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BEYOND THE PANDEMIC: WILL COVID-19 PERMANENTLY CHANGE THE WAY WE PAY?

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Danny Chazonoff, Chief Operating Officer, Paysafe

 

The impact of the pandemic on consumer payment preferences

The payments landscape has evolved rapidly during the past 18 months. Many of the trends we’ve seen during the pandemic are not new; instead the pandemic has accelerated some of the shifts that we had already identified pre-COVID-19. The surge we’ve seen in online shopping has resulted in consumers thinking differently about how they pay online, and the in-store checkout has taken on new relevance as well, with speed and convenience now more critical than ever.

The majority of businesses have already reacted to changing consumer preferences by upgrading their checkouts to some extent, but as we look beyond the pandemic with restrictions easing in some countries, retailers must consider if consumers will stay online in the future, and how the increased exposure to eCommerce may have changed consumers’ spending habits in the long term. This was the focus of our recent Lost in Transaction report – a survey we commissioned among 8,000 consumers on how their payments habits have changed in the past 12 months. Here are some of the key findings:

 

1. In-store shopping will bounce back, but we will not see a return to pre-pandemic levels. Overall, 44% of consumers say they will reduce the amount of spending they do in stores after the pandemic, although only 9% say they now plan to shop exclusively online in the future. The roll-out of the COVID-19 vaccines will have an impact on how and when consumers will return to the high street. More than half (57%) plan to reduce the volume of in-store shopping they do until they have a vaccine, and 8% say that they will not visit any stores until they are vaccinated. Where consumers are returning to stores, how they check out is increasingly important. 43% of consumers have noticed which businesses have made efforts to update their checkout since the pandemic began, and those which have not, and 39% say they are less likely to shop in stores that haven’t taken steps to make the checkout safer.

 

2. Increased familiarity with online payments, and shopping more with online merchants they had not used before, has changed the way some people want to pay online. While debit and credit cards still remain the most popular online payment methods overall, 86% of consumers said that they had changed the way they were paying online during the past 12 months, and 59% of consumers told us that they had tried at least one new online payment method in the same period. Overall, more a third of consumers (38%) say they are more familiar with alternative payment methods than pre-COVID-19 and 31% are now more likely to use them. For example, 23% of consumers used a digital wallet for the first time in the past 12 months. When asked why their payment habits had changed, being able to track their spending more accurately (26%), wanting a more secure experience and greater protection from being a victim of fraud (25%), and exploring new technology generally (22%), were some of the main reasons given by consumers.

 

3. Having made more transactions online, consumers appear to be more confident in the security of online payments than this time last year. 37% of consumers believe that either the correct balance is being struck between the security and convenience of online payments (26%) or they would like payments to be more convenient even at the expense of security (11%), compared to 23% that thought this 12 months ago. However, increased security is still the primary concern for the majority of consumers, with 40% saying that they would accept any security measure if it eradicates fraud. Nearly six-in-ten (59%) consumers feel more comfortable using online payment methods that do not share their financial details with the merchant. And a consequence of the growth in trust of online payments is a lower tolerance for being a victim of fraud. Less than half (45%) of consumers agreed that a certain level of risk of fraud is inevitable when shopping online, compared to 56% that agreed the same in 2020.

 

Business

STREAMLINE YOUR BUSINESS FINANCES AND SIGNIFICANTLY INCREASE PROFITABILITY

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Every successful and professional business owner knows and truly understands that there is nothing more important and worthy of investing significant time in than the state of their company finances.

Continue reading to discover how to streamline your business’s finances and subsequently significantly increase profitability and cash flow.

 

Invest In Employee Training Courses and Business Mentors

The initial monetary outlay required to invest in employee training courses and even an in-house business mentor scheme will be quickly absorbed by the overall improvement in employee efficiency and productivity. Training courses will bond your teams, improve their morale and sense of belonging to your company. They should also make every individual worker feel significantly more valued and will open up opportunities for individual progression, promotion and advancement. Both quantity and quality of performance are proven to increase within a business that offers employee training courses and business mentorship.

 

Conduct A Thorough Business Energy Audit

As a business professional, you will be all too aware of the sheer amount of money spent every month on your energy bills. To counteract this and potentially significantly reduce the amount you are paying, you should conduct a thorough energy audit throughout the entirety of your business. Water rates for businesses are far more competitive than one may believe and employing the services of an established and experienced company who can compare and consolidate your energy bills would be exceedingly prudent.

 

Outsource Your IT Operations

Contrary to several business ‘experts’ beliefs, there is never the exact right time to outsource your information technology operations and whenever you make the move you will inevitably need to deal with several unexpected issues. However, the benefits of doing so far outweigh any minor inconveniences you may or may not experience.

There are several crucial questions and polite demands you must make to your supplier and, naturally, your soon-to-be business partner, and it is vital to set out clear goals and targets before you begin. It would be extremely pertinent to source an IT business associate who has as few intermediaries as possible to insure a smooth and problem-free collaboration as well as ensuring your new collaborator is up to date with the very latest in technology that is specific to your industry.

 

Use Payroll Software

There are a multitude of benefits to investing in a company payroll system which include, but are in no way limited to:

  1. Fewer, if any, mistakes regarding paperwork
  2. Ensuring your year-end is as stress-free and unproblematic as possible
  3. Fulfilling your moral and ethical responsibilities to your hardworking employees
  4. Simplifying the overall payroll process from start to finish
  5. Saving significant time and subsequent money
  6. Ensuring you are fulfilling your legal obligations to the government

As your business goes from strength to strength, naturally you will gain a significant increase in the number of employees on your payroll and if your payroll is currently done in-house, there is an increase in the risk of human error the higher the employee count.

 

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HOW SMEs CAN EMBRACE CONTACTLESS, WITHOUT DITCHING CASH

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By Tsuyoshi Notani, Managing Director, JCB International (Europe) Ltd.

 

Already popular, the past year has accelerated the usage of contactless payments in lieu of cash transactions – even for very small purchases. As well as using cards with contactless abilities, the ease of using digital wallets such as Apple Pay has increased take-up across the UK, representing 32 % of online payments[1]. Digital payments have the advantage over notes and coins at point of sale because it facilitates a more hygienic experience and speedier transaction.

Meanwhile, in the UK, the contactless cost limit has been raised from £ 45 to £ 100 for a single ‘tap and go’ transaction, compounding moves by consumers to rely on contactless as the payment mechanism of choice. In fact, Link Scheme Holdings Ltd, which oversees the UK cash machine network reported that the number of visits to ATMs dropped by 43 % for the year to March 2021 on the previous year[2], although it does note that some ATMs may have been inaccessible due to pandemic restrictions.

The appetite for paying without cash is huge – and we know that a large proportion of cashless payments are also contactless. For SMEs this can present a challenge. Providing multiple ways to pay can be an administrative obstacle, and often SMEs prefer to operate with cash only, to avoid incurring additional fees and costs. However, there is good reason to offer digital payment methods alongside cash.

Business benefits to offering contactless payment solutions include reduced costs associated with cash handling, and the convenience for customers in offering multiple ways to pay for goods or services. It is also a very secure way to receive payment. A simple and fast way to transact, contactless is the ultimate convenience for customers. For retailers competing in today’s landscape, it is essential to ensure that customers have access to their preferred payment method.

However, this must not come at the total exclusion of cash until a solution has been found for the ‘unbanked’ – those without access to digital payments for one reason or another. For now, solutions are nascent, and SMEs looking to reach all potential customers would do well to offer cash payments but also enable cashless and contactless. For SMEs who increasingly find themselves faced with competition from mega entities, focusing on a convenient and frictionless customer experience is paramount.

At JCB, we take financial inclusion seriously, recognising our role as a key player in the global financial ecosystem to ensure nobody is left behind by the digitisation of payments. We, for example, partnered with FE Credit, to launch two credit cards in Vietnam that are packed with benefits to meet the needs of the unbanked. A few examples of these unique offerings are the Oi Plus Program – a flagship loyalty program that rewards cardmembers on their everyday spending, and EasyPay – one of Vietnam’s largest 0% retail installment programs, and Selfie PLUS – one-click mobile-to-card image upload solution[3].

Luckily, the ‘how’ in enabling contactless and cashless payments is very simple. When picking a card reader, ensure you choose one created by a company which enables multiple cards, as this will enable your business to accept a wide spectrum of payments – and means no sale is lost because of an issue around how to pay. From a JCB acceptance point of view – Lloyds Bank plc, Barclays plc, and Zettle all accept JCB Cards in the UK. Viva Wallet, which supports around 80,000 merchants in Greece, more than 3,000 merchants in Belgium, and more than 6,000 merchants in the United Kingdom and beyond also accepts JCB Card payments[4].

Losing out on customers who do not carry cash is a no-go for SMEs looking to build back business after a difficult year. Enabling card and contactless payments is a surefire way to appeal to customers looking for convenience, removing one big obstacle to purchase for the on-the-go shopper. That is why at JCB, we encourage SMEs to both enable contactless, and accept cash – for the biggest opportunity to enable purchases and to ensure nobody is left behind.

 

[1] WorldPay, The Global Payments Report February 2021 https://worldpay.globalpaymentsreport.com/en/

[2] BBC, ATM withdrawals drop by £37bn during year of Covid 17 March 2021 https://www.bbc.co.uk/news/business-56413993

[3] FE Credit to Issue JCB Card in Vietnam, 19 November 2020, https://www.global.jcb/en/press/2020/202011180001_alliance.html

[4] JCB and Viva Wallet’s Expanded Collaboration Across Europe, 25 August 2020, https://www.global.jcb/en/press/2020/202008240001_alliance.html

 

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