Without a doubt, 2020 has been a year of disruption. It remains a challenging time for many, but as life with COVID-19 settles into a more routine experience, merchants are searching for more options to help keep their customers safe, their products available, and the economy moving.

Around the world, merchants are responding to the challenges, with touchless interactions being the number one priority for everyone’s health and safety. Accenture research confirms this, with an estimated 25% growth rate for payments over the next three years. This is expected to be a significant driver of economic recovery as we move into the new normal.

A growing demand for contactless payments

Prior to the pandemic we were already seeing growth in payments, but the recent global disruption has caused it to accelerate. In the US alone – the largest payments market globally – there has been a 20% increase in consumer preference for contactless operations across industries, from financial services to retail and hospitality.

When the economy begins to emerge from the disruption of the pandemic, consumers and businesses will be rethinking how and where commerce will take place. New health and safety protocols will reshape commerce and payments experiences – and touchless payment processes are already at the forefront of innovation.

With that in mind, we wanted to look at some of the key opportunities and drivers of transformation in payments.

Opportunity #1: An Increasingly Touchless World

In the wake of the pandemic, increasing numbers of consumers are using mobile and digital devices to pay for goods and services. There has been an 81% increase in e-commerce, a 200% increase in delivery app downloads and a projected eight-fold increase in touchless payments in North America.

These payments simplify purchases, sales, and even daily transactions such as tipping, while reducing the risk of COVID-19 transmission through the handling of cash or point-of-sale devices.

As consumers adopt more behaviors to protect themselves and their communities from the spread of infection, touchless payments are allowing merchants to offer new retail experiences.

Opportunity #2: Loyalty as a Driver of Growth

During this period of disruption, consumers are looking for seamless interactions with their banks, retailers and brands. The shift is generating new opportunities for integrated payment rewards and marketing programs for the post-pandemic market.

App-based digital tools allow for intelligent tracking of contactless spending. These same tools can help deliver loyalty rewards to consumers, strengthening key relationships.

Integrated, touchless points and loyalty programs can help boost consumer spending, strengthening the economy more broadly.

Opportunity #3: Banking Partnerships

In this time of uncertainty banks have been genuine partners, helping their clients mitigate merchant cashflow challenges. Going forward, there are increasing opportunities to work with payments/rewards businesses in sectors such as delivery, grocery, marketplaces, and e-commerce.

These partnerships put merchants in a better position to design and implement touchless payment and loyalty programs. Options such as “buy now, pay later” and one-click purchasing for online checkout processes can be supported by banks – their strategic planning following the 2008 financial crisis ensured they were well capitalized when the pandemic struck, with a far higher capacity to absorb risk.

Opportunity #4: Response to a New Risk Environment

Increasing credit exposure and losses are predictable economic phenomena and managing loss is a critical focus. Payments is positioned to help merchants navigate the disruption while providing solutions to mitigate risk.

Opportunity #5: Core Payments Transformation

In 2020, the trend toward touchless payments was already on the rise, but the arrival of the pandemic dramatically accelerated this shift. Prior to the outbreak, the United States was the largest payments market, with a 31% global share. As things move forward, that share is growing.

Nearly all merchants in all industries are looking for innovative ways to integrate touchless payments options that service the expectations of the current and the post-pandemic worlds.

Payments transformation to touchless will drive business value while ensuring consumers are protected. Retail, travel, automotive, and energy are likely to have the greatest near-term opportunity, outside of financial services.

Meeting consumers where they are

The COVID-19 pandemic is driving fundamental changes in consumer expectations, sending companies off-balance. Businesses, their leadership and teams are seeing depleted sales and revenues, as well as rising costs. Responsive organizations are already taking advantage of the void left by others which are struggling.

Immediate action is required to address the short-term liquidity challenges, solve for costs and profitability, and generate funding for new opportunities. Already experiencing a trend toward contactless consumerism, payments is positioned to facilitate growth in this new landscape as we move into 2021 – and beyond.

In my next post I’ll explore some of the core impacts of the disruption and strategies for success in the new normal.