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The adoption of digital payments massively accelerated in 2020, largely out of necessity. Consumers and merchants alike opted for touch-free ways to pay — like contactless cards and mobile wallets — in lieu of handling cash.
And experts expect many of those habits to stick in 2021.
Online spending played a huge role in the shift away from cash, with e-commerce representing 14% of total retail spending in the US in 2020. That’s up from 11% in 2019, according to the US Census Bureau. Globally, e-commerce sales grew 28% in 2020, according to eMarketer, with standout countries like Argentina and Singapore seeing 79% and 70% growth, respectively.
But in-store, too, consumers are increasingly opting to pay using their phones and contactless-enabled cards. Other methods, like QR codes, are also catching on.
There was also a move away from credit cards last year. Increasingly, consumers pay with debit cards or interest free installments. And all these trends benefit payments players, who earn revenue every time a consumer opts to check out cash-free.
Insider asked four payments experts at Airwallex, Klarna, Mastercard, and PayPal how they’re strategizing for the continued rise of digital payments in 2021.
Insider: Digital payments globally have experienced exponential growth in 2020, do you see that growth continuing in 2021?
Camilla Giesecke, chief expansion officer, Klarna: Yes, it’s obvious that digital payments are here to stay and that their importance will continue to accelerate. During the last year consumers have rapidly had to adapt and change previous payment and shopping behaviors; ranging from using more contactless payments in store as a safer payment alternative to doing more of their everyday shopping online.
This shift is evident across demographics, with especially older generations having had to adapt to a new reality, as well as in new retail sectors. As consumers are gaining trust and confidence in these new payment and shopping experiences and they have become so well established, I am certain we won’t return to pre-pandemic patterns and behaviors. We also saw our retail partners fast-forward their online shopping services to meet this consumer demand.
Mark Britto chief product officer and executive vice president, PayPal: We don’t expect this trend to slow down anytime soon. We’ve done a number of studies where most consumers state they will continue to shop online at their current elevated levels because it is more convenient, easier and saves time. Retailers have started to adapt to meet these growing demands by enhancing their infrastructure to support new digital payment options like QR Codes, Buy Now Pay Later solutions and more. We’ve really only seen the tip of the iceberg in terms of digital payment adoption and usage.
Ari Sarker, co-president, Asia Pacific, Mastercard: Today, 3 out of 4 in-store Mastercard transactions in the Asia Pacific region are touchless: in fact, more than 80% of contactless transactions today are under US$25, a range formerly dominated by cash.
Like muscle memory, many of these changes – and drivers of digital payments growth – such as e-commerce, touchless payments and aversion to …read more
Source:: Businessinsider – Finance
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