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KINDNESS AND THE BOOM OF THE SUBSCRIPTION ECONOMY

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By Dan Ziv, CEO of TouchNote

 

Lockdown has been a forced reflection for many of us in the UK. Humanitarian crisis aside, the FTSE dropped 14.3% in 2020, sinking to depths seen last in the 2008 financial crash. So how have we as a society changed? And what have we learnt? The answer might not be quite as bleak as you’d think.

As consumers in the pandemic, we turned largely to online and subscription services to stay entertained and connected. Here at TouchNote our purpose was clear; help people connect in times of increasingly fragmented and disrupted society. Whilst physically isolated, our members found solace in caring and nurturing their relationships with friends and family. And having a subscription model designed around maintaining meaningful connection, people discovered sending personalised cards with us was an easy, everyday way to boost their happiness.

 

A subscription boom

While COVID-19 had a significant negative effect on many markets, the subscription economy, and subscription eCommerce specifically, flourished. While S&P 500 retail companies saw sales shrink by an average of 10% in 2020, subscription businesses grew by about 12% in the same timeframe. OTT video streaming, digital media, and eLearning companies led the pack with growth over 25%.

A survey this year by Deloitte found that 16 per cent of 25 to 34-year-olds in the UK have three or more subscriptions, with a jump in these numbers in the last three months of 2020. To delve into that a little more, a report by Zuora, ‘The End of Ownership‘ showed that 77% of people in the UK had at least one subscription by the end of 2020, versus 70% in 2018. The average Brit held 2.7 subscriptions in 2020. In the US, it’s a similar picture with 82% of consumers subscribing to at least one paid streaming video service; the average subscriber has four paid video streaming services.

It’s predicted that Brits will spend more than £2 billion every year in the overall subscription market. Some of the main brands Brits have spent big on include everything from Netflix and Disney+, to Freddie’s Flowers, Hello Fresh and TouchNote.

 

The kindness economy

Once the novelty of zoom filters and weekly quizzes wore off, people began to crave a real way to maintain and nurture their relationships. That’s when TouchNote became the go to service to make regular sharing of meaningful moments accessible.

Interestingly, one of our largest growing segments was within 18–25-year-olds, with almost 60% of all cards sent being non-seasonal (i.e. not linked to holidays or special occasions). When looking at members who  joined during the pandemic compared to those who joined pre-pandemic there are some notable trends to highlight. On average, subscribers send more cards to their friends than their parents. They have also used TouchNote more regularly in the past year than the average subscriber who joined pre-pandemic.

Subscribers turned to us because there was a real and authentic need to to connect, communicate and demonstrate kindness in ways that weren’t physical.  We  are  seeing other UK companies tapping into the same needs and desires. Bloom & Wild, Freddie’s Flowers and Not on the High Street are gift-centric and have done exceptionally well during the pandemic. This is because people turned to them as a way of giving a virtual hug, substituting the limits of physical contact with something equally as meaningful.

Part of this success is also down to creating a community in which consumers feel personally connected to. This is vital to success according to the Edelman Trust Barometer, in which 83% of consumers stated they wanted to feel an emotional connection with brands, and personalisation is a core element to the creation of an emotional relationship.

So whilst nobody can say with certainty what the new normal looks like, it is somewhat reassuring to see that many have chosen to refocus on building a foundation of kindness in their lives and are using technology to do so. Looking ahead, it is clear that companies who can continue to help customers in their effort to lead a kinder life, will be rewarded with loyal customers for years to come.

 

Business

THE ACCELERATION TOWARDS A MOBILE FIRST ECONOMY

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By Brad Hyett, CEO at phos

 

Over the last year, we have seen a big shift towards contactless payments. Fuelling this has of course been the coronavirus pandemic, which has made the public hesitant to handle cash due to the health concerns.

As multiple national lockdowns forced physical stores to close, and customers demanded easy, cash-free payment options, merchants had to quickly adapt. The result? An increased provision of pay and collect services.

In the UK alone, 83% of people use contactless payments according to data from the Office of National Statistics.

So it’s vital that merchants are equipped with the most efficient payment solutions, as the UK heads towards a mobile-first economy.

 

Proliferation of contactless payments

In 2020, 90% of UK card payments were contactless. This equates to an increase of 12% on the year prior, despite the total number of payments made falling by 11% from 2019 to 2020. Moreover, the affordability of smartphones has increased significantly over the last decade. And it’s estimated that 84% of UK adults now own one.

We’re Seeing merchants embrace more efficient and cost effective payment methods in response. While physical payment terminals are often too expensive for many small businesses, software point of sale, or SoftPoS, enables merchants to turn hardware that they already own – i.e. their mobile device – into a point of sale terminal.

With merchants increasingly adopting these innovative technologies, contactless payments will continue to gain popularity among the general public. In 2020, 13.7 million people in the UK either didn’t use cash at all or only used it to make a single purchase. That’s double the same figure from the previous year.

 

Changing consumer demand

Now more than ever, consumers are aware of how innovative payment solutions can add efficiency to their daily lives. As such, consumers now demand better payment services, including reduced queuing times, checkoutless stores, and bespoke loyalty schemes.

Businesses such as Mercedes offer an end-to-end digital car purchasing service, so customers can go through the whole car purchasing journey from the comfort of their own home. This includes car deliveries, financing, insurance and more.

Meanwhile, eCommerce giant Amazon has started trialling checkoutless ‘Go’ stores, speeding up the shopping experience by eliminating the queuing process altogether. The days of waiting for a table at a restaurant are also over, as more people have grown used to booking in advance.

Hence, it’s important that we empower small businesses to remain competitive and provide them with the payment solutions to meet customer demand.

 

Global transformations

The digital payments revolution isn’t slowing down anytime soon. By 2026, only 21 percent of transactions will be made using cash.

The US might have been slow out of the gate, but it’s starting to see increased adoption of mobile payments. In-store mobile payments grew by 29% in the States last year alone.

This growth was primarily fuelled by Gen Z-ers and millennials. Latest projections show that there will be 6 million new mobile wallet users by 2025, with millennials accounting for 4 million of this figure. These two generations, the former in particular, have grown up with mobile banking.

For most Gen Z-ers, their first foray into financial services was with a challenger bank like Starling or Monzo. These banks are able to offer online features such as ‘split the bill’, fee-free withdrawals abroad and much more to cater to the modern financial needs of the younger generation.

The Middle East experienced similarly sharp increases in contactless payments. From 2019 to 2020, there was a 200% growth in contactless transactions. This shift towards a mobile-first economy in the region was inevitable; the pandemic merely accelerated this shift. A recent study showed that 80% of people living in the Middle East planned to continue using contactless payments post-pandemic, with speed and security being the main draw.

 

The future is mobile

As parts of the world now start to come out of lockdown, there’s an openness to new solutions and a widespread acceptance of new technologies.

It is now a case of when, rather than if, we’ll see a permanent shift to cashless in the future. For businesses, embracing digital innovation will be key to remaining competitive and keeping pace with consumer demand in this fast-changing payments landscape.

 

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HOW MERCHANTS CAN IMPROVE THE ONLINE PAYMENTS EXPERIENCE

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By Alan Irwin, Senior Director of Product at Global Payments UK

 

The dramatic increase in online shopping over the past 18 months has encouraged many businesses to invest in developing their omnichannel shopping experiences. The reasons vary – some are keen to capitalise on the trend of older shoppers migrating towards ecommerce and some are trying to make up for loss of sales in brick-and-mortar stores during the pandemic. It is also true that many businesses are shifting their models to sell direct to consumers to avoid high marketplace fees and are therefore building their ecommerce channels for the first time.

The checkout experience is arguably the most important and delicate part of the ecommerce transaction, as it can make the difference between a happy customer likely to return, and a shopping cart abandoned out of frustration and confusion. A survey from March 2020 suggested that 88% of online shopping orders were abandoned, i.e. not converted into a purchase. A seamless, customer-centric online payment experience is therefore critically important in ensuring completed transactions. But with so many payment providers available, what should businesses be looking for when trying to keep friction to a minimum?

 

Keep clicks to a minimum

Less touchscreen interaction equals less abandonment. Adapting the payment page to fit any device and supporting popular mobile digital wallets like Google Pay ensures a seamless, stress- and hassle-free checkout experience for the customer and keeps clicks to a minimum. Friction can present itself in the most minor features – for example, when the customer is navigating the payment form, the appropriate keypad should be shown to the customer when required. It’s much easier to enter a card number using the dial pad instead of switching between QWERTY keypad layouts.

Simplifying online forms with autofill and tokenisation also significantly reduces friction at checkout and shortens necessary time taken. Ensuring checkout forms are tagged correctly for “autofill” is a great way to offer customers a single-click to input the payment, shipping, and billing data that they have stored in their browser profile. Similarly offering a guest checkout option will help convert customers who are in a hurry or looking for a one-off purchase. This can also be achieved by offering to store the payment details (called ‘tokenisation’) for express repeat and one-click purchases.

 

Make it easy to understand

A tailored payments approach can increase both domestic and international global sales. By offering a checkout experience in the customer’s language, the option to pay in their currency of choice, and use their preferred method of payment (whether it’s PayPal, Alipay or card), businesses can build loyalty quickly and put customers at ease. It is equally important for merchants to ensure they always display simple direction and information about next steps to instil confidence and prevent customer drop-off. The customer should be informed of what is happening at every stage in the process, for example, whether they will proceed to SCA (Secure Customer Authentication) next or go straight through to completion.

In addition, validating forms in real-time means merchants can highlight potential errors to the customer early on, and payment providers should provide this functionality. This could be an invalid expiry date, an incorrect digit in the card number or incorrect CVV number based on card type. When issues are only flagged at the end of the process, this forces the customer to go back through the steps to figure out the error. Real-time signposting of problems removes this potential friction and reduces the potential for a declined transaction.

 

Ensure seamless security

Merchants should work with a payment partner who offers the right blend of security and compliance management without it coming at a cost to the end-to-end checkout experience for the user. Instilling trust and security in your checkout flow while utilising the right solutions to drive seamless authentication flows will increase customer confidence and help prevent drop-off.

The greatest level of security and control comes from either utilising hosted payment fields that the
merchant can natively integrate into their checkout flow, or a hosted payment page where they can
manage the look and feel. Showcasing your brand on the checkout page with trust signals and logos also adds to building trust with the customer.

Staying ahead of regulations is also important. Secure Customer Authentication (SCA) will soon be mandatory in the UK for all eligible digital transactions, and this doesn’t have to be a friction-full process. Tools like Transaction Risk Analysis (TRA) and Exemption Optimisation Service (EOS) can quickly score transactions and drive exemptions where there is the right blend of transaction risk.

 

The devil is in the details

These three rules for successful ecommerce checkout experiences may seem straightforward, but it is important to apply them at a micro level. It can take only one minor point of friction to cause a customer to abandon their cart, and this will inevitably be replicated across other similar customers. It is critical to identify friction points early on and anticipate customer needs throughout the process. Discussing these points and any opportunities to improve customer checkout experience with your ecommerce team and payment provider is an important first step towards ensuring your entire shopping experience remains competitively seamless and loyalty is won. It may be that your payment provider cannot address them, in which case it could be time to move on in order to stay competitive.

 

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