Jumping on the Contactless Payments Bandwagon
With more consumers adopting contactless payments, businesses need to get on board or risk losing out.
Concerns over hygiene and safety due to the COVID-19 pandemic has accelerated the trend towards contactless payments, as more consumers opt for such methods of paying using their mobile devices.
This shift in consumer behaviour is expected to persist beyond the current crisis, as “low-touch, high-tech payment technologies” become the norm for shoppers here.
Against this backdrop, local businesses who have not already done so need to put in place appropriate contactless payment solutions, or risk falling behind the competition.
To learn more about the evolving payments scene in Singapore, BiZQ speaks to Warren Hayashi, President, Asia Pacific, at payments solutions provider Adyen.
What are the trends reshaping payments in Singapore in 2021 and beyond?
The payments space in Singapore has been evolving for quite some time now, driven by the government’s push to harness technology to improve people’s lives, as well as the growth and popularity of global e-commerce. The pandemic further accelerated this over the last 16 months, and we have seen three key trends stand out in Singapore.
Firstly, the lines continue to blur between online and offline retail. Unifying the two became an issue of survival when the pandemic first hit Singapore. Retailers had to pivot quickly to sustain operations by making deliveries and self-pick-up options a reality. Our own data shows that half of the merchants who were able to successfully combine online and offline into a single platform, or what we call unified commerce, saw no impact to transactions during the pandemic.
The second trend is the rise in usage of QR codes and other contactless payment methods. The increase is partly driven by concerns around hygiene this past year, as well as Singapore’s Hawkers Go Digital initiative. The convenience of paying through providers such as GrabPay and ApplePay, is also fundamentally changing consumer behaviours, where all they need now is their mobile device or wearable to make a payment.
And thirdly, we are also observing the growing popularity of pay-by-instalments or ‘buy now, pay later’ schemes. While this is a result of increased convenience, it is also due to tightened household budgets. The good news is that machine learning algorithms have become more adept than ever at assessing risk instantaneously, which means that these instalment payments are no longer only limited to big ticket items.
How can contactless payments be positioned as the next frontier in payment for goods and services?
Contactless is already becoming the norm, and businesses should really consider including contactless payments options as part of their offering. While the driving force behind this is safety and hygiene, we expect this will continue as shoppers become more familiar with low-touch, high-tech payment technologies.
Tokenization is also gaining traction as online shopping surges. Our research found that 49% of Singaporeans shopped more online during the pandemic than they did before, and 54% have said they will be shopping more online than they did prior to the pandemic. In this new landscape, shopper recognition through payment data will help brick-and-mortar retailers retain loyal in-store shoppers when they shop online.
While many businesses adopted these options as a means to survival, consumers want these to become the norm as they enjoy the benefits, and want more flexibility around purchasing across multiple channels moving forward. They are also more likely to continue using technology to reduce person-to-person contact, such as self-checkout with mobile apps or kiosks, or using mobile point-of-sale terminals for contactless payments in-store.
How can the adoption of contactless payment contribute towards Singapore’s drive to build a Smart Nation?
Singapore’s Smart Nation vision is to harness and integrate technology to improve people’s lives. Contactless payments help to drive this as it facilitates simple, seamless, and secure transactions through technology, while making it convenient and hassle-free for both the customer and merchant.
For example, consumers are now using their credit cards, mobile devices, or wearables to ‘tap-to-pay’ or using their mobile phone to scan QR codes to complete a transaction. In a retail setting, these contactless payment options can reduce overall payment processing time and improve overall customer experiences too.
Ever since COVID-19 restrictions were put in place in Singapore, the e-payments format of ‘Pay by Link’ has also gained prominence as it allowed customers to pay through alternative means. Instead of asking a customer to interact with a point-ofsale payment terminal or come to your store, retailers can simply send them a link that takes them to a secure payment page. Adding this function enables retailers to easily expand to digital channels like email, chat, social media, and SMS, making it easy to let shoppers pay with their preferred payment method.
What are some benefits of, and challenges for, businesses offering contactless payment options to retain existing customers and attract new ones?
When it comes to contactless payment options, the benefits outweigh the challenges. The main barrier to overcome is cybersecurity, one of the biggest concerns to businesses and customers alike.
In fact, customer perceptions of security play a big part in the shift towards contactless payments and the adoption of it. To address these concerns, businesses can adopt a unified authentication solution, which allows consumers to opt for their authentication method of choice. As consumers become more familiar with secure authentication methods, confidence in the ability of e-payment companies to safeguard customer privacy is also boosted.
In terms of benefits, optimising the payment cycle will lead to greater experiences for both merchants and customers. On one hand, consumers today are expecting technology to enhance their day-to-day experiences, from getting to work in the morning, buying breakfast on-the-go, and shopping for groceries.
Retailers that offer contactless payment options stand out and attract these new customers. On the other hand, contactless payments benefit retailers by enabling them to facilitate business in a safe, low-contact environment, while providing a delightful user experience.
To truly reap the full benefits of going contactless though, businesses should prioritise unifying commerce beyond just offering multi-channel payments options. With unified commerce, payments from all channels, online and in-store, feed into a single platform to give retailers a full overview of consumer transactions, so they can upsell, cross-sell, build loyalty programmes and more.
This is a great way to retain existing customers, as traditionally, contactless payments meant that every customer was treated as a stranger unless they had a personal relationship with the in-store staff. But by connecting online and in-store payment data through unified commerce, customers are identified by their profiles which are linked to their payment methods.
What this means is that when a regular online customer taps their card at the point-of-sale payment terminal in-store, the single platform will automatically recognise the customer’s profile. This is another way to engage customers and reward them, such as through adding loyalty points directly to their card, inviting them to take part in consumer surveys, or helping them subscribe to an ongoing service.
What advice can you give to businesses looking to adopt contactless payments?
When adopting new payments options, be it online or contactless methods, businesses need to put the customer experience at the centre, rather than being around the brand or the store.
For example, brick-and-mortar store operators who are looking at adopting new payment methods now have the opportunity to reimagine their entire offline and online offering. We see the new physical store as a space for shoppers to engage with the brand, make purchases and even have them delivered to their homes. At the same time, merchants may even consider moving the purchasing and payments experience online or seek to provide a hybrid of the two experiences to provide options for consumers.
Retailers should also think about how they can unify the offline and online commerce experiences, as this is key in encouraging customers to return. By unifying commerce, merchants will be able to integrate checkout with customer loyalty programmes. Our research shows that four in five Singaporean shoppers prefer to spend with retailers who have a loyalty programme, particularly those that are available via an app or are linked automatically to their payment cards.