There are plenty of defining years in the history books, and as 2020 draws to a close, it’s almost certain that the global pandemic will ensure that this year is featured prominently. With events cancelled, launches delayed, and country-wide lockdowns, the way we work has changed forever. Still, for financial technology and surrounding industries, this was also a year of challenge and opportunity.
This December, The Fintech Times is asking industry leaders for their ‘View from the Top’ to gain an insight into the decisions behind the last 12-months. Today, we’re looking at the issue of Payment trends, hearing from Vijay Ramnathan, Jane Loginova, Thomas Pays and Nikhita Hyett on their 2020 thoughts, plus a look ahead to 2021. Will there be a Happy New Year? Read on…
One of the biggest trends in fintech of the year has been the rise in paytech, fuelled in part by the Covid-19 pandemic and the need for alternative, contactless payment methods that saw cash get the boot. There have been a huge amount of payment methods that have been trending this year, be they wearable payment devices, e-wallets or even crypto. In this View from the Top, companies MineralTree, Radar Payments, Ozow and Bluesnap outline their own 2020 experience.
Vijay Ramnathan is the president of MineralTree, Inc., a company specialising in AP and payment automation for middle-market companies. A self-professed fintech and payments geek, Vijay thinks digitalisation has experienced a significant shift, particularly in the US.
“It’s no surprise that business professionals today expect the same modern, digital experiences at work that they have in their personal lives. In the US, that shift has been taking place slowly and surely, but 2020 put it into hyper-drive. Consider core functions like accounts payable. At the start of the year, greater than 60% of small and medium business bills in the US were still being paid by paper check. That’s an astounding number when you think about how most US consumers pay bills these days. Covid has forced businesses to come to grips with the gross inefficiencies in their AP processes. It’s not just paper checks. The inefficiencies in cost and cycle time, the lack of control over cash flow, the risk of fraud, and the challenges of managing the finance function remotely are all factors accelerating companies’ digitisation efforts as we approach 2021.
“One form of that digitisation is in the use of virtual cards which generate unique 16-digit codes for a single-use between a payer and a payee. These cards offer several important benefits: The tokenised, one-time use makes them highly secure and protects the business issuing the payment. Virtual cards are processed just like a credit card, making them widely accepted while offering suppliers assurance of funds. Lastly, businesses that use the cards can also take advantage of valuable rebates to generate extra cash. All those factors will lead to a huge uptick in adoption in 2021.”
Jane Loginova is the co-CEO and co-founder of Radar Payments, a payment processing provider. In her role, she is responsible for leading the company through the rapidly changing landscape of payments and banking. She thinks that payment diversification will be a major focus of 2021.
“With brick and mortar stores going digital to survive the Covid-19 pandemic, transaction volumes have increased exponentially. As a result, it has been an interesting year for payment processing businesses.
“We have become an important partner to PSPs during this time as they help move their retailer customers to online commerce. The need to process payments fast and securely has never been higher, but we’re helping to navigate this shift.
“While retailers have responded well to the pandemic by pivoting online, their work is only just getting started. Payment diversification will be a crucial next step as we enter 2021. As the world continues to embrace digital payments, there will be a growing demand to introduce new digital methods at the checkout to offer consumers choice and cater to their preferences.
“We expect to see our role remain important during this next phase. By aggregating a wide range of payment methods into a single solution, we can remove the hassle PSPs face dealing with various vendors – giving them time to focus on what’s important, the retailers.
“When we launched Radar Payments back in February 2020, we couldn’t have anticipated the impact of Covid-19 on the world of payments. In that time, we’ve been lucky to acquire 40 customers and we expect our revenues to double year on year. It’s hard to know how 2021 will play out, but we’ll be here to help PSPs and retailers adapt how they need to.”
Thomas Pays is CEO and Co-founder Ozow, an EFT payments service that aims to address the digital and financial inclusion needs in the South African and African Markets. It is this inclusion that he has been focused on this year.
“In Africa, payment innovators have had to take a market-led approach and develop payment solutions that directly address customer needs.
“Most of the traditional payment services are focused on the card-carrying customer: the one in eight that have a credit card in South Africa. At Ozow we saw an opportunity to drive digital and financial inclusion for the seven out of eight bank account holders who don’t have a credit card. By allowing anyone with a bank account to make or accept cashless payments, we can bring the benefits and convenience of digital payments to everyone, not only the higher-income customers that have been the focus of the larger companies for so long.
“Through simplified online payment solutions available for consumers, merchants and SMEs, and by supporting them through helpful innovations such as zero-rated data costs, we can enable greater participation and access in the digital economy for all African consumers and businesses.”
Nikhita Hyett is Managing Director for Europe at BlueSnap, a global payment technology company. She thinks that we will see more marketplaces launch in 2021 as a result of the rise in paytech.
“Even before the pandemic, consumer brands were beginning to establish their own online marketplaces as niche alternatives to Amazon and eBay. Why? Imagine that you’ve bought a new vehicle from your favourite carmaker. You want to add a ski rack for up top, a bicycle rack on the spare tyre and upgrade the floor mats. Today, you might visit Amazon to find compatible options. But what if the car manufacturer had a marketplace where complementary brands sold accessories guaranteed to fit its vehicles? In exchange for providing the marketplace and access to customers, the carmaker would receive a small portion of the revenue from each sale, just like Amazon.
“Payment technology now makes it possible for small or mid-sized brands to launch affordable marketplaces quickly rather than build them from scratch – expect to see more marketplaces launch in 2021.”
“Covid-19 has not slowed the boom in cross-border commerce, which is expected to grow by nearly 13% year-on-year in Europe by the end of 2020.
“Merchants are particularly eager to grow cross-border sales in Asia Pacific, where disciplined management of Covid-19 has led to a V-shaped recovery. To be competitive in Asia, merchants must localise payments, working with providers that can intelligently route payments to local acquiring banks.
“This eliminates cross-border exchange fees and increases credit card authorisation rates by 3% to 6%. Offering local payment methods like Alipay, a must-have in China, and accepting local currencies is key in 2021 and applies to anywhere merchants are looking to sell.”