As 2021 draws closer, the payments industry faces overarching developments in the digitization of payments across a variety of sectors. Tearsheet interviewed leading finance professionals on their forecasts for payments in 2021.
Digitization of payments in retail
Helena Mao is the vice president of global product strategy at Blackhawk Network.
“Digital and contactless payments are here to stay, and retailers need to be prepared to offer shoppers truly seamless, omnichannel payment experiences. For many merchants, physical, digital and stored value payments are disparate and clunky. The brands that stand out in 2021 will be those that bridge the gap between physical and digital payments to provide consumers with complete end-to-end omnichannel experiences, including how they pay.
Taking it a step further, brands who can give consumers complete access to their spending power by transforming loyalty points, rewards and other assets into usable payments stand to truly wow shoppers, deepen engagement and even find new customer acquisition channels.”
Financial inclusion
Jennifer Worley is the senior vice president of product and marketing at Meta Payments, a Division of MetaBank.
“Use of mobile payment wallets and contactless payments have surged, as merchants have had a decreased desire to handle or accept cash. Right now, it may make more sense to order an item online you’d traditionally buy with cash in-store, or to arrange to purchase your takeout dinner in advance electronically. Many businesses are also accelerating plans to switch from checks to digital options for payments. This move has a variety of benefits, both today and in times of normality.
However, while many of us take these conveniences for granted amid the pandemic, for millions of Americans who rely on cash to pay, it’s not that easy. And in fact, it may leave them more vulnerable. New digital banking solutions and general purpose reloadable prepaid cards are an economical and convenient way for unbanked and under-banked consumers to access our country’s increasingly digital financial system, so it’s no surprise the FDIC found nearly 30 percent of unbanked households use this payment tool. We anticipate seeing even more growth here into 2021.”
Payment cards and marketing mixes
Peter Krauss is the CEO of Arroweye Solutions
“In 2021, ‘just-in-time’ marketing will raise the competitive bar among banks, credit unions, and fintechs. The ability to target the right audience at the right time has always been a competitive advantage, and it’s a strategy banks have embraced from the beginning. But the unprecedented events of 2020 drove marketers across financial services to fully appreciate the requirement to pivot quickly when customer needs, or market demands, dictate it; and banks and credit unions took notice.
2021 will see a full complement of FIs employing more agile and targeted marketing methods that drastically cut go-to-market timelines to improve response rate, attract new high-value segments, enable expanded product breadth, and take back share.
The ability to combine buyer targeting with the speed of just-in-time production methods will put debit and credit card programs in-market more quickly and at lower cost than was traditionally possible. Banks, credit unions, and fintechs of all sizes will get more aggressive with test markets, scaling quickly once they have proof of concept.”
Contactless payments and payroll
Andrew Garner is a senior vice president at Netspend.
“The COVID-19 pandemic drove a huge increase in the number of people who want to pay in digital, contactless ways, and experts predict this trend will continue long after the pandemic is over.
This trend is not only impacting a large portion of the workforce, including 14.1 million American adults who are still unbanked and may not have access to these payment options – it’s also impacting their employers. This is especially apparent in service industries where tipping is a significant portion of wages.
We recently hosted a webinar with restaurant-industry pros where 93 percent said their customers are using less cash as a result of the pandemic, which leaves businesses in many cases with insufficient amounts of cash on hand to payout tips or expense reimbursements to their workforce at the end of their shift.
The silver lining of this story is that more employers — and thus more consumers — are making the switch to digital payments, opening the door to a myriad of new payments, savings and budgeting capabilities that support financial wellness and stability.”
Embedded finance
Clay Wilkes is Galileo’s CEO.
“Similar to how Uber disrupted the taxi industry by integrating payment functionality directly into its app to reduce ride-payment friction for drivers and passengers, we’ll see more companies across industries embedding payments into their offerings. By eliminating riders’ worries about having cash to pay for rides or whether cabs accept cards, Uber created an entirely new transportation category. Similarly, Doordash changed the game for real-time food delivery, and Amazon changed retail by enabling us to buy almost anything instantly from our laptop or mobile device.
Embedded payments enables business concepts that don’t work, or at least don’t work well without it. Promoting stickiness. Embedded payments makes the app brand and card brand increasingly important. As in the above examples, simplicity and ease of use established each company’s app as the go-to choice for rides, food delivery and general purchasing.
And, the payment card that’s entered in the app initially will be the card that’s top of the wallet indefinitely. Brand matters! Liberating businesses to think outside the box. Embedded payments won’t only reduce the need for consumers to carry cash or even physical cards but will enable out of the box thinking, leading to further positive disruption to the status quo by decoupling payment from the service or purchase.”