The Future of Paytech: How the Pandemic Transformed Payment Trends

Cash is king. Well, that was before the COVID-19 pandemic. As soon as the virus became a world concern, governments sought ways to curb its spread. Lockdowns, social distancing and various COVID guidelines were enacted. This meant people spent less and didn't move more. And for many businesses, this was a death sentence.

A 2020 study revealed that nearly 2% of US businesses closed permanently, while over 41% shut their doors temporarily.

On the flip side, the payments industry has had a post-pandemic boom. With more businesses pivoting to e-commerce and virtual services, cash has taken a back-burner.

According to a Business Insider report, online retail sales surged to $794.50 billion, a record-breaking 14.4% of total US retail in 2020.

To cope with these changes, the payment industry has undergone tremendous advancements. QR codes, e-wallets and NFC technology are becoming more popular, making paytech more accessible.

In this article, we shall look at some of these trends and how they came about.

Biometrics

As the need for contactless transactions increased, payment solutions that required minimal interaction were developed. One of them is biometrics.

This payment method was initially unpopular until the pandemic happened. Biometrics utilises your unique physical characteristics to authenticate transactions and can be seen in many forms.

A growing use case for biometrics is the biometric payment card. This particular card initially records your fingerprint and requires you to place your finger on the card sensor whenever you need to pay.

Biometrics is rapidly gaining traction as a preferred payment option. A recent survey by Visa found that consumers are as likely to use biometrics authentication for in-store purchases as they would for online buys.

And according to Goode Intelligence, global biometric payments to the value of $5.765 trillion will be made annually by 2026. Also, there will be over three billion biometric payment users by 2026.

Those are pretty high numbers, and with genuinely contactless biometrics like face/iris ID, it can only get higher.

BNPL (buy now, pay later)

The post-pandemic period saw people and businesses scrambling for loans because of the financial crisis caused by the COVID-19 lockdowns. Banks were generally unwilling to give these loans or made the process unnecessarily rigorous.

So payment providers such as Klarna, Afterpay and Affirm stepped up with the BNPL payment method.

Instead of doling out a considerable sum for that new phone or putting it on your credit card with enormous charges, you could spread the cost across a timeline.

The people loved it.

And so it boomed. A Kaleido report showed that BNPL's transaction value grew by 292% between 2018 and 2020. Also, top BNPL companies like Klarna and Afterpay almost doubled their sales in 2020, reaching $ 53 billion and $11.1 billion, respectively.

Crypto payments

Despite crypto bans in countries like China, the crypto and blockchain space is still thriving. Companies like Paypal, Visa, and MasterCard are all taking steps to integrate crypto payments into their system.

However, it's not just the fintechs; there are rumours that the e-commerce giant, Amazon, may be interested in accepting crypto. Though they have denied these rumours, their July job ad shows they are thinking about the endless possibilities cryptocurrency can bring.

E-commerce

The e-commerce industry may be the biggest pandemic winner. With global lockdowns and stores calling quits, shoppers turned to online stores for their needs. Thus boosting e-commerce adoption and increasing its total US retail sales share by 75% last year (from 8% penetration in 2019 to 14% in 2020).

As a result, online payments also have. Apple Pay handles 43% of all contactless payments, Google Pay holds 31%, and Samsung Pay accounts for 20%.

However, all is preserved for in-person and in-store transactions. Many countries are lifting restrictions, businesses are reopening their doors to customers, and commerce has resumed cautiously.

This has led to remarkable innovations in contactless in-person payment methods, like SoftPOS.

In-person SoftPOS payments

Although in-store payment methods dipped slightly over 3% in 2020, it still holds the majority of sales and will likely do better post-pandemic.

The virus is still there, so customers and business owners are urged to use contactless payment systems.

And are there any options better than SoftPOS?

SoftPOS offers a flexible and affordable way to receive payment without the risk of contact. It uses NFC tech to transform your regular Android into a portable POS machine without extra hardware.

SoftPOS also allows you to accept payments anywhere you go while providing a secure and trustworthy way for your customers to pay for your products or services. It is the future of paytech, and you are welcome to build with us.