CROSS-BORDER PAYMENTS ARE AT A NEW CROSSROADS FOLLOWING COVID-19
Consumers are increasingly ready to embrace digital payments, mobile e-wallets, touchless and contactless payments not just because of speed or convenience, but because of COVID-19. The pandemic has further reinforced the need for businesses to undergo digital transformation, which is pivotal in the digital economy.
Cash is no longer king; e-commerce is the new king. Consumer thinking and behaviour in the digital economy have been forced forward by several years in just the last six months as a result of the pandemic. As economies across the globe start to emerge from the COVID-19 pandemic, e-commerce businesses are also beginning to refine their recovery strategies. The value of crossborder payments is not expected to exceed the 2019 levels until the end of 2022 or even 2023 because this particularly deadly virus lacks natural immunity and does not yet have a vaccine.
Estimates of the decline in cross border transaction activity for 2020 vary extensively from 20 percent to 30 percent, depending on the business vertical. In certain segments, for example, corporate travel payments have taken a significant step backwards.
There may still be uncertainty as to the persistent pattern of a drop and the upsurge of the number of virus infections, local and regional lockdowns, but there remains an appetite to plan a new future. COVID-19 has meant that e-commerce businesses have to go back to basics and re-examine the issues that surround friction, checkout process, conversion rates, and the need to ensure long term customer loyalty. Some of the challenges in the wake of the pandemic include:
- Merchants and businesses will be more cost-conscious when deciding their payment strategies – cross-border payment providers must offer a compelling value proposition.
- With reduced cross-border traffic, localisation of payment acceptance is required to support local payment solutions, local payment options, and personalised digital payment journeys.
- Faster adoption of real-time payments will accelerate the movement of money between consumers and businesses and business to business (B2B).
- Omnichannel experiences and digital engagement with customers are now table stakes.
- Open Banking and instant cross-border payments are encouraging the introduction of more innovative services.
The crisis has certainly placed greater importance on digital and mobile, but that will not be enough to ride the storm. Economies of scale, M&A, cost efficiencies, and new pricing strategies will be the new normal to secure new revenue sources. Technology is pushing the boundaries of how consumers shop and merchants cannot afford to overlook these changing dynamics if they want to win and retain customers. Creating new customer experiences is a core component in both driving overall e-commerce growth and improving conversion. Personalisation of the customer’s journey will be able to generate relevant offers and discounts based on consumer spending habits and loyalty.