2020 was a year unlike any other. The long-term implications of COVID-19 on individuals, communities, economies and societies are only beginning to be understood. The short-term impacts of the pandemic are however crystal clear – especially for small businesses.
Small businesses faced lockdown periods and saw operating restrictions and regulatory uncertainty when they were able to open. These challenges forced everyone to adapt quickly. While the burden was too much for many to survive, many small businesses not only survived but even thrived by drawing on their relentless spirit of innovation.
2021 is in many ways a transition year. There are ongoing challenges in many communities while others are further along in recovery. Businesses of every size are looking to rebuild smarter in 2021, adapting to a landscape of commerce defined by accelerating change in technology and consumer behavior.
The 2021 Global Payments Report covers how payments have changed over the last year and how the pandemic has catapulted payments technology further than previous projections.
E-commerce is now essential commerce
As pandemic restrictions closed physical locations, businesses and consumers flowed like water into new avenues. Online shopping spiked as home-bound consumers turned to their computers and especially their mobile devices to shop. E-commerce grew by 19% in 2020 over 2019, the highest global growth rate in five years.
In 2021 and beyond, e-commerce is far more than electronic commerce, it’s essential commerce. The ability to conduct commerce from a distance is no longer a nice-to-have, it’s a must-have for businesses of every size.
Now’s the time to accept digital wallets
Consumers are making online purchases with digital wallets more than any other payment method and they offer a classic win-win. Consumers benefit from having a safe, convenient and fast way to pay. Merchants that accept digital wallets enjoy higher conversion rates and greater customer satisfaction.
Digital wallets are the payment method of choice among global e-commerce consumers, representing 44.5% of e-commerce transactions in 2020. We expect that dominance to only grow, with digital wallets accounting for 51.7% of e-commerce payments by 2024. Digital wallet acceptance is a new necessity to thrive in the world of online transactions.
The last gasps of legacy paper B2B payments
The pandemic accelerated the need to manage cashflow more efficiently. Businesses everywhere still needed to exchange money under unprecedented economic stress. Many accounting departments were ill-prepared for the sudden shift to remote work. Checks still accounted for 29% of B2B transactions in 2019, with two thirds of those checks issued by small businesses.
The pandemic may signal the last gasps of legacy B2B payments. Small businesses need to pay and be paid by other businesses in order to survive and thrive. 2020 showed that reliance on access to centralized paper systems could prove costly. Upgrading legacy paper B2B payments to more efficient digital systems is now a critical path priority for all businesses.
Consider offering buy now, pay later options
Since the dawn of commerce, merchants have extended credit to their customers. That’s not always practical for small businesses today, especially when conducting business at a distance. Buy now, pay later (BNPL) options like Affirm, Afterpay and Klarna offer small businesses a convenient modern alternative to legacy layaway or in-store financing options.
BNPL is poised for explosive growth in North American e-commerce, projected to jump 181% over the next four years, from 1.6% in 2020 to 4.5% of payment volume by 2024. BNPL emerged as an e-commerce method but is gaining rapid popularity in-store as well.
Tap into the reliability of subscription payments
Long the domain of larger businesses, subscription-based relationships are often perfect for small businesses. Once limited to certain sectors like media subscriptions, today a new wave of subscription payment options and providers is opening doors for even the smallest businesses.
The nearly universal success of subscriptions, and any payment experience, starts with simple, secure, reliable payments. Subscriptions offer value for customers – personalized to their needs, always on and effortless to pay. Subscriptions are ideal for small businesses seeking reliable income and long-term value from their most loyal customers.
We’ve entered a new era where the velocity of commerce is accelerating faster than ever. Rebuilding our economies and businesses starts with a clear-eyed understanding of what’s changed and where commerce is heading.