Re-Evaluating Payment Solutions in the Wake of the Pandemic

In the wake of the pandemic, businesses, brands, and consumers have adapted to varying levels of government restrictions on our movements and operations. One of the many consequences has been the adoption of digital payment technologies, with an increase in the switch from traditional physical card payment systems to digital solutions. It seems that service providers have gone from exploring digital solutions to rapidly bringing to market innovative payment options that meet new customer demands for safer transactions by limiting the use of cash and shared devices and curbing the spread of the virus.

In this post, we will explore the new payment trends that have caused seismic shifts in the payment service space and which of these are here to stay.

It All Took Off With Consumer Demand

In recent years, businesses tried to drive consumer behaviour towards contactless payments. Some have had more success than others, but the uptake has not, generally speaking, been overwhelmingly positive. However, during Covid-19, consumers actively sought and even demanded that brands and businesses offer safer, more hygienic means of transacting.

As is usually the case, any behaviour preferred by consumers and bolstered by circumstance, in this case a global pandemic, will inevitably become habit. Consequently, those digital payment technologies that were launched, popularised, and adopted during the height of the pandemic are sure to prove beneficial long after Covid-19 has subsided.

As consumers continue to gravitate to new, digital ways of paying for goods and services, we are certain that the payment landscape will irrevocably be changed forever.

The Top Payment Service Trends

The world was already in a state of digitisation, with more companies optimising their operations and offerings through various digital transformation strategies. That said, the pandemic pushed things into overdrive, with an especially strong pivot towards digital payment services. While cash isn’t going to disappear any time soon, it certainly isn’t king anymore. Same goes with POS transactions, whose evolution from the faulty dial-up system to the tap-and-go conveniences of today means that this payment means will continue to dominate the payment space for some time to come. But only so long as the tap method is available.

Unsurprisingly, though, paying with cash and card through hand-to-hand exchanges has become less popular as people opt for safer and more hygienic ways to transact. This has marked the beginning of an increase in the trend of mobile and contactless payment services. We’d go so far as to say that these digital payment solutions, like contactless payments, virtual cards, and eWallets, are starting to become expected by consumers as they go about their day-to-day transactions. In fact, a record number of customers have already taken to digital transactions.

These are the most popular payment trends that have been embraced by consumers.

Contactless payment services

Contactless payment services have accelerated during the pandemic as South Africa grapples with heightened hygiene requirements. As the name suggests, contactless payments allow consumers to pay by tapping a physical card, wearable or smartphone enabled by RFID or NFC technologies over a card reader. It’s faster and more convenient than inserting a card, and more secure than PIN technology.

Apple Pay, Samsung Pay, Fitbit Pay and Garmin Pay all operate in much the same way. Each method is a virtual wallet, using a tokenisation system that loads a random number instead of your actual bank card number, making it secure to use without compromising your physical cards – or your physical health.

Payment gateway services

Payment gateways are simply pathways between consumers and the merchants, securely validating the customer’s card details and ensuring that are funds are available to make the payment. There are various types of payment gateways, but essentially service providers like Snapscan, Zapper, Yoco, and iKhoka have risen in popularity by facilitating online payments between consumers and businesses.

These gateway services differ from the contactless options, like tap-enabled cards and the likes of Apple Pay, offering instead the option to scan a quick response (QR) code to make payments. The ability to scan a QR code diminishes the need for consumers to hand their cards to someone else, touch buttons or exchange cash. While that wasn’t necessarily a significant enough reason to adopt these payment gateway apps before the pandemic, it certainly became a factor as consumers enjoyed the freedom of less restrictive lockdown levels.

We believe that as more retail opportunities open up, we can expect to see more people to experiment with this payment means. Likewise, we believe that this revolutionary technology frees merchants from their stores, liberating them to trade in various places that are slowly but surely opening to consumers, like concerts and trade shows.

Mobile money services

Mobile financial services, known as “mobile money,” enables unbanked people to use their phones as a bank account. Essentially, it is a mobile application that tries to mimic an actual physical wallet. If you own a smartphone you can deposit, withdraw, transfer money, pay utility bills, and pay for goods in shops. Think of the freedom, something which has certainly occurred to consumers in South Africa who have wholeheartedly embraced this trend.

The development of the mobile wallet solution, better known as an eWallet, is a significant breakthrough in the digital payment landscape, offering both the banked and, more importantly, the unbanked population with equal access to a cheaper, more convenient money management tool.

Make no mistake, in spite of a report from Finmark Trust revealing that as of 2018, 80% of South Africans had bank accounts, a large 40% of these bank accounts are dormant or “mail boxes” used for quick deposits and withdrawals. eWallets are a welcome solution that solve many of the pains a large portion of the population experiences when it comes to finding a more easily accessible and usable mobile financial tool. Instead of paying with cash, cheque, or credit cards, increasingly more South African consumers can use their mobiles to pay for a wide range of services and digital or hard goods.

It’s financial inclusivity at its best.

The Future of These Payment Trends

The inescapable reality is that Covid-19 and its subsequent impact on global health and mobility restrictions has led to a few notable changes in the payment service space, including the sharp shift to digital solutions, altered consumer spending habits, fintech disruption, and increased financial inclusion.

In the coming years, we are sure to see an increase in the transition of payment methods from physical cash and card to the digital payment methods. In this time, many new trends will appear and disappear, but the most popular of these mentioned above will continue to play a vital role in shaping the future of the payment landscape.

These are the payments trends that we think are here to stay:

• Digital-only banking services will increase their reach.
• eWallet transaction volumes will grow, with brands each trying to create their own brand-specific wallets.
• Mobile and online banking adoption and usage will increase.
• More businesses, including restaurants, coffee-shops, fast food chains, and retailers will encourage cashless payments.

 

Only time will tell how it will all unfold, however one thing will remain and that’s the way in which Huge Connect will continue to provide dependable and secure business connectivity solutions across South Africa and large parts of SADC – from SMME to Enterprise.

Our team at Huge Connect have actively researched and identified the critical elements which enable businesses across the board to thrive in this exciting time, so connect with us today.

Let us help you explore this new world and keep you connected.