Payments play a critical role in the success of any business, and this is especially true today. As consumers become increasingly reliant on digital payments and contactless technology, businesses must keep up with the times to ensure their customers have access to convenient payment options.
This shift towards digital payments has enabled companies to grow more quickly than ever before by expanding into new markets without having to worry about traditional brick-and-mortar infrastructure costs.
With the global Internet penetration rate reaching a record high of nearly 65%, and 5.44 billion people or 68% of the global population having access to mobile devices, the global market value for digital payment was estimated at USD 81.03 billion in 2022 and is poised to grow at a compound annual growth rate of 20.8% throughout 2023 – 2030. In Southeast Asia, although cash is still widely used, the digital payment adoption rate is particularly strong, with the use of online wallets accounting for 17% of payment methods followed by online cards (16%), contactless cards (11%), QR codes (10%), and mobile contactless options (7%).
The evolution journey of digital technologies
The evolution of digital payments has been a remarkable journey, and it continues to shape consumer behaviour when it comes to making payments. In the early days of online commerce, credit cards were one of the most common forms of digital payment. This was followed by e-wallet services such as PayPal which allowed users to store and transfer funds securely online so they could make purchases without having to enter their card details every time they made an online purchase.
With continuous improvements, digital payments have become much faster, safer, and more convenient. These systems are often backed up with fraud protection measures which can give people peace of mind when conducting transactions digitally. Additionally, thanks to the recent breakthroughs in big data, data analytics, and artificial intelligence, digital payment services have become increasingly personalised, catering specifically to each customer’s needs, preferences, and buying behaviours.
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During the COVID-19 pandemic, due to the sudden surge in demands for online retailing and contactless payments, innovations in this space emerged rapidly, enabling companies to streamline customer experiences while increasing security standards across all types of transactions. The period also witnessed the boom in mobile-first digital economies, making cashless relevant and further cementing the trend toward digital payments.
Alin Dobrea, the head of marketing solutions and brand partnerships at ZALORA, shared “Over at ZALORA, the trajectory is evident. Within a year, we can see how digital payment options have sustainably grown from 74.61 per cent in 2020 to 81.20 per cent in 2022. Inversely, conventional cash transactions simmered down from 25.39 per cent in 2020 to 18.80 per cent in 2022. Zooming in, we see this decline a little clearer: from the months beginning September 2021, cash transactions had steadily declined from 21.22 per cent to 14.98 per cent in September 2022.”
This same trend is felt by Malaysian B2B marketplace, Dropee, which services local retailers (sundry stores, mom & pop stores) to handle their inventories, credits & operations. “The pandemic somewhat accelerated the growth of digital adoption/acceptance amongst these clients as ours, as they were operating manually/offline all this while. We’ve seen an average increase of 70%+ monthly during the pandemic years. This has also trickled down to their behaviour, allowing them as business owners to be more receptive & inclined to pay online,” explained Aizat Rahim, Managing Director at Dropee.
Benefits of safe and secure payment technologies for businesses
Investing in proper payment technology can be an invaluable asset for businesses. The right system can save time, reduce costs, and help to create a better customer experience. Specifically, digital payments enable businesses to gather customers’ payment data more conveniently and extensively, generating around 90% of banks’ most useful insights such as who is purchasing what, when they do their shopping, and the most effective incentives. Hence, digital payment service providers such as PayPal often come with powerful analytics tools that allow their clients to track sales patterns over time so they can adjust their pricing and promotional strategies accordingly.
Nonetheless, consumers cited security and privacy concerns as the biggest deterrent when using digital payments. Aizat Rahim of Dropee elaborates that, “one of the critical challenges we have been facing is that the average order value (AOV) tends to be much larger than consumer purchases. Most of them are unbankable in which they do not even have a company’s current account, and due to that, anything above RM 5,000 (USD 1,100/SGD 1,500) would be a hassle for them to make those purchases online. Some businesses may prefer to pay for their goods and inventories through traditional channels such as bank transfers or cheques, which they may perceive as more secure and reliable.”
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However, the biggest challenge when it comes to traditional channels of payment is that they often take a long time to process. “Cross-border transfer takes days and even weeks sometimes,” shared Bell Beh, Co-Founder & CEO at BuzzAR.
This is what sets trusted payment service providers like PayPal apart: their ability to create an efficient, swift, and secure payment service. In fact, cross-border payments made through PayPal are capable of being processed within minutes. Moreover, by choosing a reputable digital payment service provider, businesses can build trust with their customers, alleviating their worries about identity theft or data breaches. This added layer of security gives consumers more confidence when shopping online, increasing sales volume as well as improving customer loyalty over time due to their positive experiences with the company’s payment process. For instance, research showed that just by adding PayPal as a payment option, companies can increase their conversion rate to 18%, and lower marketing expenses by 10%.
Such innovations show that it is possible to streamline payment processes that make them swift while still retaining security and privacy.
How digital payment technologies enable businesses to remain resilient
When the pandemic hit, many businesses had to pivot to offering their products and services online. This means in order to stay resilient amid market disruptions and economic headwinds, businesses needed a robust payment platform that offers a secure and reliable way to process payments, allowing business owners to maintain their operations despite the challenges posed by economic, world health, or environmental factors.
Over at ZALORA, one of their key features is to create different ways to pay for their customers. Their solution is “Offering a variety of payment methods that are convenient, secure, and flexible for customers, such as cash on delivery, digital wallets, cards, installment plans, etc.,” explained Alin Dobrea.
Moreover, another example of how payment platforms can help businesses stay resilient is through improved customer experience. With a wide range of options available for customers when it comes to making payments—whether it’s via credit card processing or online wallets—businesses can provide more convenient experiences for their customers. This allows them to not only retain existing customers but also attract new ones from different markets who may have been previously deterred due to the lack of access to digital payment.
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Besides, digital payments increase efficiency in billing cycles which helps businesses save time and money on administrative costs associated with manual processes. Payment automation solutions empower organisations to streamline billing processes, reducing overhead costs significantly over time while still providing accurate records quickly and without any human error, thus keeping operations running smoothly. PayPal tools such as invoicing and recurring payments enable users to seamlessly transact with different businesses without subjecting business owners to the burden of manual processing.
In sum, the recent global pandemic has highlighted the importance of having a secure and reliable payment platform to ensure business resiliency during disruptive times. Investing in the right payment platform is instrumental for any business looking to survive, let alone thrive, in such an unpredictable environment. This is why many reputable businesses have turned to reliable payment partners to create convenient, secure, and flexible payment options for their customers.
“PayPal has been one of ZALORA’s key payment partners throughout the years. This partnership allows our customers to pay online securely and conveniently. Our experience working with PayPal has been very rewarding and collaborative. ZALORA and PayPal have an ongoing collaboration based on leveraging co-marketing campaigns, promotions and cashback such as ZALORA Birthday, and Singles’ Day, as well as PayPal’s own initiatives such as the GiveBack campaign. By partnering with PayPal, ZALORA has enhanced its customer experience and loyalty, as well as its online presence and reach,” shared Alin Dobrea of ZALORA. Aizat Rahim of Dropee added, “It is one of the easiest/fastest ways to set up these local/micro businesses to make payments online.”
To explore reliable partnerships in digital payment that can help boost your business, click here.
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Photo by Karolina Grabowska via Pexels
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This article is produced by the e27 team, sponsored by PayPal
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