New payment technologies and options have helped businesses adapt under the pressure of the COVID pandemic, says i2c President Jim McCarthy. Look to the future to bring more innovation as companies large and small embrace new ways of winning and serving digital customers first. Read his thoughts in the PYMNTS e-book, “In a Word: 50 Thought Leaders Summarize 2021.”
Over the past year, with economies temporarily reopening amid multiple spikes in new COVID variables, we have seen a continued shift to e-commerce and an increased willingness to adopt new digital payment methods and experiences. Perhaps surprising to many, companies have often been able to move forward and adapt to the new operating conditions. For this and other examples of resilience, “adaptability” is the word that I think best describes 2021.
Firms Fought by the Rise of BNPL and Crypto
Companies have been able to juggle COVID restrictions and social distancing guidelines while navigating also with changes in customer behavior to digital. Small and medium-sized businesses (SMBs) have embraced contactless card and mobile payments in increasing numbers, which now appears to be a convenience consumers have come to expect regardless of health concerns. We’ve also seen many companies rapidly adding online shopping experiences or morphing entirely to a digital first model as e-commerce continues to devour foot traffic.
The rise of buy now, pay later (BNPL) and cryptocurrency has been particularly noteworthy. These payment options were previously on the sidelines, but with the help of FinTechs and increased consumer demand, they have been put on the cutting edge of payments. The BNPL market has experienced massive growth primarily driven by Generation Z and millennial consumers.
amazing 44% of Americans now report using a BNPL solution to fund their purchases. Of course, the major BNPL players continued to expand as consumer demand increased, but we’ve also seen companies like Amazon, Apple, and PayPal move in. It is also almost certain that card issuers are about to add the BNPL option, given its success over the past year.
The crypto space also had to remember for a year. An increasing number of companies across different industries, from Microsoft to Starbucks, are starting to support crypto payments. The two largest networks for processing jumped as well. Visa has launched a partnership with 50 crypto platforms on card software to allow users to convert and spend digital currency at millions of merchants. Mastercard has announced that it will allow its network partners to enable consumers to buy, sell and hold digital currencies using a digital wallet, and reward them with digital currencies under their loyalty programs.
Banks that will not be left behind
Of course, we’ve also seen banks adapt to changing consumer behaviors, albeit within the confines of their limitations. We’re starting to see the likes of Bank of America and Wells Fargo deciding not to reopen some branches and reducing ATM networks, as businesses move online and consumers switch from cash to digital. Many have accelerated their digital banking initiatives with the increase in online and mobile banking. However, we have also seen a growing realization about the inability of legacy systems to adapt to digital payment innovations and the new ways in which people and organizations do their business.
With constant change for sure, the path for these incumbents will be around developing flexible digital capabilities that can handle increasing digital transaction volumes and enable customers to adapt quickly to changing operating conditions.
In short, the past year has shown us that adapting to new realities and adopting new capabilities go hand in hand and are key to resilience.