How to Embrace the Connected Payments Era: A Guide for Businesses by Nuveiby Fintech News Singapore August 1, 2023
The year 2023 marks the arrival of the connected payments era. This period is characterised by the emergence of innovative payment types, cutting-edge payment infrastructure, and innovative business models. Consumer expectations are also shifting.
Today’s savvy consumer is looking for personalised payment journeys that are flexible, prioritise data security and streamline the checkout process.
But these expectations often differ by location – and payment localisation is paramount to business success. One way businesses can localise their payment experience is by employing the right mix of payment methods at the checkout.
From the rise of mobile wallets and contactless payments to the adoption of cryptocurrencies and the integration of artificial intelligence in payment processing, the payment ecosystem continues to evolve.
Alternative Payment Methods (APMs) are now expected to make up 25% of global non-cash payments by 2025. It is, therefore, crucial for businesses selling online to keep up with these trends to remain competitive and meet customer expectations.
Embracing new payment technologies not only enhances convenience and security for shoppers but also enables businesses to reach a broader global audience.
What are the latest payment method trends?
Though payment trends are constantly fluctuating, these are some of the most popular methods in 2023:
1. Mobile wallets
In 2026, digital or mobile wallets are forecasted to make up 73 percent of e-commerce payments throughout the Asia-Pacific region.
Their popularity stems from their unparalleled convenience, enabling users to store multiple payment methods on their smartphones and make quick, contactless transactions.
Popular mobile wallets in the region include AliPay and WeChat, as well as more localised wallets such as GrabPay in Singapore, MoMo in Vietnam, GoPay in Indonesia and GCash in the Philippines.
The value of digital wallet transactions alone is expected to grow from US$7.5 trillion to over US$12 trillion worldwide by 2026.
Online installments accounted for over US$100 billion of APAC’s e-commerce transaction value in 2022.
This payment method appeals particularly with Gen Z and millennials – both known as tech-savvy and financially conscious groups – due to its financial flexibility, seamless digital checkout experience, and transparent terms.
In payments company Nuvei‘s recent “Empowering new business innovation with payments” study with global market intelligence firm IDC, a leading e-commerce retailer said that installment payments account for 30% of their total sales.
3. Account-to-Account (A2A)
A2A payments are growing in popularity worldwide, primarily driven by real-time payments (RTP) rails. In 2022, the global A2A transaction value surpassed US$525 billion and is projected to grow at 13% CAGR by 2026.
Consumers and businesses look to A2A payments for their speed, cost-effectiveness due to the elimination of card fees, and heightened security with the removal of intermediaries.
Popular A2A rails within APAC include India’s RTP system, UPI – used by almost 260 million Indians – and Australia’s New Payment’s Platform (NPP).
RTP transaction volumes in the region are expected to grow from 49.2 billion in 2022 to 96.2 billion by 2027, a compound annual growth rate (CAGR) of 14.1%.
4. One-click payments
According to a Baynard study, a large-scale e-commerce site can potentially increase conversion rate by 35% through better checkout UX.
Typing in payment details when making a purchase is a common example of where UX can be improved. Bypassing this with a single click payment option removes friction in the buyer journey.
One-click payments allow businesses to speed up transactions and enhance UX by using information previously submitted and stored securely on a token.
How payment method trends can increase bottom line
1. Cutting costs
By offering popular APMs such as account to account payments, merchants can eliminate network interchange fees, which can be substantial for each transaction.
Additionally, methods like digital wallets and instant payments often have lower processing fees than traditional credit card transactions, leading to cost savings.
Some APMs, including installment options, often have built-in fraud protection measures, reducing the likelihood of costly and time-consuming chargebacks.
2. Expanding into new markets across the globe
Alternative payment methods cater to consumers who may not have access to or prefer not to use traditional payment options like credit cards.
By offering a diverse range of payment methods, merchants can attract a more extensive and diverse customer base, expanding their market reach and potential for sales.
In Nuvei’s new study, a leading global sports apparel manufacturer stated that they expect a 6% to 8% increase in revenue from implementing new payment channels.
3. Reducing cart abandonment
9% of shoppers will abandon their carts if their preferred payment method is unavailable. By staying on top of payment trends, merchants can reduce friction during the payment process, leading to a higher conversion rate.
4. Enhancing customer experience
A seamless and convenient checkout experience is essential for customer satisfaction. Alternative payment methods like digital wallets, installments, and one-click payments provide customers with faster and more streamlined checkout experiences, encouraging them to return for future purchases.
5. Building trust and security
Some APMs, like digital wallets, often come with enhanced security features such as encryption and biometric authentication. By offering these secure payment options, merchants can build trust with customers and reduce concerns about data breaches and fraud.
As new payment methods continue to evolve worldwide, merchants will need to be prepared to adapt and ensure that their payment stacks are flexible enough to support these changes and stay competitive in the ever-changing payments landscape.
Staying on top of and implementing popular payment trends is just one way that online businesses can use payments to increase revenue and expand their offering.
Download Nuvei’s new study written in collaboration with IDC to find out more about how you can utilise payments to drive revenue for your business https://bit.ly/3rTtS85.