Bi-weekly roundup 4/19: latest payments industry news and trends

This week’s payment news roundup covers the first digital wallet from eBay, virtual cards for remote work expenses, new potential for BNPL, and more.

Committed to embracing innovation, eBay introduces its first digital wallet and announces storage vault for collectibles

Big news this month for eBay sellers, according to payment news company Payments Dive: The global commerce giant is debuting its first digital wallet in an effort to expand its payment capabilities. Merchants will be able to receive on-demand and scheduled payouts. Sellers can store their sales revenue and use it to pay selling expenses or purchase new items.

Additionally, eBay could secure up to $3 billion in assets over the next few years and become one of the largest warehouses of non-governmental assets worldwide with the launch of its storage facility and digital marketplace. Designed to securely stow and authenticate collectibles and luxury goods, the initiative — slated to launch next quarter — aims to promote more trust across its marketplace of more than 147 million active buyers.

Online merchants must prioritize customer experience and fraud protection, as consumer expectations shift throughout pandemic

Business Wire shared a new report detailing the attitudes and behaviors of online shoppers that shows how consumer expectations have shifted since the pandemic began. A strong customer experience (CX) and fraud-control processes are at the top of the list for more than 5,000 online shoppers across five major markets, according to ClearSale.

When in-person shopping became cumbersome and even unsafe during the pandemic, ecommerce adoption increased significantly. Thirteen percent of those surveyed made a digital purchase for the first time ever because of the pandemic.

Other key findings include:

  • Alternative payment methods are a must-have. Only 20% of shoppers under age 55 have their credit card handy when shopping online.
  • A seamless checkout process is more important than ever. Report findings said 35% of online shoppers will exit a website if the checkout process is too complex or takes too long.
  • Implement fraud analytics to prevent false declines. A whopping 40% of consumers will boycott a merchant if a legitimate online transaction is incorrectly declined.

Overall, the report gives ecommerce brands the framework needed to approach 2022 and beyond: Online shoppers will have little patience for merchants who don’t prioritize customer experience and fraud protection.

Spend management tech adopts virtual cards to accommodate remote work expenses

Virtual cards have been around for years, but the digital shift has prompted more widespread adoption as remote workers expense items away from the office.

A dispersed workforce has made it harder for some companies to track spending and ensure employees use the right payment methods and get the right approvals. Virtual cards — which add value for both buyers and suppliers — aim to eliminate these issues while improving the back office workflow.

Easily customizable virtual cards provide a specific spend amount within a certain time period, which allows accounts payable to consistently track spending patterns throughout the entire company.

Though non-digital transactions still occur, the shift toward virtual purchases is ongoing. The vice president of business development and director of banking alliances at a spend management software company told Pymnts.com that 80% of buyer-to-supplier transactions could be done electronically by 2025.

New account-to-account payment tools from Mastercard improve transaction success rates

In other payment technology news, Digital Transactions reports Mastercard’s launch of two new payments tools: Payment Success Indicator and Payment Routing Optimizer. They’re designed to determine the success of a transaction by leveraging open banking data and facilitate secure payments with more speed and confidence. The move comes after Mastercard acquired Aiia last year to expand its open banking reach.

Together, the tools work to find the best payment rail for the consumer and merchant to ensure a transaction goes through. The Payment Success Indicator allows the payment originator to check a user’s account balance and historical payments behavior. If the tool shows an account balance is available today but may not be next week, the Payment Routing Optimizer will recommend a same-day ACH payment.

A study from the network released earlier this year showed 74% of U.S. consumers are “willing to link their bank accounts to financial apps” to perform various payments functions. The survey said among Millennial and Generation Z consumers, around 90% have already implemented this functionality.

Mastercard said Payment Success Indicator and Payment Routing Optimizer are currently available in the rental home market and will expand to the following verticals that utilize ACH later this year:

Expect continued acceleration for BNPL with potential for offline spend, says equity analyst

Buy now, pay later (BNPL) continues to dominate payments industry news. According to Digital Transactions, RBC equity analyst Dan Perlin said new data from a Worldpay report “demonstrates the secular growth tailwinds for this payment method.” BNPL accounts for some 2.9% of worldwide consumer ecommerce spending in 2021, which is up from 1.6% in 2019.

Perlin said this data also “broadly support[s] a view for BNPL’s ability to capture additional share… potentially offline as well.”

While companies like Affirm, Block, and PayPal benefit directly from BNPL, Visa and Mastercard have “introduced application programming interfaces for installment-payment programs” so merchants can offer in-house BNPL programs.

Perlin said BNPL “helps to solve a number of consumers’ pain points” including:

  • Increased affordability for larger items
  • Aversion to credit cards
  • Inability to qualify for a credit card

Merchants benefit from BNPL, too, with higher average basket sizes (ABS) and more in-depth customer insight.

Conclusion

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