Most businesses do not give much attention to the payments sector. They have their set methods of how they make and receive payments, and they are happy to leave things as they are.
However, when diving into what is happening in the payments industry, there is a lot of change happening and there are exciting opportunities for many kinds of business.
The developments happening will eventually force businesses to alter how they pay and receive payments whether they like it or not. Payments is a fundamental aspect of any business, and so as a business owner or executive, it is important to be aware of upcoming industry changes as there may be potential competitive advantages for your business to gain.
In this blog post, we’ll dive into some of the trends that are changing the payments landscape across Malta and Europe:
The growing popularity of Alternative Payment Methods
Although due to the COVID pandemic card usage in physical stores has increased significantly, in the ecommerce space, we are also seeing considerable growth for alternative payments methods, i.e. not just for VISA or Mastercard.
As a result of increased ecommerce volumes, transactions that would have previously been made in-stores using cash or cheques, are now being made online using payment methods such as digital wallets (e.g. PayPal & Google Pay), account-to-account payment methods (e.g. Trustly), Buy Now Pay Later schemes (e.g. Klarna), and others.
Each country has its own preferred payment methods. That’s why it’s not enough to only allow consumers to pay using PayPal and the card schemes. For example, 83 per cent of Dutch online shoppers prefer to pay using iDEAL, while 53 per cent of Belgians prefer to pay using Bancontact. Not offering these payment methods can hurt your sales if you’re targeting these countries.
The growing popularity of Crypto Payments
With over 300 million cryptocurrency users around the world, more and more online stores are now accepting crypto payments. Although cryptocurrencies are far from mainstream yet, it is notable that several established companies such as Microsoft, Sotheby’s and Starbucks all accept cryptocurrencies, along with thousands of smaller businesses around the world. A recent survey by VISA shows that 24 per cent of SMBs are planning to accept crypto payments.
From a technology standpoint, accepting crypto payments has become easier than ever before thanks to companies such as Utrust that help ecommerce shops provide a seamless checkout experience for their crypto-enthusiastic customers.
Despite the above, all is not plain sailing as many industry players are anticipating that the use of cryptocurrencies will come under further regulatory scrutiny. For example, Turkey has outlawed paying for items with cryptocurrency, while China has also declared all crypto transactions illegal.
Increased demand for Instant Payments
One of the benefits of using crypto payments is that payments are instant. Instant payments are also possible when using fiat currency though of course not all fiat transactions are instant. For example, bank transfers across different banks many times take days to process.
Instant transactions make the payment experience smoother, and it is something that is increasingly expected not just by consumers, but also by businesses. Meeting these expectations results in a better user experience and potentially improved sales conversions.
There are many ways to make and receive instant payments, such as by using SEPA INST or Open Banking. The best method depends on the use case at hand.
The payments market will continue to mature
With new start-ups, partnerships, mergers & acquisitions, and regulations announced on a daily basis in the payments industry, change is the only constant. For this reason, it’s important for established businesses to have a payments partner who can direct them on how best to develop and benefit from their payments strategy. This is what FinXP does.
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