The Biggest Digital Payment Trends 2022

Digital payments services will continue to be as important in 2022, as they have been in recent years, as technology advances and the demand for more digital commerce continues to grow. This is especially true given the impact that Covid-19 has had on the world over the last few years. This blog will provide you with everything you need to know about digital payments, why they’re an essential part of business today, and the trends you need to look out for in 2022.

Why digital payments are essential today

Since the pandemic hit, businesses have had to adapt to the way in which they take payments. Whether it be an eCommerce, or bricks and mortar business, more and more people are using contactless payment and other digital methods to complete a purchase - with some businesses now even declining cash payments altogether. Whilst these digital payments were once a necessity to keep businesses open through the height of the pandemic, customers and businesses are now continuing to use these methods after seeing the benefits they have on both themselves and the economy.

As we discussed, we saw a major increase in digital payment methods being used when the pandemic hit, and with the effects that were seen on the economy due to lockdowns and fears of going out, digital payments have helped change this. As of 2020, the U.K economy alone had shrunk by a record of 9.9%. However, by the end of the year, the economy had seen a rise of 1.2%, showing that there had been an increase in spending and there were high hopes for the economy to get back on track. There were several factors as to why and how the economy began to rise again after a record-breaking fall. The main factor was that the U.K finally opened up again to the public, and people were able to resume a pretty normal life, going to restaurants, bars, and non-essential shops. Another factor is the increase of digital payment methods in shops, restaurants, and all other hospitality. The demand for more digital payment methods was certainly there before the pandemic. But as places shut down and consumers were forced to buy nearly everything online, contactless ways to pay increased dramatically - with 9.6 billion contactless payments being made in 2020. Over a quarter of the U.K’s payments were digital in 2020, and that is set to continue, with the digital payments industry expected to be worth 6.6 trillion by the end of 2021.

But why are people so reliant on digital payments now? And why is their demand still growing after the pandemic has slowed down drastically?

Well, it’s simple. Digital payments are fast, easy and cater to most people’s needs. As a society, we are always demanding convenience, and we want everything before we’ve even asked for it - and digital payments provide us with just that.

Swift transactions allow for people to get in and out of shops without having to interact with staff and worry about cash transactions, leaving consumers with more personal time, eliminating most queues and hassle. Consumers now also feel safe using digital payments, as with time technology has advanced, and with rigorous security measures around digital payments, they are at very low risk of fraudulent transactions. Overall, digital payments are seen as a quick, hassle-free, no-cost experience.

So if this isn’t your sign to introduce digital payment methods into your business model then I don’t know what is…

Types of digital payments

• Mobile payments e.g. apple pay
• QR Payments
• Superapps
• Online payment
• Paypal payments

If you’re unsure about which digital payment methods could work for your business, or if you really need them, keep reading and we’ll be sure to provide you with everything that you need.

Now that you know why it is essential to be providing your consumers with more than just one method of payment, it’s important to know which methods are suitable for you and would benefit your business. This part of the blog will take a deep dive into the digital payment methods that are going to continue to grow in popularity throughout 2022.

1. Buy now pay later

Now that you know why it is essential to be providing your consumers with more than just one method of payment, it’s important to know which methods are suitable for you and would benefit your business. This part of the blog will take a deep dive into the digital payment methods that are going to continue to grow in popularity throughout 2022.

One digital payment method that is taking the world by storm, now more than ever, by providing consumers with convenience and accessibility is the ‘buy now, pay later' (BNPL) model. BNPL giants such as Klarna, Clearpay and Laybuy have set the tone for their competitors, by changing the way consumers can purchase goods and services online and in-store. Klarna especially has revolutionised the checkout experience for customers, by allowing consumers to choose the way they pay. Klarna provides smart and flexible ways for consumers to shop and currently has 90 million active consumers, through more than 250,000 merchants, in 17 countries. They offer a number of services including; Buy now, pay in 30 days, pay in 3 instalments, and direct debits. So it’s no wonder why this payment method and its popularity isn’t slowing down.

4 in 10 brits now admit to using a method of BNPL, for ease and convenience, with 9.5 million people saying they would avoid shopping with an online retailer who didn't offer a buy now pay later service.

And it’s not just consumers who are benefiting from using BNPL. On average, there is a 70% eCommerce industry-wide cart abandonment rate - meaning that consumers aren’t going through with their purchases once they add something to their basket. Klarna promises to eliminate this factor and increase your overall sales by a further 30%, they also believe they can increase average spending by at least 34%.

So if that's not a good enough reason to include Klarna in your payment methods, then what is?

BNPL providers like Klarna are continuing to evolve as payment methods and consumer needs do, and they are now seeking to become a one-stop-shop for shopping. With an ever-growing number of retailers adopting BNPL into their business model, recent data has predicted that by 2026 global spending via BNPL services will hit $995 billion, quadrupling the current amount. This is because companies like Klarna were once used for mostly fashion eCommerce, but are now being launched with big fintech firms and online banks. From these statistics and the vast amount of companies, industry-wide, that are hopping onto the BNPL trend, this could be the perfect time for you to do so too.

2. Loyalty schemes

Another digital payment trend that we are going to see a lot more of in 2022 is loyalty schemes.

Loyalty schemes have been part of many companies' marketing strategies for as long as you can think, whether it be a points card that you top up or a stamp card that gives you discounts or free products once completed. This scheme is especially prominent in the in-store retail industry, with industry giants such as Boots, Superdrug and Paperchase offering their customers' points cards that allow them to gain discounts and free gifts, all in return for their details and of course their loyalty.

So, what do retailers gain from this scheme?

Well, it's in the name. By providing customers with a scheme that offers them free things and discounts, they are in turn more likely to become loyal customers, returning to your store to purchase more than they might have before. Which ultimately increases your popularity and revenue for the brand. As well as these factors, a loyalty scheme is also a great way to directly market to your consumer. When signing up for a loyalty scheme the consumer must provide a name, point of contact and oftentimes their birthday. This provides the business with ways to send that person targeted emails and offers to entice them to spend more and can help them better understand who their audience is. Is their customer base mainly female, under 35? Or males over 50 etc.

However, due to changes in consumer behaviours, data protection laws and the decline of in-store shopping in recent years we have seen loyalty schemes fall in popularity. As we discussed previously, Covid-19 has had a massive effect on the way consumers now shop, with 2.14 billion digital shoppers in 2021, rising from 1.9 billion pre-pandemic. The drastic rise of eCommerce means choices are seemingly endless, and consumer attention is becoming increasingly harder to capture, as they are now targeted from every angle by brands eager to win their loyalty. Due to this, customer loyalty has never been more difficult to gain, or more valuable to retain.

So, as in-store shopping declines, and it’s harder to gain loyalty online, brands are looking for ways to solve these problems.

Marpay

A way that brands can offer their customers the same opportunities as a loyalty card would in-store is through using technology such as Marpay. Marpay is an emerging technology introducing a way of connecting the world’s top online shops with loyalty programme members who are looking to maximise their spending power at checkout.

How does this work? You may ask…

Well, new 'MarPay' technology systems connect online retailers directly with loyalty programmes, ensuring that customers can spend and earn points on every purchase made through their website. Marpay can be used to either free up shoppers' points, allowing them to buy more and pay less or to allow consumers to earn points on their purchases, or to top up their points balance whilst they shop. The retailer will inevitably benefit from this by gaining more profits by increasing average spending and increasing their customer base through loyalty.

This new technology means that traditional reservations consumers may have in their customer journey can be eliminated, and create a positive, enticing online shopping experience for them. The Marpay system means that customers have total control over how they spend their earned points and online retailers offering it will ultimately hold a competitive advantage over many. If multiple retailers are selling the same products but only yours offers marpay, then the customer is more likely to purchase with you as they feel as though they are gaining more from their purchase - whether that be through earning points, or using them to receive a discount on your website.

Pointspay

Pointspay is a highly innovative e-payment platform that offers marpay technology to its members, and online retailers that use it. Pointspay directly connects its members' points to leading online merchants worldwide. Such as; Dyson, Nike, Macy's, and many more.

Using Pointspay consumers can shop with their favourite online retailers and either pay with points they’ve earned, or pay with cash and collect points for later. It also allows its retailers to capture a greater share of wallet, boost average order value and increase retention rates while gaining access to a new customer base. Studies have found that online retailers can increase their average basket value by 30% when offering Pointspay as a payment method at checkout.

Introducing this digital payment method into your business model is a win-win for both online retailers and customers looking for more - by getting ahead of trends in 2022 and by providing your customers with solutions to their problems it could set you apart from your competitors.

3. Contactless technology

Contactless payment methods are nothing new to us after the first contactless card was introduced by Barclays in 2007. However, the introduction was slow as the public were very sceptical over the safety and need surrounding contactless payments. Fast forward to 2022 and it's predicted that by the end of the year over 50% of all purchases made in the U.K will be made via contactless payment - as it has now been named the most popular payment method.

Again, the pandemic massively changed the way retailers accept payments, meaning that consumers had to adjust to using contactless payments. At the height of the pandemic the world was adjusting to the spreading of coronavirus and wanted to keep it to a minimum, so many establishments became cashless, only accepting card payments - which many have continued throughout the evolution of covid-19. The only way most people could pay for goods and services was through contactless methods, such as apple pay, bank transfer or through websites via QR codes.

As people quickly noticed these digital payment methods made life easier and more convenient in many ways, we're yet to see the use of them slow down. Studies have shown that pre-pandemic chip and pin payments were the most popular, accounting for 37% of all transactions in the U.K, and at the same time, contactless payments were only 17% of all payments. However, by the end of 2022, it is predicted that the number of payments being made via chip and pin will fall to 11%.

Clearly, contactless payments that involve card readers will still be prominent in 2022, but the growing popularity of digital wallets means that no touch payment technology is also increasingly growing in popularity in other contexts.

4. QR code payments

In the last few years, the increase in the use of QR codes has opened up a whole new world of contactless possibilities for both retailers and consumers. Using a QR code enables rapid purchases by simply scanning one with your phone, so whether you're surfing through social media or shopping for your favourite online business, virtual payments have never been easier.

QR codes also work in the real world and have been extremely helpful in the hospitality and leisure industry in recent years. They’re a less expensive alternative to chip and pin, as there's no need for card readers, menus, or even as much staff. For example, in restaurants, you can now scan a code on the table, look at a menu, pick the meal you want, and pay for it all within the same minute. This was especially helpful during the pandemic when there was table service only rules. The world has learnt to adapt to these measures and now, as people continue to seek convenience, the demand for this service continues to grow.

So, if you're not already using QR codes as a payment method, now is the time to start.

5. Super apps

Another digital payment method that hasn't had as much coverage is the use of super apps - which are set to be a major key player in digital payments for 2022.

So what is a super app?

A super app is a mobile application that provides a variety of seemingly unrelated services via one single application. Rather than having multiple apps for different services, a super app aims to provide users with access to multiple services all in one app. For example, users can chat, shop, order a taxi, apply for a bank loan, and do a variety of other things all from one app. Super apps are gaining more popularity as they're extremely convenient, and they answer everyone's needs all in one place.

A super app is perfect for a business that offers more than one product or service, such as a bank, restaurant, or eCommerce business. A great example of this would be Uber, which once started as a taxi service, now offers food delivery and has plans to make its way into other transport services. Their super app has allowed its users to have multiple services all in one place, where payment is all digital.

Over the next year, popular social media sites such as Instagram and Facebook are predicted to become super apps, as they have slowly transitioned into becoming eCommerce sites as well as a social network. For example, you can now interact with your friends on Instagram in one minute, then purchase something from your favourite brand the next, without having to leave the app.

With people spending an average of 4.2 hours on their phones a day, apps must be offering as much as they can to their users. It’s also shown that there was a 7% increase in app downloads in the year 2020, and this continues to grow, as users continue to look for quick ways to access their needs. This indicates that brands aren't slowing down when it comes to adapting to their users wants and needs, so why not get ahead of the game and turn your app into a super app? Integrating all of your services into one platform could help skyrocket your brand and its profits.

Hi, we’re Accountancy Cloud…

Hopefully, this blog has helped you understand why it's so important that your business implements digital methods into your business model. Whether you’re an eCommerce business, a small pop up shop, or a restaurant, digital payments are needed in any type of business, and the demand for them by consumers isn't slowing down. Using these methods or others could help skyrocket your company and create more revenue for you this year - which is what we all want, right?

Here at Accountancy Cloud, we want to make your eCommerce business run smoothly by supporting all of your financial needs and queries. We offer the best online accounting, R&D credits and CFO services for ambitious businesses who want to grow. Take a look at our services page to find out what more we can do for your business. Whether you're a startup, small or medium business, we take on clients with revenue of up to £15 million. Our mission is to help you succeed.

To learn more about Accountancy Cloud and how we can help you, get in touch today to discuss your unique needs and requirements.