The future of commerce and payments in the post-COVID era

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2020 has marked the beginning of a new transformation in digital payments, driven by the global disruption of the COVID-19 pandemic. We are experiencing a significant change in the lives of people worldwide which may have long term effects.  The need for reduction of physical contact will impact the way we live and interact with others, and the way companies and consumers relate to each other. This is a digital transformation of society.

Looking ahead as commerce and payments evolve, mobile devices, big data, hyper-personalisation, ambient experiences and other advancements are changing everything about how we live, how we communicate, how we work and play. Here’s what we think is in store for commerce and payments in the next 5-10 years.

The road to cashless

Non-cash transactions are growing at the fastest pace ever and led by Asia, which is growing at a staggering rate of 32%. Hong Kong is no exception as the year-on-year transaction value of digital payments climbed almost 13% in 2020. While the move to cashless has been embraced by many, the COVID-19 pandemic has further accelerated this process.

The fear that banknotes or coins are a vehicle for the transmission of the virus has even caused some establishments or services to stop accepting cash. We’ve seen more people using digital payments instead of cash in supermarkets and on public transport. Earlier in May, PayPal rolled out its QR code functionality in Hong Kong to enable touch-free payments to help people maintain social distancing and safety preferences for in-person commerce.

While we expect the demand to go cashless to continue to rise, how do we foster the progression of digital payments in a manner that makes all stakeholders comfortable?

Commerce becomes contextual, conversational and boundaryless

The early days of e-commerce and payments were fraught with challenges. Connectivity was limited, payments didn’t always work, logistics took too long, and fraud was hard to detect as well as deter.

Since then, we’ve seen a massive shift in how, and where commerce is conducted. Before 1999, you went to the shop. Now the shop comes to you no matter where you are. The years in between saw the steep rise in online and mobile commerce, as well as the creation of new offerings. Examples include direct to consumer subscription services, conversational commerce via social media, chatbots and voice technology. The payments industry innovated alongside these changes, shifting to allow users to pay for goods and services at every turn because consumers are mobile and on the go.

Think about how the internet has helped small businesses to sell to a global customer base. It is essentially giving businesses the ability to offer unlimited aisles of merchandise to consumers across the globe, in multiple currencies. All this is driven by one thing – trust. Trust that you will pay and get your merchandise if you are a buyer, and trust you will be paid for your merchandise if you are a seller. But trust has to be earned. To do that, customers need to feel safe.

Security and trust become synonymous

At the heart of a trusted, frictionless payments experience is the secure and proper use of data. Customers want to be informed how their personal data is collected, stored, and shared in the entire commerce journey.

They want to see privacy, and security taken into consideration throughout. Customer data should be protected by strong cybersecurity measures, supported by evolving fraud and risk features. Building, maintaining and updating the proper controls for all of these areas are table stakes, yet also serves as a competitive advantage in an increasingly complex payments landscape.

Ambient experiences provide limitless opportunities for commerce

In the next phase of commerce, the lines will be blurred between consumption, the experiences of everyday life, and paying for those experiences. Merchants will partner with payment platforms to make commerce as seamless as possible so that shopping and paying will no longer be two explicit and exclusive actions.

With a robust, safe, and reliable ecosystem, the future is where payments become like air – invisible, but always there for your needs.

Written by Sri Shivananda, SVP and CTO, PayPal

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