Payments digitalization is transforming the payments landscape. New technologies are making it easier and more convenient for consumers to make payments, while also providing new opportunities for businesses to streamline their payments processes. One of the most exciting developments in this space is the rise of buy now, pay later (BNPL) services. BNPL allows consumers to purchase goods and services online without having to immediately pay for them. Instead, they can spread the cost of their purchase over a period of time. This flexible payment option is growing in popularity, particularly among younger consumers who are used to making payments digitally.
The surge of payment technology during the pandemic resulted in new opportunities for many organizations including Global Payments, as CEO Jeff Sloan explained in a new interview with Alan Murray and Ellen McGirt in Fortune Magazine:
What the pandemic really did… is it really accelerated the blurring of the lines between the virtual and the physical worlds. Now people think about their laptops, their iPads or cell phones, the same way they think about physically going into a store and they want complete flexibility, regardless of where they go one needs to be interoperable for the other. So now there is no really more distinction between e-commerce and what we call omni-channel or acceptance in the virtual world as well as the physical world. We did $1.45 billion of revenue in the omni-channel world, and I just described that, blending last year—that blending of the virtual and physical environment.
In addition to the increasingly digitalization of payments, the pandemic allowed for growth of alternatives like Buy Now Pay Later. The ability of companies to adapt during the pandemic created better outcomes for consumers, as Sloan explains:
The second thing I’d say, is things like buy-now-pay-later or what we call BNPL, the proliferation of alternative payments mean some of which are through your banks, and some of which are through newer players like an Affirm or a Klarna which actually are non banks. I don’t see that changing either. In fact, in last year, 2021 Global Payments did over 2 billion by-now-pay-later transactions, and I’d say, that’s probably got 50%. So the idea that consumers can kind of pay the way they want, pay over the number of payments that they want, generally not get charged for paying in installments, we’re one of the biggest providers of that type of functionality. And that’s something obviously the pandemic accelerated.
The payments industry is also being disrupted by the rise of new technologies, such as blockchain and distributed ledger technology. Digitalization is also changing the way consumers pay for goods and services. In particular, there is a growing trend for consumers to use mobile phones to make payments. This is because mobile phones are becoming more widespread and they offer a convenient way to make payments. There are also a number of new payment methods that are being developed, such as contactless payments and mobile payments. The payments landscape is changing rapidly and it is important for businesses to stay abreast of these changes.
Overview by Jordan Hirschfield, Director of Research at Mercator Advisory Group