January 6, 2022
Average Read Time: 7 minutes
Technology has conditioned people to get what they want – quickly. No one works, studies, or shops at slow speeds any longer. Search, messaging, managing finances: we want everything to move even faster.
Heck, even the Earth has caught on to this trend. According to scientists, 2021 was the shortest year in decades because the Earth is spinning faster on its axis, making days just a tiny bit shorter.
Just as consumers expect speed, so do businesses. “If your customers can’t get speed from you, they’ll simply go to someone else. This is true when scheduling a consultation to get an estimate for how much a service will cost and certainly when ordering a product online,” said Jared David Overton, CEO of same-day delivery service PigeonShip. “While price is still an important differentiator for many, quite often, customers are going to choose whoever can serve them the quickest – even if they aren’t the cheapest option.”
What applies to same-day shipping applies to payments, too. These days, clients don’t necessarily view speed as a differentiator; it’s become table stakes in a world that isn’t slowing down for anyone. Merchants and suppliers better make sure that customers can conduct transactions as quickly, easily, and seamlessly as possible.
Here’s how the need for speed is playing out in payment trends and what those trends mean for merchants and suppliers in 2022 and beyond.
By now, we all know that 2020 and 2021 were watershed years for B2B ecommerce. Buyers discovered that websites make it much faster and easier for them to do research, purchase products, and arrange for service. The average B2B customer now uses six different channels in the decision-making process.
McKinsey’s research on B2B decision makers confirms that omnichannel is not just a trend, but has become critically important for B2B sales globally. Eight in ten B2B leaders say that omnichannel is as or more effective than traditional methods. Only about 20% of B2B buyers say they hope to return to in-person sales.
However, B2B organizations, by and large, haven’t kept up with retailers when it comes to omnichannel sales. For example, the latest statistics show that close to 30% of small businesses of all types still don’t have a website. On the other hand, retailers have been working on creating seamless omnichannel buying experiences for their customers for years.
Because just about everyone is used to the ease and convenience that retailers provide through their omnichannel strategies, particular ecommerce, B2B merchants will need to create similar experiences for their prospects and customers to compete and thrive. Consistency is the key; each sales channel needs to look the same and operate together so buyers can move from one to another (and another) without hitting speedbumps that might hinder their purchases.
One critical element of the omni-channel experience is, of course, payments at checkout, both online and in-store. And by and large, most of those payments will be digital. , cashless transaction volume will more than double by 2030, from approximately 1 billion to about 3 billion. This will be the case across regions, as the uptake in cashless transactions is projected to increase on all continents.
Payment processes, methods, and acceptance need to be fast and frictionless to avoid abandoned shopping carts (both literal and figurative) and lost sales. For sellers, that means:
With much initial attention focused on the potential to transmit the coronavirus through touch, many businesses and cardholders joined the trend toward contactless payments. 31 million Americans used a Visa contactless card (or digital wallet) in March 2020 – up from 25 million in November 2019. Overall use of contactless payments in the U.S. has grown 150% since March 2019.
While concerns about passing along the virus via touch have waned, 65% of consumers still would prefer to use contactless payments as much as, or more than, they are currently, a recent study by Visa reports. If you’ve ever used a contactless card, you’ll understand why. Approval of a transaction takes mere seconds, sending shoppers quickly on their way and eliminating checkout line bottlenecks.
While contactless transactions are way up, non-contact forms of payment have been adopted mostly by large companies. As of early 2021, Visa reported that only 39% of small- to medium-size enterprises accept some form of contactless payment, while 67% of businesses overall have implemented it.
Offering contactless payment can be a differentiator for a small business. To increase their competitive advantage, merchants in the know will be investing in new payment terminals and software to enable them.
Businesses considered high-risk, including CBD, traditionally have struggled to secure merchant accounts that allow them to process card payments. Yet digital payment options offer the kind of speed and convenience that customers are looking for – and are the only way to conduct online sales, which are critical in this day and age.
However, that situation is changing. Some payment processors have expanded their risk tolerance and established relationships with like-minded sponsor banks that may not accept all high-risk categories, but have now opened their services to some emerging markets.
With a greater number of legitimate banks and payment processors beginning to serve high-risk businesses, the ability for those businesses to accept card payments is growing just in time to take advantage of both booming ecommerce and in-person sales of such popular products as CBD.
Partnering with a secure, reliable credit card processor that has made the strategic decision to serve high-risk markets can bring new customers and higher spending to those businesses simply by accepting cards as a payment method. High-risk businesses should look for a payment processor that understands the nuances of their market and shows commitment to it.
As Payments Journal explains in Real-Time Payments: Everything You Need to Know, real-time payments (RTPs) are initiated and settled nearly instantaneously. Ideally, real-time payment networks provide 24x7x365 access, which means they are always online to process transfers, including on weekends and holidays.
The United States has lagged behind many other countries in real-time payment implementation, but is catching up. The most prominent example of a real-time payments network in the U.S. is The Clearing House. Half of demand deposit accounts in the U.S. are now connected to The Clearing House’s RTP network, according to an FIS report. FedNow, the Federal Reserve’s anticipated real-time solution, also will fall under the definition of a real-time network when it launches, potentially in 2023 or 2024.
The speed of RTPs offers several advantages. First, payments that settle instantly are available instantly, aiding businesses with cash flow and their own payment needs. Second, RTPs provide end-to-end communication from the payer to the payee and back again, putting an end to a fragmented communication process and offering more information about the payment process.
With those benefits, RTPs are a clear winner for B2B payments. And they are widely available; The Clearing House network is open to all federally insured U.S. depository institutions.
Payment facilitators onboard merchants who become sub-merchants to the facilitator, receiving payment services through its master merchant account, allowing merchants to bypass the extensive underwriting process. If you don’t recognize the concept by name, you’re familiar with some of its providers, such as Square and Stripe.
The payment facilitator market is a lucrative one: revenues are projected to grow from $2 billion in 2018 to $15 billion in 2025. Because of that growth, other parties are getting into the game, and the number of payment facilitators could double from about 1,200 today to 2,400 by 2025, according to one source.
Among those new players are independent software vendors (ISVs), providers who integrate their applications with a payment processor so payments can be accepted within the software. The benefits to ISVs are clear: extending the capabilities of their software and adding value to their users; providing fast, easy merchant onboarding; ownership of the payment process with the ability to generate a new revenue stream.
In addition to faster onboarding, an increase in the number of payment facilitators in the market, means increased competition, which can lead to better services and pricing, and more choice for merchants. So, merchants who are considering a relationship with a payment facilitator should broaden their research beyond the major players and consider other options available to them.
So there you have it: six payment trends that are indicative of the current demand for speed by today’s buyers, whether we’re talking about faster choices, faster payments, or faster processes – and, in some cases, all three.
As we’ve pointed out throughout this article, we’re not talking about speed for speed’s sake; we’re talking about speed that customers expect and is integral to being competitive in your market. Companies that are faster to change in response to changing customer needs will win. Slower players will be moved aside as those who transform more quickly pass them by. Don’t be one of the companies getting lapped by others, whether in the payments arena or any other critical area of your business.
If you want to learn some of the ways MerchantE can help you optimize how you accept payments and stay ahead of the trends, watch our Money In video.
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