Three Key Market Drivers in the Payments Industry
During the past few years, payment gateways have stepped out from behind the scenes to play a leading role in how companies provide customers with improved methods for online and digital payments. This emergence is certainly driven by the increase in consumer adoption of online payments.
1) The rise of invisible and frictionless payment experiences
Whereas 5 years ago it was swipe and go or click and go, today consumers want touch and go, wave and go, and even, face and go.
Payments have become central to the customer experience and that is driven by the consumer wanting a seamless, integrated shopping experience. Regardless of touchpoint.
What has changed is now retailers understand the most overlooked aspect of the journey is the most critical to their business in more ways than one – the actual PAYMENT process. A customer doesn’t like waiting more than a moment or so for the signature prompt to come up while standing at the register. It’s even less time online – which you all know as you’ve experienced it yourselves. The dreaded “spinning wheel,” and wondering “did the charge go through?” Then the release of breath when you finally get the payment confirmation.
2) Explosive growth in the subscription business model
It’s no surprise then that 70% of business leaders say subscription business models will be key to their prospects in the years ahead.
According to Zuora’s 2019 Subscription Economy Index™, there is data suggesting that the growth of subscription revenue tracks ahead of the US Gross Domestic Product. Between 2012 and 2018, companies in the Index saw sales grow more than 300%. Revenue growth was 5 times faster than S&P 500 company revenues and U.S. retail sales!
Why the leap? Industry disruptors realized that when you put together convenience, curation, and in some cases concierge service, and offer that weekly or monthly, people sign up. They do it in ways that have broadened the idea of what a subscription is – beyond publications and software to verticals such as Personal Care, Automotive, and Meal Delivery. Subscriptions are how we groom and dress ourselves, take in entertainment and culture, care for our pets and ourselves and digest food and beverage.
3) The intersection of the software and payments Industries
All subscription companies, no matter the vertical or service, have one thing in common – online payments. Companies have been slow to adopt some of the newer digital payment options, like mobile wallets and contactless payments. Some were waiting to see the rate of adoption is before making the investment. Then along comes a global pandemic to shift things into overdrive.
On March 11, the World Health Organization declared COVID19 a global pandemic and as the physical world shut down, the online world became omnipresent. According to an analysis by ACI Worldwide, “Transaction volumes in most retail sectors have seen a 74% rise in March compared to the same period last year.” According to a payments.com study, between March 6 and March 28 the percentage of consumers who shopped online for groceries tripled. Online shopping for non-grocery doubled, and the percentage of people who interact with restaurants digitally more than tripled.
So, there was – and naturally continues to be – a huge uptick in online sales and therefore online payments. Which is great for Card Not Present businesses – as long as they’re ready.