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What's next in 2021? Commerce and payment trends from the experts
As businesses navigated through unprecedented change over the past year, digital commerce accelerated at a breathtaking pace. Consumers adjusted the ways they shop and pay practically overnight to digitally-driven means. Payment technologies and solutions to support soaring demand for online and contactless ordering buoyed businesses through months of disruption.
As we shift focus to the year ahead, we spoke with our industry-leading experts from Global Payments, along with Visa, Google Pay and American Express to learn how these pandemic-driven changes will continue to impact commerce as well as other emerging trends in 2021.
Together, we identified five commerce and payment trends that will underscore the need for businesses to remain agile to respond to consumers' evolving preferences and deliver exceptional commerce experiences.
Trend 1: Contactless payment adoption accelerates
Already on the verge of widespread adoption, contactless payments have gone mainstream. Initially favoured by digital native millennials, the ability to “tap-and-go" is now preferred across generations, including notoriously tech-averse baby boomers. As a result, “Contactless payments have become a driving differentiator," according to The Visa Back to Business Study.
As more shoppers swap out their top-of-wallet cards for a contactless version, we predict more widespread and sustainable adoption. While safety was a key driver of contactless payment adoption in 2020, convenience and simplicity will drive future growth.
Trend 2: Omnichannel options expand
The pandemic accelerated the shift away from physical stores to digital shopping by roughly five years, according to IBM. In 2020 this meant businesses were swiftly rolling out safety-focused solutions like take away, click and collect and QR code contactless ordering.
As a result, savvy businesses will need to double down on omnichannel commerce strategies that deliver superior shopping experiences online and in person.
Trend 3: Embedded fintech dominates across industries
Embedded fintech describes the seamless integration of payments and financial services and products into software. With an embedded fintech approach to business, businesses of all kinds -- from restaurants to medical practices -- can create value well beyond the transaction.
We expect that more businesses will adopt embedded fintech approaches to drive revenue in 2021. Venture firm Andreessen Horowitz estimates that by embedding fintech within the overall offering, businesses will increase a customer's profitability by up to 5x the original revenue stream.
Trend 4: Advances in technology help businesses keep pace with digital commerce
The breakneck pace of digital commerce transformation in 2020 will prompt businesses to embrace technologies strategically to drive sustainable growth.
The innovations to watch in 2021? Cloud technology and open banking. Moving to the cloud is not a matter of if, say our experts, but of how. Getting this combination right takes work, but the payoffs are substantial. Open banking technology offers speed and convenience by automating connections between financial entities through APIs. For instance, it can allow a payment provider to quickly and securely check a shopper's bank account balance in real-time -- with the shopper's permission -- before approving a transaction, improving the customer experience and protecting the business from fraud.
Trend 5: A focus on financial inclusion
The same payment technologies and solutions that helped consumers shift to digital commerce during the pandemic are also critical to paving the path to financial inclusion.
Konrad Chan, president of Asia Pacific at Global Payments said, “Digital wallets help everyone participate in commerce, including the underbanked or unbanked."
A range of innovative payment solutions like digital wallet payments and prepaid products are being leveraged worldwide to help these populations.
However, there's more work to be done.
Are you prepared to embrace commerce in 2021?
While the global health crisis ushered in a seismic shift for digital commerce in 2020, the trends of 2021 will take digital experiences to the next level and pave the way for broader participation in the digital economy.
Learn more about these important trends and how your business can thrive in a transformed post-pandemic digital economy. Sign up to receive the full report, “2021 Outlook: Five Payment Trends Transforming Commerce," when it's available.