Jeff Parker from WorldFirst discusses the global shifts in consumer behaviour, providing an overview on the current situation in the payments industry and on future trends
The year 2020 has been a brutal reminder of the fragility of the global economy. With seismic shifts in consumer trends happening seemingly overnight due to the COVID-19 pandemic, businesses have been forced to pivot and adapt quickly to survive.
Many of course haven’t, but those nimble enough to adjust are now presented with a huge opportunity to thrive and grow not just at home but internationally, in ways that may have taken them many years previously. Driven by digital technology and innovation, the payments industry is one of the key enablers that will power this access to new markets for global growth.
I’m often asked what the future of payments looks like. As CEO of a global payments company and previously running our business in Asia, I have seen the region’s digital payments revolution propelling adoption rates and opening up new markets of potential customers to sellers worldwide. While no one could have predicted COVID-19, what I do anticipate is the increased adoption of digital technologies and payments bringing huge opportunities especially for small businesses in the wake of the pandemic.
The most noticeable trend driving this has been the shift to ecommerce. With huge parts of the world physically locked down, the world of online shopping exploded. Online businesses such as Alibaba and Amazon hired thousands of additional workers to cope with increased demand, while more traditional businesses like Tesco’s and Sainsbury’s have also quickly added capacity to their online arms.
The shifts brought by COVID-19 are also likely to be habit-forming. In a survey of consumers across South and Southeast Asia by the consultancy Deloitte, 78% said their use of digital services has gone up since the pandemic, with about half of these reporting their usage ‘increased substantially’. Seven in ten respondents say they use digital wallets to pay for their shopping online, among other digital activities. Similarly, in Europe, 62% of consumers expressed interest in switching from physical banking to digital platforms in 2020, a 13-point rise from 2017, according to a report by Mastercard.
Looking to survive, we saw businesses both large and small trying to pivot and quickly transition their businesses to capture these digital trends. Some seemingly once traditional face to face businesses switched quickly in favour of the ‘virtual classroom’ and we saw amongst other things — dog training, event management, and group workout classes all move to zoom, accessible from the safety of the home.
At WorldFirst, we help SMEs navigate the world of international payments, and some of our most heartfelt conversations have been with entrepreneurs behind these businesses. They face a greater challenge coping with disruptions because of their size, but at the same time, they are also more agile and able to quickly diversify overseas through ecommerce platforms such as Shopify, Wix, and Arcadier.
These platforms enable businesses to quickly develop online stores so their products can reach global audiences, while offering additional services such as fulfilment and integration with a wide range of payment gateways. They also allow businesses to market to younger customers globally through popular social media platforms. As these businesses start interacting with global customers, they also need to think about how to manage overseas income. Cue the pivotal role payments plays, enabling these businesses to maximise the value of these sales by using smart money currency solutions.
Historically, the payments industry has been slow to keep up with the ever-evolving world of ecommerce. Since the 1990’s we have seen the transformation of selling through the likes of online marketplaces such as Amazon. Suddenly, you could buy goods at the click of a button. Likewise, with shipping, the adoption of technology enabled goods to be transported faster than ever before.
Payments were the weak link — slow, expensive, opaque, complicated, and requiring a physical presence. Fast forward to the current day, payments are catching up quickly and, in my view, will lead innovation over the next 10 years — blazing the trail on moving money faster, safer, easier, and cheaper globally; connecting buyers with sellers directly and enabling them to grow their business globally. New PayTech solutions from the likes of Stripe, Square, Alipay, and PayPal have all eased the process.
Payments — past, present, and future
So, what will come next? I think we will see the digitisation trend extending further and even accelerating. We’ll see it working all the way through the value chain from consumers at the point of checkout through to businesses that are either making payments or receiving funds from their buyers.
While innovation is heavily influencing the payments industry, this is just the beginning. We can expect this to expand into value added services that support the cross-border business of SMEs such as lending, logistics, and the tracking of trade related documentation.
What’s in store for 2021 is unknown but a whole world of opportunity awaits us. I for one am hugely excited by this and the role WorldFirst can play in shaping the future of cross-border payments.
About Jeff Parker
As CEO at WorldFirst, Jeff is responsible for advancing the business through the lens of the customer. He is committed to driving innovative, inclusive, and affordable services for individual customers, small and medium-sized businesses, and online merchants in the rapidly growing area of cross-border trade.
WorldFirst helps businesses to reach and expand into new markets, moving money easily around the world through our digital payments platform.