that either the correct balance is being struck between the security and convenience of online payments (26%) or they would like payments to be more convenient even at the expense of security (11%), compared to 23% that thought this 12 months ago.
However, increased security is still the primary concern for the majority of consumers, with 40% saying that they would accept any security measure if it eradicates fraud. Nearly six in ten (59%) consumers feel more comfortable using online payment methods that do not share their financial details with the merchant. And a consequence of the growth in trust of online payments is a lower tolerance for being a victim of fraud. Less than half (45%) of consumers agreed that a certain level of risk of fraud is inevitable when shopping online, compared to 56% that agreed the same in 2020.