The last three years have made a huge difference in the economy and the way people consume overall. So many plans were shifted in a new direction as a response to the circumstances imposed by the pandemic. While in-person consumption was put on hold, everyone was sent running to their devices. When this happened, we saw a rise in e-commerce businesses as a means to conform to the demands of the digital marketplace. This trend is not going anywhere anytime soon and the technology fuelling this sector will see innovations to keep up.
One example of a company that saw a gaping void to fill in this industry is the Swedish Fintech company Klarna. They followed a simple concept of “buy now, pay later” which pertained to the confidence and convenience consumers look for. Their business model allows customers to make online purchases only after they’re sure they’re happy with the product. This should paint the picture of the types of businesses that are emerging from the shift. Klarna is just one example of many companies that have created a unique approach to the e-commerce sector.
This is an era where if a cell service provider goes down, the economy is put on pause. With immense reliance on technology, there will always be cause for concern but there will also be plenty of opportunities for businesses to capitalize on the market. The Fintech industry has done exactly that; they’ve recognized what’s convenient for consumers and what makes them comfortable reaching for their wallets. With knowledge of these triggers, companies are making themselves easily accessible through apps or websites which reduces consumer interest in brick-and-mortar businesses.
Now what must be considered is that this business model still has a long way to go from 2022 before it can be relied on as a regular form of banking. This is largely due to the frequency and severity of fraud and cyberattacks on digital banks. This issue derails a lot of the progress of the Fintech industry and is certainly something that developers will continue to fight against. However, once these companies get the bugs out and find a more permanent solution, the industry will be able to reach unimagined heights.
Digital payment processing trends are still new to society, though it is something people have reacted to incredibly well. At this point, the reliance on the sector is building, so let’s look at the trends to watch for shortly:
GaaS (Games as a Service)
The global gaming market is worth over $200 billion and is forecasted to double within the next twelve years. There are hundreds of millions of players all over the world who live and breathe online gaming. The GaaS model is designed to profit from this large audience through “microtransactions” in free-to-play games. Rather than charging $30-$60 for a game, developers can monetize and make the game a subscription rather than a one-time purchase.
By making it free and slowly introducing purchases to enhance the gaming experience, there is a consistent stream of purchases from each player. There is also constant attention being received from players as they will always want to have the latest and greatest that the game has to offer. As the excitement rises, so does the chance of players looking for upgrades and updates.
Q-Commerce (Quick Commerce)
How would you like to order something online and receive it within an hour? Half an hour?! Fifteen minutes?!? Don’t get your hopes up, this isn’t referring to your Amazon order of 53 items. The Q-Commerce sector is reserved for small items such as food, medications, self-care items, and others like this. This new model is a game-changer set to revolutionize delivery services and the idea of “delivery” as a whole. If it won’t come within an hour, is it being delivered? Or did you just “order it”?.
With speed being the draw for consumers (typically in and around 30 minutes), payment providers are under a lot of pressure to make transactions happen as fast as possible. Dark stores are also in a constant battle to provide faster service than the competition or risk losing the customer. This is a Hunger Games-style industry, people will pay more to receive quicker.
Buy Now, Pay Later (BNPL)
Recalling the example of Klarna, many companies are following the same trend to keep up with the aggressive demand for this business model. Consumers are drawn to the BNPL concept for many reasons whether it be budgetary, to avoid fees or interest, or simply not being able to pay for something at the moment. As BNPL services fill this void, it has allowed the market to reach a value of over $5 billion and is estimated to reach somewhere around $40 billion by 2030. Flexibility is everything to consumers today: the more freedom or uniqueness there is with the service, the more likely people are to try it. Everyone wants to believe what they’re using is better than what everyone else is.
Artificial Intelligence (AI) Processing
AI can be used to examine transaction data and identify irregularities without requiring supervision. This is beneficial for handling mass amounts of payments and data traffic while minimizing the number of errors. With these pattern recognition abilities, AI can track and store data that will allow payment processing to run smoothly and prevent credit card fraud. Companies are benefiting from AI from a security and processing standpoint. As this technology advances, we can expect to see AI playing an even bigger role in digital payment systems down the line.
What’s Next?
Businesses are taking advantage of these trends and making tremendous strides while creating value in the marketplace. This sector (just like any other business) is extremely competitive. The slightest hint of more convenience will be the deciding factor for consumers of e-commerce. Companies that are succeeding in this sector know this and structure their services around it to be that much better than the competition.
Written By Ben Brown
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