2020 was a difficult year in many aspects, but it also challenged the payments industry to find new solutions to work through the limitations of the pandemic. Seth Brennan, CEO of North Lane Technologies, a payments industry veteran, shares his thoughts on the year ahead.
In 2020, the coronavirus pandemic made for a year of unexpected twists and turns for businesses and consumers around the globe. For the payments industry, a number of trends emerged that will continue to have a lasting impact on the post-pandemic landscape, like accelerated adoption of digital payments, changing consumer expectations, and increased demand for seamless cross-border payments.
Demand for cashless payments continues to grow
Although digital transformation was already underway in the payments space before COVID-19, the global pandemic heightened the need for more flexible payment options to enable commerce in the face of unprecedented restrictions. Digital payments have allowed businesses to do everything from moving in-person fitness classes online to launching e-commerce channels in a hurry. When life returns to normal, preferences for the engagement, convenience, and flexibility of digital payments will remain.
More businesses will also rely on digital platforms to deliver payments to their workers, contractors, sales representatives, and other stakeholders. In response to the pandemic, companies ranging from sales organizations to nonprofits turned to digital channels to deliver payments safely and efficiently. After discovering the benefits of these solutions, including cost-efficiency and a reduced administrative burden, these organizations are unlikely to go back to cutting checks.
Cross-border payments become more seamless
The need for contactless payments has accelerated the demand for virtual payment options, including across borders. Worldwide transaction value of global transfers reached nearly $88B in 2020—that’s 10% year-over-year growth. Digital payments are particularly crucial in industries experiencing robust international growth—like direct selling, distributed development and travel—requiring businesses and individuals alike to regularly send funds across borders and around the world.
The cross-border payments of the future will be all about expanding options for both the payor and payee, allowing recipients to seamlessly deposit funds into any bank account, spend online, or transfer funds anywhere in a variety of currencies. Whether paying service providers or enabling workers to deposit funds in international bank accounts, digital channels will simplify this process by eliminating persistent pain points like lack of transparency, high transaction fees, and long wait times.
In 2020, the pandemic drove holiday shopping online
U.S. consumers spent a record $9 billion online on Black Friday, followed by $10.8 billion a few days later on Cyber Monday—the biggest online sales day in U.S. history. The shift to digital has never been clearer, but boundaries between the physical and virtual worlds are becoming less so. When it comes to everything from social interactions to the way they shop, consumers expect brands and businesses to not only meet them in their preferred channels, but to seamlessly blend virtual and real-life experiences. For instance, today’s consumers expect to be able to browse in store and then order from their mobile phones to avoid the line. Shopping in any channel—or across multiple channels at the same time—should be equally engaging, smooth and digitally enabled.
But these preferences don’t just apply to the shopping experience. North Lane’s recent Consumer Incentivessurvey revealed that 91% of consumers are open to virtual rebates, and 79% would choose a virtual option over a traditional rebate. The survey also found that 75% of consumers said they were likely to make another purchase from the brand that issued the rebate. In 2021 and beyond, brands must continue to build the dynamic and multi-channel commerce experience of the future, ensuring every aspect of the customer journey is equally seamless—from making a quick in-store purchase to redeeming and spending virtual offers and incentives.
2020 was a challenging year, and we’ll never forget the difficulties the pandemic brought to our businesses, communities, and personal lives. Nonetheless, 2020 left businesses with something to build on: payments innovations that enable them to stay flexible and ready to meet whatever challenges and opportunities the future brings.