While we still do not have an end in sight to the COVID-19 pandemic, one impact that is here to stay is the shift in the way that people shop and pay. With retail stores temporarily closing or reducing hours, delivery/pickup surging in popularity, and physical contact points being avoided as much as possible, merchants have had to make abrupt changes, often stretching their payment systems to new or interim limits. Now nearing four months since the initial shutdown, many merchants have been able to tackle their most immediate payment issues to keep business moving. However, even with this success, much work will be needed to find long-lasting solutions to new constraints and respond to emerging customer trends.
To ensure future payment plans are aligned and prioritized to the requirements of the current and post COVID-19 world, a payments roadmap evaluation should be a high priority next-step for every merchant. The following highlights just a few of the ideas merchants may want to consider (or reconsider) for their future in-store, digital, and phone consumer payments.
Contactless Payments & Mobile Wallets
Although US adoption of contactless and mobile wallets payments has lagged compared to many other parts of the world, the potential to avoid touching a payment terminal during the pandemic has helped surge its consumer adoption. According to an FIS survey, 45 percent of respondents say they are using a mobile wallet of some type. Moreover, 31 percent of respondents said they would use contactless or mobile wallet payments as opposed to cash or checks in the COVID-19 aftermath. Visa reports that contactless usage in the US has grown 150 percent since March 2019, and 9 out of the top 10 U.S. issuers are actively rolling out new contactless cards to customers.
Eliminating Signature Requirements
An additional physical touchpoint that must be considered during the checkout process is collecting a customer signature, either via pen or terminal stylus. Though signatures had previously been a required cardholder verification method, in 2018 the major card brands stopped requiring signatures for EMV-enabled merchants. The choice for signature is now up to the merchant. If the business does not have a need to collect the signature and has a POS system that allows the removal of the signature step from the checkout process, now may be the time to abandon signatures permanently.
Buy Online, Pickup In Store (BOPIS)
Merging the digital and in-store worlds, BOPIS (or, alternatively, Buy Online Pickup at Curbside [BOPAC]) allows a consumer to place and pay for their orders online while expediting the receipt of goods by going to the store to pick it up. Though BOPIS has grown in popularity in recent years, COVID-19 has marked an explosion of consumer adoption that hints BOPIS is here to stay. Data from Adobe Analytics and Digital Commerce 360 found that BOPIS orders increased 208 percent from April 1-20, 2020 compared to the same time period in 2019. And looking at the future, a survey by CommerceHub found that 59 percent of consumers are more likely to use BOPIS following the COVID-19 outbreak.
Digital Alternative Payments
As consumers participate in a greater number of digital shopping and payment experiences, alternative payment methods have continued to gain exposure. Installment payment providers such as Klarna, Afterpay, and Affirm are seeing record new adoption during the COVID-19 pandemic. Klarna reported that it has now reached 7.85 million U.S. customers, while Afterpay reports 5 million active users with a 30-40 percent increase in weekly customer enrollment since the beginning of the pandemic. PayPal and Venmo also continue to experience a significant increase in consumer adoption and demand, in part because of their ability to serve as a non-traditional (i.e., non-credit or debit card) payment method. In April 2020 alone, PayPal added 7.4 million accounts (332 million total active accounts) and reported 22 percent year-over-year volume growth.
IVR Payments
With many physical locations closed and customers either unwilling or unable to pay their bills via an online portal, payments by phone have seen a renewed interest during the pandemic. Utilizing an Interactive Voice Response (IVR) system to collect payments offers a more secure way to handle a customer’s card data than relying on a human at a call center to key-enter sensitive data into a terminal or hosted pay page. IVR also allows for payments to be captured 24×7 and does not limit the number of customers able to make a payment at one time to the number of employees working the phone lines.
Pay by Link
Pay by Link offers another secure way to collect payments from customers who are not making a face-to-face transaction. Merchants initiate the payment by sending a secure link directly to a customer. Opening this link will take the customer to a secure payment page where they enter their payment details. The link can be sent to a customer via email or text message, and payment information is completed on the customer’s device. While there are many ways that Pay by Link can be deployed within a business, it is already commonly used in call centers, with chatbots, and in other customer service experiences where payment needs to be collected. Many major U.S. payment processors already offer this service or are rolling it out soon, and additional providers already exist in the marketplace. As consumers continue to lean on digital transactions, Pay by Link can offer another flexible route to accept payments securely.
To further discuss these and other potential opportunities for your re-evaluated payments roadmap, please contact Ashley Miller at [email protected].