With a growing understanding and new consumer behavior embracing more and more digital banking, many are still learning about the capabilities of borderless and contactless payments after new perceptions of value, security, and availability, creating an ongoing challenge for merchants.
Consumers are seeking out simplicity and instantaneous opportunities more than ever before in this growing digital age and look to familiar opportunities like cross-border transactions and tools like QR codes that provide better solutions to everyday payments.
But how impactful are QR codes to digital payments? How has the continuous e-commerce surge impacted Latin America and other marketplaces? Which regions are impacted the most by QR codes? What options do QR codes provide digital payment consumers? These are all questions approached by Gustavo Ruiz, the CEO of SafetyPay, an e-payments provider operating in over 17 countries worldwide. In this guest post for The Fintech Times, Gustavo addresses the future of what consumers should expect moving forward.
QR Codes in Today’s Digital Banking
The implementation of Q-code services as payment methods in global markets brings instant payments to life. This solution allows non-credit cardholders and fraud-wary consumers to use QR codes without sharing additional information online and pay for goods and services. Capabilities like this expand the opportunity to complete instant payments at any date or time to pay for goods and services to millions of people.
With consumer preferences continuing to shift toward touch-free interactions, it is critical that businesses can connect physical and digital commerce. By providing consumers opportunities to pay digitally via a QR code and popular digital wallets, businesses are more convenient and offer more choices for all modes of commerce, especially as in-person shopping, dining, and entertainment experiences resume.
A large part of the acceleration comes from merchants – who had previously dictated payments terms – turning to new, digital alternatives for their clients. For example, merchants that introduce QR codes for seamless checkout experiences are attempting to improve the customer experience, increase average order value (AOV), while also creating some money-saving automation for the merchant.
Both small merchants and large banks are getting into the QR race for different consumer markets. Recently, Peruvian Central Bank allowed nine digital payment provider companies to operate with QR Code payments in the country. These agreements, transactions, and breakthrough decisions in digital banking have transformed the traditional methods of payments in uncharacteristic regions like Peru that is still a traditional cash-dependent society.
According to a recent Mastercard survey, 66% of respondents in Latin America and the Caribbean and 63% in the Middle East and Africa expect to use payment technologies such as QR codes in the next year. The adoption of new payment technologies such as QR codes, cryptocurrencies, and biometrics is on the rise.
Looking toward a post-pandemic society, digital currencies, biometrics, contactless, and QR codes are becoming more mainstream as consumer’s comfortability with them and understanding of them increases and the use of cash decreases. Trends like QR codes are introducing a gradual shift toward a digital economy and a shift that may eventually lead us toward a global cashless society.
With the pandemic still garnering much of the attention in 2021 and impacting how people shop, contactless shopping is more relevant and popular than ever. Digital merchants offering cashless options make purchasing more convenient and safer for all. As the pandemic continues to impact small businesses all over the world, QR technology is playing a crucial role when it comes to adapting and moving forward into a new generation.
Pandemic-led Changes To Cross Border Transactions in Latin America and Global Markets
New forms of digital payments and consumer behavior have grown rapidly across Latin America and the Caribbean in recent years, influenced by a pandemic-led acceleration. That includes digital wallets and cross-border payments. For 2021, that adoption is poised for further growth.
Cross-border transactions have simplified the digital purchasing options consumer have. These options continuously evolve as e-commerce continues to surge within U.S., U.K, Latin American, and many other European marketplaces. E-commerce has steadily competed for market shares from brick-and-mortar over the past two decades, but growth spiked since the beginning of the pandemic.
Cross-border e-commerce sales grew 21% in 2020 compared to 2019, while payments processor Worldpay found that last year 55% of online shoppers made a cross-border purchase. From luxury goods to everyday necessities, consumers are buying online more and from abroad. For both merchants and payment processors, this has increased the need for seamless, reliable systems to support cross-border payments.
According to Statista, Brazil alone was forecast to account for almost one-third (32.5%) of the e-commerce market in Latin America and the Caribbean in 2020. It was followed by Mexico and Argentina with approximately 28.8% and 8.5%, respectively. According to projections, various economies in the region are expected to increase their participation in the market in 2021, with Argentina and Mexico experiencing the most notable growth in online sales.
Digital transaction platforms and new payment methods have continued to grow in Latin America since the turn of the century, but during Covid-19, these avenues have been pushed even harder. Enabling bank transfers for cross-border transactions are a must for merchants in order to compete with new markets. A detailed personal banking strategy that recognises cross-border payments needs to be included when developing for a future post-pandemic. Countries are pulling ideas from other countries to establish rapport and build new target audiences to help improve their business strategy – which starts with the implementation of digital wallets and alternative payment options like cross-border transactions in their markets.
Options for Consumers
QR codes and cross-border transactions have been around for decades, but the pandemic showcased a shift to a remote lifestyle with more global transactions that need technology to keep society progressing. Businesses can now connect with pre-existing and new customers while maintaining Covid-19 friendly protocols with the help of payment merchants. These digital options have accelerated cashless and paperless opportunities, allowing for flexibility, security and growth when Latin America and the world needed them most.
According to Harvard Business Review, cash only accounted for 30% of transactions as early as 2017. Statista reported that US-based businesses processed more than $170 billion in cashless transactions in 2018 alone. Consumers are becoming more comfortable with innovative payment technology as years progress and the standard credit card continues to be the preferred method of payment over cash in the U.S.
In our world of digital banking, QR and cross-border opportunities commonly allow customers to make payments to multiple banks in multiple regions, a great technological advantage that allows simplistic and instant payments.
More banking and payments brands are actively pushing and advocating contactless payments and many new merchants are joining the party. Incorporating contactless payments options like QR codes and cross-border transactions encourages the adoption of new technology among millions of users, especially for merchant partners with retailers and other B2C companies that may bring more customers on board.
As businesses continue to return to in-person operations in Latin America and around the world, consumers and merchants will continue to rely on payment technology for added convenience, reassurance, and reliable banking options for better purchasing power. It is not likely to be disregarded when social distancing eases and may even provide more ways to elevate the consumer experience in the future.