The year still has about a dozen weeks left, but merchants and payments providers are already looking at their 2022 calendars and trying to determine what might be the next big innovation as the digital economy continues to evolve.
Lauren Craig, regional manager of the Americas at Checkout.com, said in the next three years, 40% of merchants will be looking to accept crypto as a currency, but the industry has a lot to do to prepare for that to happen at such a scale.
“But as more and more merchants [want the ability to accept crypto], I think the industry will then follow,” Craig told PYMNTS. She also noted that the crypto space is still developing, with innovations from both new players and legacy payment providers. Checkout.com has several clients focused on crypto and currently facilitates pay-ins and payouts for crypto exchanges.
In the shorter term, Craig said the focus is on the continuing acceleration of eCommerce and more industries that were “very card-present heavy” moving into digital sales, which may require merchants to seek new expertise and providers to optimize their operations.
“The approval ratio is much higher when you’re in-person — you expect that person to [still] be able to pay when they walk away,” Craig said. “Whereas in eCommerce, you do see that drop in approval ratio, so [the optimization of those online transactions is] really important for [businesses whose online sales volumes have] significantly increased.”
With the rise of buy now, pay later (BNPL) and other digital payment methods, Craig said she expects credit card usage to fall. According to PYMNTS research, 29 million Americans have used BNPL in the past year, with 48% of those consumers saying they are more trusted service providers than banks or credit card companies.
See more: Q3 Online Checkout Friction Index: Lack of Payment Choice Drives Cart Abandonment
“I think that people are doing it because they can,” Craig said. “They want the ability to buy something and not have to think about it and pay later.” As the user base grows, though, so do late payments, with one-third of users defaulting at some point, she said, and it remains to be seen how this impacts BNPL providers.
As more providers join the fray, Craig said she expects companies to start specializing by region and by niche, such as high-end fashion or electronics, especially as consumers start using BNPL for high-value purchases.
See also: The Next BNPL Horizon Will Expand Access to 83% Who Want to Make Big Ticket Purchases
“I think we’ll start seeing it used for a lot more cases than what we see today,” she said. “And I’d be really interested to see how these buy now, pay later companies differentiate from each other.”
Real-Time Payouts on the Rise
Checkout.com is also working to grow its Payouts product. Payouts launched in April and gives merchants the ability to make payments directly to recipients’ cards and bank accounts. Craig said merchants could use the solution that best suits their needs. Companies in the gig economy and global remittance space are already benefiting from the new solution, according to Craig.
“If you think of gig economy merchants who operate in many different regions, there’s only a handful of people that can say with one integration … you can get both pay-ins and payouts,” she said. “And when you think about that from scalability, when you think about that in cost savings, as far as development time and money that goes into implementation, it’s a very strategic way to help a company be able to come to market quicker.”
Checkout.com says the global real-time payments market was valued at over $10 billion in 2020; by 2028, the market is expected to grow to nearly $100 billion.
Craig said the ability to facilitate instant payouts also creates “very innovative use cases,” where insurance companies could provide funds to customers more quickly after an incident, for example, or airlines could send refunds to travelers when a flight is delayed or canceled rather than provide paper vouchers.
See also: MoneyGram Teams With Visa Direct, Checkout.com To Advance P2P Payments
“There are many different ways that we can approach this product and make that customer experience a lot stickier, a lot happier and just very unique,” Craig said.
Supporting eCommerce Growth
To meet the increasingly global digital needs of merchants, Checkout.com earlier this year acquired Estonian software development firm Icefire, which added 115 new developers to the company in an effort to meet its goal of increasing technology and product employees by 60% in 2021.
Read more: Checkout.com Acquires Estonian Software Development Firm Icefire
“We’re making sure our platforms can handle this expansive growth of eCommerce … and just ultimately trying to support our customers in their growth as best as possible,” Craig said. Among the key areas of focus for Checkout.com are improving merchants’ performance and expanding its fraud prevention offering to track new trends.
“We do see that fraud will also start moving more to the eCommerce world, and they’re going to find new and innovative ways to infiltrate the eCommerce world, which means that PSPs [payment service providers] like ourselves need to also be innovative with our approaches,” Craig said.
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