Forecast and trends: how passed the first half of 2021 in the payments sector

We discuss the statistics and hypotheses of reports from different organizations. In this blog, I will not only talk about the forecasts that were developed in the ‘World Payments Report 2020’ from Capgemini Research Institute, but also draw a parallel between scenarios and trends that we observed in the first half of 2021.

The ‘World Payments Report 2020’ described the changes, achievements, and pivots in the payment sector in a difficult covid period. The payment landscape is constantly expanding as new players develop customer interactions, innovative solutions and new business models. Market dynamics are being modified. Payment offerings are changing from a standalone product to being part of an ongoing customer experience in which payment opens up more and more opportunities. For both retail and wholesale buyers, technology has changed the payment process to ultimately make it invisible as the end user’s expectations dictate.

According to the report, within the framework of the developing payment system in 2021, it is expected to receive a single solution with 4 components:

• Pay is a traditional way where traditional methods are used to complete transactions.
• Fast Pay offers instant processing of payments using technologies with immediate confirmation and transfer to the account.
• Easy Pay provides transaction security based on improved identification and authentication to make it easier for customers to make digital payments.
• Invisible Pay is a desirable end-state where payments are made on the back-end without direct client involvement for seamless authorization and seamless interactions.

As customers evolve, service providers go through three transformative stages: “Abide”, “Adopt” and “Adapt” to enhance customer engagement and achieve the single solution described above.

1. Abide describes conventional payment players who offer traditional payment methods using off-the-shelf instruments.

Abide for the Ukrainian user in 2021 means real-time transfers, 24/7 online support, a convenient application, bonus programs, etc. Many players on the Ukrainian payment market comply with and adhere to these standards.

2. Adopt is a growth phase where firms take initiatives in regulatory and efficiency technologies to meet parameters, become flexible and open the door to third-party partnerships that provide new market opportunities and customer segments.

For example, in 2020, the number of automatic payments has grown dramatically. During the pandemic and remote work, many had to change their usual transaction patterns. This trend continues in 2021. Banks, streaming services and others already understand that setting up an automatic payment to replenish a mobile account, transfer to another card, pay for Netflix or charity is a must-have for the user and an advantage for the company.

3. Adapt is the stage in which firms enthusiastically embrace processes and actions to fully meet the needs of customers/end users. Responsive firms are fully involved in the payment process for their “customers” and offer value propositions beyond payments.

Every year connecting and registering users in various applications takes less and less time. In 2021, market leadership will belong to those who develop digital identification of a person, for example, through the BankID System of the NBU. And also the BNPL solution — Buy now, pay later — has become a significant advantage in the eyes of users. The rapid growth of online commerce is giving rise to new payment models such as the BNPL. It is important for payment systems today to pay attention to the creation of technological ecosystems in order to implement an installment system for all payment methods.

As a reliance, regulators in Ukraine are also creating a dynamic landscape for success. As players innovate, new actors enter the market, harmonization and modern standards are set as regulators seek to maintain an optimal balance rather than stifling innovation.

In the first half of 2021, we see players in the market prioritizing digital excellence and meeting customer expectations. Innovators and traditional players are improving the customer experience by supporting and introducing new products, doing the work for users and providing a wide variety of payment solutions. Today’s trends are in line with the views of the ‘World Payments Report 2020’, and are very pleasing to all participants in the extensive payment system. Let’s see what the second half of the year will bring us!