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

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.

 

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