COVID-19 has accelerated consumers’ shift to digital channels with online shopping volumes reaching new highs around the world. In Southeast Asia, e-commerce has emerged as the growth engine for the region’s digital economy, growing 63% to reach US$62 billion in 2020, according to Google, Temasek and Bain & Company’s latest e-Conomy SEA report.
This ongoing shift towards online commerce has been accompanied by a rising adoption of digital payments. Accenture forecasts nearly 420 billion transactions worth US$7 trillion are expected to shift from cash to cards and digital payments by 2023 – and increase to US$48 trillion by 2030.
This rapidly evolving landscape is forcing financial services companies to innovate to keep up with changing customer behaviors and expectations.
To get a sense of where the e-commerce payment landscape is heading to, Fintech News Singapore spoke to Dr. Thomas Fromherz, Fellow at Netcetera, a Swiss software company and digital payment leader with a presence in Singapore, to hear about the key trends to watch out for.
Invisible payments
According to Dr. Fromherz, with more and more e-commerce transactions moving into the mobile space, new opportunities are opening up, especially in the field of invisible payments.
Dr. Thomas Fromherz
“[Mobile] makes the integration of digital payments in e-commerce checkouts more compelling,”
he told Fintech News Singapore.
“It enables so-called invisible payments where payment often happens automatically in the background somewhere along the customer journey.”
In Southeast Asia, the concept has been incorporated in commonly used services and products including ride-sharing app Grab or for bill payments on Line Pay.
In the US, online retailer Amazon has taken it a step further with Amazon Go, a chain of convenience stores where customers are able to purchase products without being checked out by a cashier or using a self-checkout station.
E-commerce through social media
Another key trend that’s slowly gaining momentum is e-commerce through social media channels like Facebook and Instagram, Dr. Fromherz said. The whole concept behind this is to allow customers to make purchases in the channels they are regularly engaged in.
“Artificial intelligence allows to extract items from pictures the user is posting like sneakers, watches, special accessories, and so on, and link [these items] to an e-commerce site to allow viewers to start a shopping process right from that picture,” he explained. “This is easily combined with payment means the social channel offers itself like Facebook Pay or by digital payments like Apple Pay, or even by modern credit card solutions like Click to Pay.”
Conversational commerce
Conversational commerce (c-commerce), or e-commerce done through messaging and chat apps like Facebook Messenger, WhatsApp, Talk, and WeChat, is another trend to watch out for, Dr. Fromherz said, especially when it comes to business-to-consumer (B2C) e-commerce.
“We’ve already seen this with WeChat,” he said. “WhatsApp, for instance, is currently rolling out a payment functionality on its B2C WhatsApp platform.”
Research conducted by Boston Consulting Group (BCG) found that consumers globally are embracing c-commerce because it delivers the kind of quick and personalized experiences that meet the needs of today’s shoppers.
But c-commerce is not just growing the universe of online shoppers—it is associated with higher spending too. Research reveals that the ongoing, trusting and personal connections people develop with brands and sellers via conversations often lead to new interactions, more effective personalized recommendations and higher spending.
Voice-activated commerce
Finally, the fourth trend Dr. Fromherz believes will accelerate in the coming years is voice-activated commerce.
Voice-activated virtual assistants like Alexa and the Google Assistant have been picking up steam for several years, but this year, a notable trend observed has been the rising usage of voice assistants to make purchases.
The 2020 How We Will Pay study by PYMNTS and Visa estimates that 23 million consumers used voice assistants to make purchases in 2020, a 45% increase since 2018 and an 8% gain since 2019.
Major firms are getting into the voice-enabled shopping game. Walmart announced Walmart Voice Order in partnership with Google in April 2019, allowing customers to order groceries with a simple, “Hey Google, talk to Walmart.” Amazon is also incorporating the same concept with AmazonFresh. The platform allows customers to shop through any Alexa-enabled device.
Frictionless digital payments
At the end of the day, Dr. Fromherz said it all comes down to providing customers with the most seamless, frictionless payment experience while they shop online.
In Asia Pacific, one notable development in this area, he said, has been the arrival of Click to Pay in July.
Initially introduced in October 2019 as EMV® Secure Remote Commerce, Click to Pay is a checkout industry standard that’s designed to simplify the online checkout process and further secure customers’ personal information.
Basically, Click to Pay is a checkout option that lets users make a purchase on a website, mobile app or any other digital channel with an American Express, Discover, Mastercard, UnionPay or Visa credit, debit or prepaid card, with just a single click.
“Click to Pay keeps registered cards as digital cards in central systems of the credit card schemes, and it aims at automatically recognizing the customer or the customer device in as many cases as possible, thus finding the stored card, be it returning to a merchant but also when shopping at a new merchant,” Dr. Fromherz explained.
“Click to Pay addresses the so-called guest checkout, where the user either doesn’t want to store his/her card at the merchant or where the merchant doesn’t offer this to the customer.
“In many cases where the option is used, the customer will be relieved of the burden of entering his card data and his address data which makes the transaction more seamless to him. The merchant will directly benefit from this automatic data entry as it reduces friction.”
Note:
EMV® is a registered trademark in the U.S. and other countries and an unregistered trademark elsewhere. The EMV trademark is owned by EMVCo, LLC.
