Simas Simanauskas, director of partnerships at ConnectPay » PACA’s economic and political newsletter
Simas Simanauskas, Director of Partnerships at ConnectPay, shares his thoughts on the solutions that could shape the payments market in the coming year.
In 2022, the penetration of digital payments has reached 89%. Simas Simanauskas, Director of Partnerships at ConnectPay, shared what will continue to drive the payments market forward and what areas experts should keep a close eye on in 2023.
Create more dynamic shopping experiences
Automation continues to grow in many industries, including e-commerce. While some predict a bleak future where this trend could potentially lead to a loss of 34% of current positions, retailers are not so pessimistic. Some see it as a way to build on the existing buying process and improve it to guide the consumer seamlessly.
One such example is Bonobos, a US-based e-commerce store that connects its online customers with store staff who can support their specific requests. This hybrid approach to customer service management still has some challenges to address, such as increasing employee workloads. However, it speaks to the mindset of seeing automation as an opportunity rather than a threat to make the entire shopping experience more dynamic.
“Companies need to leverage the efficiency of automated processes to fine-tune their operations. When it comes to payment, we’re already at a point where if the process isn’t made clear, you’ve already lost the consumer,” says Simanauskas. “However, if done well, this is a chance to create highly personalized roles for a better user experience, improve services and gain an edge in the ever-competitive payments market.” »
A2A payments are increasing
Previously, experts estimated that account-to-account (A2A) payments would account for 20% of all global payments by 2023. While the exact number is difficult to determine, A2A payments have grown exponentially, with companies raising millions to continue improving the solution. This boom can be mainly attributed to the introduction of the open banking system; Third-party access to financial institutions’ data has allowed more competition to enter the market.
According to Simanauskas, A2A will continue to generate interest from merchants and fintechs, especially with the European Central Bank’s (ECB) efforts to make instant payments more widespread or the Federal Reserve’s plans to launch the system. states.
“A2A simplifies verification by eliminating cumbersome registration procedures and the need to enter long lines of complex information. In addition, direct payments from the consumer’s bank account to the merchant’s bank account minimize costs for sellers,” says Simanauskas. “The need to accelerate operations is evident in both Europe and the Atlantic, as this will bring greater operational efficiency and greater purchasing power to companies. »
Optimization for one-click mobile payments
Over the past five years, mobile commerce has grown on an upward trend: in 2016, it accounted for 52.4% in 2021, or 72.9% of the total retail e-commerce market. In addition, experts predict that by 2026, 60% of the world’s population will use digital wallets. However, in order to cash in on this trend, businesses must take the time to optimize mobile purchases, as they are currently leading the way. cart abandonment rate 86%.
“Businesses are not yet fully utilizing mCommerce, which means their payment flow is often not aligned with the simplicity and flexibility that mobile payments require,” says Simanauskas.
He cited Apple Pay as an example. It is currently one of the most popular pay-per-click solutions in the world and its user base is expected to reach 48.7 million people or 17.3% of the population in 2023. “Any merchant with such a large market share that doesn’t offer Apple Pay as a payment method will undoubtedly lose a potential revenue stream. The same goes for not including other digital wallets as payment methods.
Improve the checkout experience
Cart abandonment is a common problem in e-commerce. In 2022, the typical shopping cart abandonment rate was just under 70%. All of this stems from unclear pricing, multiple logins, and confusing user experiences. Improving the checkout experience will help e-businesses recover up to $18 billion in lost sales worldwide. If nothing is done, that figure could reach $4 trillion.
“Cart abandonment remains a challenge for many retailers. One way to solve this problem: engage customers from start to finish, from second to first adding their product to the cart. Also, reduce any possible friction,” he noted, citing Hollister as an example. Recently, it introduced the ability to redirect the shopping cart to third parties.
“We live in a fast-paced world, so timely nudges can serve as reminders to consumers and lead them to the desired outcome. »
Integrated finance, often referred to as Banking-as-a-service (BaaS), enables the integration of financial services into any business. The report found that 88% of businesses using integrated finance saw increased employment and 85% increased customer engagement. Therefore, the demand for the service is only expected to increase.
“Native finance enables non-financial businesses to start up, so its appeal has not diminished at all. Additionally, I think we can expect interest in BaaS to grow in other areas, such as retail. As an example, ‘buy now – pay later’ is a particularly expanding segment of in-car finance to watch closely in 2023,” said Simas Simanauskas.