Many industries around the world are rapidly adopting online payments. For some, like retail, online payments have been an instrumental part of business for years. For others, they are only just starting to impact the way companies operate.
Below we assess how COVID-19 has spurred the adoption of online payments in four major industries, how those payments are being implemented and what impact they are having.
Nowhere has the rapid shift to digital and online payments been felt more keenly than in retail. The pandemic closed storefronts around the world and forced brands of every shape and size to focus their efforts online.
Businesses that prioritized online payments best weathered the pandemic, says Jordan McKee, a research director at 451 Research. Referencing a March 2021 survey by his company, McKee points out that more than half of the merchants who said payments were a strategic area of focus saw sales grow during the pandemic. By contrast, only 25 percent of merchants who said payments were slightly or not at all strategic saw sales grow during the same period.
Payments — online payments, in particular —are now seen as a way for stores to differentiate themselves from competitors, says the team at Oliver Wyman, who cites Amazon as a leader in understanding how payments represent “a strategic control lever” for businesses.
“The company offers countless forms of payment, checkout is fast and seamless, and payment is secure,” they write. “The Amazon payment experience is a differentiator: For the same product at the same price, users will often choose Amazon for its 1-Click button ordering. In addition to using payment as a pillar of its value proposition, Amazon has further used payment as a loyalty tool to expand its business and to capture larger market share and profitability.”
For retail brands to continue their success with online payments, offering a range of options is essential. Speaking at a virtual roundtable hosted by Retail Gazette and Checkout.com, Ian Harrison, CDO of The Fragrance Shop, says he was initially hesitant to clutter the checkout, but more payment options ended up driving more conversions.
“Having credit and debit card options alongside PayPal, as well as mobile payments such as Apple Pay, and buy now pay later (BNPL) providers including Clearpay and Zip has helped us – especially online,” Harrison says.
COVID-19 has accelerated the adoption of online payments in the insurance industry — an industry notorious for continuing to rely on paper checks after others have digitized.
Many insurers' efforts have focused on digitizing premium payments, reports the team at CB Insights. In response to growing demand from customers, more and more insurers now accept credit and debit cards, digital wallets, and even pay-by-text.
Insurers have also implemented online payments to speed up the claims settlement process. The vast majority (85 percent) of satisfied claimants renew their policy, says Mahala Johnson, the head of product management at ACI Worldwide, and fast claims are a big part of that satisfaction. But paying claims by check makes a contradiction of these expectations.
That’s why insurers are utilizing digital push methods to make payments faster. “In the simplest terms, this allows insurers to deposit money claims directly into the policyholder’s bank account via traditional ACH, Zelle, or Real Time Payments (RTP), push-to-card options via debit or prepaid card, or PayPal or Venmo stored value accounts,” Johnson writes.
“By incorporating real-time digital disbursements, insurance companies have the opportunity to meet, and exceed, the demands of their customers, accrue internal benefits and evolve, even during a global pandemic.”
Despite the numerous and unique challenges the healthcare industry faces during a global pandemic, many providers still managed to digitize payment infrastructures in response to consumer demand.
A report by InstaMed found that the vast majority of American consumers want to make healthcare payments in one place (82 percent) and prefer electronic payment options (85 percent). More than three-quarters of customers (78 percent) want online payment methods to remain in the future.
Healthcare providers have responded to demand in various ways, says Jeff Coppolo, a strategic payment expert at BlueSnap. Those responses include clinics accepting contactless and card-not-present payments like Apple Pay and Google Pay, and providers integrating payments into their practice management software so that patients can make payments in the same place they see their appointments and test results.
Both residential and commercial real estate payments are being digitized as landlords move away from physical checks and rent drop boxes to a more streamlined system.
There are many issues with the traditional way of collecting rental checks, says Rae Parker, a content specialist of customer growth at AppFolio. Traditionally, property managers have had to collect them from boxes at each building, manually create delinquency reports and track down tenants in arrears in person.
Online payments eliminate much of that work. They also allow property managers to expedite payments to apartment owners.
Demand for digital solutions is rising fast, says the team at PYMNTS. “For example, one online rent payment provider service recently noted that applications for digital payment solutions rose 20% in 2021 compared to application levels before the pandemic.”
It’s also prompting businesses to look into other emerging payment methods, like digital currencies. RTLY Capital, for instance, has announced it will give real estate agents the ability to be paid in cryptocurrency, according to PYMNTS.
Is Your Industry Next?
Businesses of all kinds are rapidly adopting online payments, and executives must consider how to integrate their own solutions —whether that’s through a third-party service or a custom development.