To say that the future of electronic payments is in a period of historic transition is an understatement.
Payments were already evolving rapidly, thanks to new technology changing consumer attitudes toward convenience and security. The COVID-19 pandemic accelerated that evolution and fast-tracked changes that ISVs and VARs must embrace to provide sustainable solutions for merchants.
Nothing illustrates the rapid nature of these changes like the 2020 holiday shopping season. In-store sales on Black Friday weekend fell 42%, while Cyber Monday sales grew 15% year-over-year for record sales of $10.8 billion (via Forbes). And that’s just the tip of the iceberg. In 2020, there was exponential growth across multiple platforms with contactless technologies leading the way. Here are five changes that will create new opportunities for ISVs in 2021 and beyond.
1A New Dynamic in Dining
Restaurants are embracing quick response (QR) code technology that eliminates the need for printed menus and paper receipts. QR codes provide patrons the convenience of paying when they’re ready rather than waiting for servers to bring them their bills. Add to that mobile apps and tableside terminals, and there is an entirely new dynamic in dining. The focus is now shifting from personal interaction to convenient, streamlined ordering and payments.
2Curbside Pickup and Buy Online Pick-up in Store (BOPIS)
Shutdowns and limited capacity are challenging retailers to rethink business models and how to retain customers. The shift to curbside pickup and BOPIS is being embraced by all businesses, from major retailers to local hardware stores. Order-ahead options are becoming more prolific, as are dedicated pickup parking spots in front of stores. Since the onset of the pandemic, 85% percent of shoppers significantly increased their use of curbside pickup (via Business Wire). ISVs and VARs that embrace shopping cart technology allowing consumers to order online and pick-up curbside or in the store are poised to experience significant market growth in upcoming years.
Limited capacity is also creating new opportunities for software developers that offer appointment setting and scheduling software. Salons, spas, healthcare providers, automotive repair shops, and fitness centers are transitioning to prescheduled, limited capacity business models that provide consumers with reserved time and limited availability. Unlike reservations of the past, the COVID-19 model comes with discipline. Consumers respond favorably to the “get in, get done, get out” model and continue to embrace this efficiency in a post-pandemic world.
4Delivery and The Gig Economy
Before COVID-19, the gig economy was already impacting the retail and hospitality landscape. Companies like DoorDash, Uber Eats, and Postmates were uniquely positioned to grow as America started to stay at home. Forbes predicts that the food delivery business alone will be worth an estimated $200 billion by 2025. Embedded technology that allows for easy integration to key players in delivery will be critical for POS companies in the food, retail, and service industries. POS solutions must accept online delivery orders and fulfill them as seamlessly as in-person orders to be successful in this new environment.
5Cash Discount Payment Models
As merchants seek new ways to remain profitable, another area of change is the shift of payment processing fees from merchants to consumers. Cash discount payment models, when properly implemented, allow the cost burden of accepting cards to be offset by a slightly higher price to consumers. This price includes a percentage increase that covers the associated credit card transaction fees. Merchants in verticals with tight margins are already implementing this strategy and saving anywhere between 2.5% and 4% that they would typically pay to payment processors.
As America’s buying habits continue to shift, both due to COVID-19 and the natural evolution of consumer preferences, it’s more important than ever for software developers to stay on top of trends in their respective industries. Those embracing new technologies that create secure, convenient buying experiences are poised to be winners in the new retail age.