Online Payment Processing: Key Trends in 2017
In this post we look at the key trends in online payment processing that defined 2016 and will continue to dominate this year too. The online payments landscape is driven by technology, but consumer demand for convenience is also a key driver with consumers embracing the benefits that digital innovation brings.
Consumers are increasingly receptive to digital solutions that make transactions and purchases more convenient and user friendly. The Millennials may be the key demographic that have come of age during the digital revolution, and are therefore early adopters of technology solutions; but we are also seeing other age groups using online payments as their preferred payment method, and welcoming new developments.
Online Payment Processing and The Cashless Society
In the UK, cash now represents less than half of all payments as consumers embrace other payment methods. Figures from UK Cash & Cash Machines show that only 4% of UK adults (2.2 million) rely on cash for day-to-day payments, compared to 2.7 million adults that never use cash.
Over the next decade the number of cash payments is forecast to fall by 34% to 11.3 billion.
Online payment methods are also penetrating the High Street with many consumers opting to pay online using click and collect, or to use mobile wallets and prepaid cards in store.
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Alternative payment methods are no longer confined to local market preferences or PayPal, virtual currencies are gaining traction too. In recent months Bitcoin has shaken off its image of being a slightly ‘shady’ form of currency, and become more widely accepted by consumers.
Blockchain, the technology behind Bitcoin, is also attracting a lot of attention from financial services firms interested in exploring applications for making online payments more secure and transparent.
Mobile Is King
Mobile payments are dominating the payments landscape both in store and online. As well as browsing and shopping online from mobile devices, and using smartphones to make payments in store, many merchants are seeing significant growth in payments through their mobile apps.
Domino’s Pizza is a case in point, with 77.7% of UK deliveries through their ecommerce site, and 48.6% of online sales made through the Domino’s Pizza app (source BBC News). Merchant apps are providing consumers with convenience, more payment methods, personalisation, tracking and incentives such as discounts, special offers and coupons.
Personalised User Experience
Digital technologies allow merchants to deliver a more personalised and relevant customer journey, increasing conversion rates. With a wealth of data available, those that are using it successfully are able to tailor their payment process to the customer, payment method and the device they are using.
Purchasing via social media is another key trend that is gaining momentum with all the giant social media platforms enabling brands to sell directly from the websites and apps. This is allowing merchants to reach customers and prospects in new ways, and target them on their preferred social networks.
Combining remarketing and targeted advertising with friction free payment processing is driving impulse buys and easy sales.
Subscriptions Are Booming
Offering subscription services is an increasing popular method of engaging with Millennials. Digital entertainments, SaaS and gaming were at the forefront of this trend, but in recent years we have seen many other verticals offering online subscriptions.
From groceries and ingredients for your evening meal, to beauty products, gifts and even socks on subscription, this model is bringing benefits for both consumers and merchants. Convenience is once again the key driving for consumers, ensuring that payments are taken and goods are delivered with the minimum of input. Merchants benefit from recurring revenue, customer loyalty, and opportunities to upsell other services or products.
For more on trends in online payment processing and the impact of the cashless society on retail, download our whitepaper here.