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Recent Trends in Online Payments

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This article presents the latest trends in online payments, in terms of both buyer and seller.

From the seller’s point of view


Growth in the share of alternative payment methods

In addition to paying by credit card and payment using a virtual wallet, any other payment method may be referred to as an alternative payment method. The market share of alternative payment methods has grown over the past couple of years, and in some countries they are really catching up in terms of the proportion of traditional online payment methods, credit cards, for example.
Most often, these alternative payment methods were developed by local industry players who take into account local market conditions, as well as customer needs. These methods are often based on the already existing payment infrastructure of a particular country, based on the availability of banks and on the payment culture (habits). For example, Brazilians who do not have banking services and who do not have access to an online bank or credit card can pay for an order via the Internet using the local Boleto alternative method.
Additional drivers for adopting alternative payment methods are related to the cost of the transaction itself, risks, speed of settlement and acceptance, support and sponsorship by local market players. Online sellers prefer low costs, guaranteed payments and the use of the international SWIFT system to increase cash flow. Alternative payment methods that are based on existing bank payment rails (bank transfers, direct debits) provide simplicity and convenience for merchants. so for buyers.
An important incentive to use alternative payment methods is that buyers who have access to credit cards sometimes do not want to use their cards when paying online. They are afraid that these cards can be stolen and used fraudulently. Therefore, buyers are looking for such payment methods for themselves that give confidence and a sense of security when paying online.

The popularity of e-wallets is growing

In addition to alternative payment methods, e-wallets are gaining more and more turn around the world. Often they are developed with a reference to mobile devices. As the use of smartphones and tablets grows in popularity, the popularity of electronic wallets is growing with the same progression. Many e-wallets (MasterPass, V.me from Visa, PayPal) have been designed to make payments made through mobile devices easier, faster and easier.
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Conversion optimization

More and more online sellers understand that their online order and proposed payment options directly affect the conversion rate (the ratio of potential consumers to actual buyers). If sellers do not offer the right to choose payment methods convenient for buyers, they may miss out on the sales themselves because the buyer has no choice in payment methods. Therefore, it is very important to understand the various requirements and requests for payment methods and choose the right mix for your audience.
In addition, by offering the right set of payment methods, more and more payment service providers are providing payment analytics tools that allow web users to improve their payment offers or improve verification criteria. For example, merchants may decide to require 3D-secure authentication based on confirmation of the cardholder’s identity or transaction criteria (for example, buyer's country or order value). By being able to negotiate the method of payment for the order with the buyer and performing a risk check, sellers will be able to shift most of the responsibility for payment to the buyer.

Interbank fees are down

In the USA and in Europe, the mutual commissions for the fourth party when paying, for example, for MasterCard and Visa, were superseded by regulators. Mutual commissions refer to those fees that must be paid by the cardholder to the issuer for each transaction processed. These fees represent a significant proportion of fees for using merchants accepting bank cards or a trade commission. Due to increased competition, sellers are expected to benefit from lower commission rates.
Increased competition between payment service providers and acquiring banks
As markets become more and more mature, payment service providers and acquirers active in these markets need to develop new products and services, expand to other markets, or look for a strategically advantageous partnership in order to remain competitive. Through mergers and acquisitions, payment service providers try to profit by saving and remain competitive in terms of pricing. Increased competition leads to lower transaction fees and commission rates.

Department stores

There is a trend managed by a scheme that allows payment service providers to receive cash from transactions with sellers. It lies in the fact that more and more payment service providers are using the aggregate payment model of services. This model allows them to subscribe to online merchants, offer one access point to accept payments online and settle them when necessary, and retains full control over business relationships.
For many sellers, this is even easier, since they deal only with aggregators. There is no need to contact payment service providers and acquirers.

From the point of view of the buyer


Buyers' perception of the digital shopping process

With a regular store purchase, payments are made in one place and at the same time. When shopping online, the buyer and seller are separated from time and place. This leads to a change in the perception of risks involved in the transaction. For successful use of e-commerce, both seller and buyer, trust is very important. Making a purchase on the Internet, the buyer identifies himself with ordinary life, as if he first went to the store, then paid for the selected product, and then waited for delivery.
When the buyer identifies himself as the most ordinary buyer from the very beginning of the purchase, understands all stages of the purchase and allows payment, this leads to trouble-free payment. In addition, it allows the seller to offer the customer any additional personalized services that are relevant to that particular customer, thus increasing the conversion rate. Examples of such digital solutions can be seen in the BankID, Personalausweis, .beID, Idensys, iDIN companies.

Shopping and payments using mobile devices

Worldwide, the share of smartphones among ordinary mobile phones is growing rapidly. 9 billion devices worldwide are currently connected to the Internet, including computers and smartphones. And as expected, this number will increase dramatically over the next decade from 50 billion devices to 1 trillion. Mobile devices are increasingly used for various purposes:








Electronic Wallets and Phone Applications

Electronic wallets offer payment services, storage of payment data and personal user data. Purpose of e-wallets:



Currently, there are a huge number of services with e-wallets, offering their services to sellers and buyers, which led to the "war of e-wallets". Currently, the market demonstrates diverse coverage, reception and support of channels. Internet and PoS wallets, as well as omnichanal wallets. Electronic wallets can be used for various purposes and with the help of a variety of devices (stationary PCs, tablets, mobile phones). Many additional and improved services are expected in the future. Examples include: MasterPass, V.me from Visa, PayPal

The process of converging sales channels

As the experience of using the Internet with the population continues to grow, consumers by default take into account both channels, both offline and online, when making a purchase. In addition, sellers have a growing opportunity to use the same two channels, creating omnichanal sales experience for the buyer. The norm is considered to make a purchase online, and then pick up the goods in an offline store or pickup point. Also, buyers appreciate and quite often use the opportunity to return the goods back when ordering online. Or, for example, the buyer measures the favorite model of jeans in the store, and its size is over - then he can order the desired size from the online store and get the goods at home. For the consumer, this trend means that there are no more differences between a regular purchase, a purchase via the Internet or a purchase using a mobile phone. There is just a purchase. Payments are individual for each individual order, offline and online, they differ from each other.
Electronic wallets are trying to provide an opportunity for payment for the consumer, using any channels and adapting to them.

Control of personal data by the buyer

The need to register again and again in various online stores forces customers to leave a lot of personal information on the Internet. Important information remains scattered over the Internet, which makes it vulnerable to fraudsters. This also causes many risks of breach of confidentiality, especially when personal data is used for analytics online or offline.

As a reaction to the above disadvantages, an interesting tendency has emerged to make publicly available data closed. The Life Management and Personal Data Ecosystems platforms provide users with the ability to retain full control over their personal data and allow them to determine which data is compatible with which company. This is especially important for payments that include confidential data, and for them there is a growing need for security. In the light of this trend, we see how payment methods such as Bitcoin are evolving.

Sincerely yours, Yambox full-line operator
(we are engaged in logistics for e-commerce)


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Source: https://habr.com/ru/post/306418/

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