As a shop owner, finances might be keeping you up at night, but how often do you think about how your customers are actually paying for their services? Is it cash? Debit? Credit? Smartphone? What about Bitcoin? Or paying with their fingerprints?
In the wake of the global pandemic, how people pay for goods and services has come to the forefront.
“What used to be a very sleepy industry has now become the sexiest part of financial services,” said Neha Wattas, and executive director at JP Morgan, speaking at CES 2022 on Jan. 5. “If the last decade was about software eating the world, we really do feel and see that today payments are eating the world.”
Wattas said this because she believes payments have fundamentally transformed every aspect of life.
“What used to be a clunky experience at checkout is now an almost invisible and, might I say, even a pleasant experience,” she said. “If you’re a business, if you’re a merchant, you’re in the payments business.”
Many companies stopped accepting cash altogether during the pandemic – or strongly encouraged customers to use other means – and it seems like consumer generally were onboard with this approach. According to research presented at the CES session, 62 percent of consumers prefer making in-store purchases with digital or contactless payments, and just 16 percent of consumers will revert to their old methods of payments pre-COVID.
“Older adults who never shopped online, went online during COVID and they realized it’s not that bad. They realized they actually like it. What we are seeing is that the changes are structural,” Wattas said.
During the session, Michael Ellison, CEO of Corporate Insight, presented various statistics:
- 63 percent of consumers would switch to a business with contactless payment options
- 48 percent would not shop at stores require contact with cashiers or direct payment
- 46 percent feel contactless payment is among the most important safety measure
- 67 percent of U.S. retailers now accept some type of contactless payment solution.
“Clearly there’s been a shift of considering contactless not just as a payment but as safety in the shopping experience,” he said.
Consumers are eager to use payment alternatives such as Apple Pay, Samsung Pay, and voice-activated payments. Biometric authentication such as fingerprint ID and facial recognition were projected to have bee used in more than 18 billion transactions last year, Ellison said. (Wattas said JP Morgan is piloting biometric payments, such as paying with your palm.)
In the next few years 91 percent of the population will have a smartphone, said Neha, and society in general is open to other financial institutions, not just banks, these days.
“Where banks use dot be the paradigm for trust in society and still are, but there are alternatives,” she said.
Cryptocurrency
The panelists believed that 2022 will be “major year of crossing the chasm” for bringing cryptocurrency into mainstream consumer payments. Before the pandemic, there was about 1M$ in decentralized finance (DeFi) under total value locked, said Michael Terpin, CEO of Transform Group, who also sat on the CES panel. Now, it’s at $100 billion.
Currently, there is US$8 trillion in print worldwide, and digital currency just hit $3 trillion, said Jason Cooner, CEO of SDG Exchange.
“It’s rapidly catching up and it’s rapidly becoming mainstream,” he said.
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About the Author
Amanda Silliker
Amanda Silliker is the former editorial director of the Vehicle Repair Group at Endeavor Business Media. She oversaw five brands — Motor Age, PTEN, Professional Distributor, ABRN, and Aftermarket Business World. Prior to her tenure with Endeavor, she had over a decade in B2B publishing at Thomson Reuters, ranging from writing and editing content for print and web to managing awards programs and speaking at conferences and industry events. Connect with her on LinkedIn.