Retail Payments in 2021—And Beyond

New technologies like pay-by-link and click-to-pay will get a workout this year.

With 2020 unlike any other year in our history, it is certainly challenging to predict what the future may hold. One thing is clear, though. There has been an extreme shift in consumer behavior, and that shift is likely to sustain itself or the long-term, including with regard to shopping and payments.

Surveys from McKinsey & Company have found that more than 60% of consumers have tried new ways of shopping, from mobile app ordering to click-and-collect during the pandemic. So, what does this mean for 2021?

Here’s our take.

Digital Payments Overall Will Increase

Concerns over the transmission of Covid-19 have caused consumers to rethink how they shop and pay, accelerating what was already in motion—the preference to use card and contactless payments. And, with the massive shift to online shopping, the usage of cards and apps has only continued to increase.

In fact, according to McKinsey research, most digital and contactless services have seen increased adoption since April, with more than half of new and existing users reporting an intent to continue post-Covid-19. And additional McKinsey data indicate consumers show an increase of anywhere from 20% to 50% in intent to purchase online, including after the pandemic ends.

While cash will not disappear completely as a payment method, Covid-19 has accelerated the downward usage trend, and we expect this to continue in 2021 as digital payments overall increase. This is especially likely as it could remain a year of desire for safe, hygienic payment processes amid concern and uncertainty about in-store shopping.

Click to Pay Usage Should Grow

Click to Pay is one of those digital payment options we expect to see grow. It’s a one-click payment option that can be used on a mobile app, Web site, or other digital channel, with payment being made with a credit, debit, or prepaid card from Mastercard, Visa, American Express or Discover.

Why will it take off? The benefits are convenience and ease. Shoppers do not need to search for their credit card or enter their personal details every time they want to make a purchase digitally. They simply enter their card information once and from then on pick the “Click to Pay” option when conducting a transaction.

And there are additional benefits to consumers—and to retailers that offer it as a form of payment. Beyond being an easy and streamlined payment option for digital shoppers, Click to Pay also bolsters payment security. The technology underpinning Click to Pay follows the EMV Secure Remote Commerce industry standard. This standard uses tokenization to replace account numbers and other sensitive data, making this payment method hard to breach or replicate.

The Use of Biometrics Will Increase

Driven largely by the need for hygienic payments and the continued reliance of consumers on their smart phones, the use of biometrics should only continue to grow in the coming year. Fingerprints, face scans, and voice recognition will maintain their appeal in providing an unprecedented level of security and convenience for payment transactions via consumer devices.

It is also a lot easier for consumers to pay with a touch of their finger or scan of their eye or face than to type out complex passwords on small screens. Consumers welcome convenience and speed, and retailers want to meet consumers’ desires, so it makes complete sense that biometrics would maintain its appeal in driving digital payments in 2021.

Pay-by-Link Adoption May Rise

With this type of payment method, there is no interaction whatsoever with a payment terminal. A link or QR code—provided via email, app, newsletter, social-media post, or flyer—brings a customer to a secure payment page. This enables retailers to maximize the potential of contextual commerce by allowing them to match offers to their customers at the right moment, including when in-store, proving value-add for both the customer and the business.

And, given that consumers do not need to wait in line to interact with a payment terminal, they will likely adopt pay-by-link more and more if retailers offer it in the coming year.

Click-and-Collect Shows No Signs of Slowing

Retailers offering this kind of service are able to reduce the amount of time people wait in stores for their items or queue in the front of the store, waiting to get in. By leveraging click-and-collect, consumers can enter the store, pick up their order, and not even have to pay, as that has been taken care of online in advance.

The average length of stay can therefore be drastically reduced, helping the retailer to have fewer buyers onsite at the same time, therefore minimizing the risk of infection. Since the method increases both safety and convenience for consumers, we expect it to continue in 2021.

At the end of a year that nobody could have predicted, perhaps it is wise to be cautious when looking forward to the trends that will shape 2021. However, all signs point to this year representing a new normal in the retail payments space.

While vaccines are arriving, consumers have become quite comfortable with digital ways of shopping and paying. Given this, together with all of the convenience, ease, safety and security these payment options have provided, we expect these practices to continue in the coming year, and potentially beyond.

—Jed Danbury is a vice president at Computop, Bamberg, Germany.