How the Pandemic is Driving Demand for Payment Solutions

How can you keep up with the overnight widespread change and emerge even more competitively?

payment processing

Consumers demand more payment options than they did in 2019, before COVID-19. To provide the types of experiences their customers expect, merchants launched new processes, reengineered old ones—and turned to the channel for the payment solutions to make it happen.

Justin Zeigler, Director of Product at Datacap Systems, says, “The nationwide shutdown of person-to-person interaction pandemic forced an immediate transition to alternative payment methods. Virtually overnight, solution providers were scrambling to move commerce from traditional in-person payments to e-commerce alternatives.”

PJ Tierney, Vice President – Integrated Payments for EVO Payments, says, “The biggest shifts that we have seen would probably be the acceleration of digital payments adoption, including the shift from cash to card, the utilization of contactless solutions such as tap-to-pay and digital wallets, and increased demand for e-commerce solutions.”

Chris Lenz, Vice President of ISV Sales for North American Bancard, says solutions providers also saw changes in the types of solutions in demand in typically card-present environments, such as veterinary and healthcare businesses. “These solutions require more than just launching websites. They take new approaches from both a hardware perspective—Bluetooth, Wi-Fi, and mobile payment terminals—and a technology perspective—QR code, text to pay, and in-app payments for on-premises purchases.”

Why COVID-19 Is the Start of a New Era for Payment Solutions Providers

Zeigler anticipates that the widespread adoption of new payment processing services will continue. “Now that consumers have tasted the ambrosia that is frictionless payments, saved and automated ordering and integrated loyalty, many will expect this functionality as a baseline going forward,” he says.

Lenz comments that it’s also important to consider the impact the pandemic had on payments overall. “The industry drove prior changes—not the consumer. That shifted in the last year,” says Lenz. “Payment solution providers now have to keep with shifts in demand from consumers, rather than push to change the market.”

He says, for example, the transition to EMV was industry-driven. Banks issued cards, and from a consumer standpoint, they still had to go to a register and use a card – but instead of swiping, they dipped. “Now they don’t have to go to a checkout counter or hand someone a card. In many instances, the consumer is now making the purchase and payment before even getting to the merchant’s location.”

Tierney says sweeping and rapid changes have also created new challenges for the channel. “The immediate impact for the channel is meeting the demand for technology,” says Tierney. “Payment solutions providers will need to recognize the increased market demand for technology at the point of sale and evaluate the health of their merchants and payment partners accordingly.

Continued Change Ahead

Zeigler says that although the payments industry has changed more in the last five years than in the previous 20, expect even more change. “Prepare for payment alternatives on the horizon like ACH/FedNow and cryptocurrency to materialize and evolve,” he says.

Lenz comments, “In the long term, payment solution providers will have to find a way to stay relevant as P2P and P2B payments accelerate.”

Tierney adds, “Standardization of the payment experience through software, across all channels—both online and in-stores—is where we are rapidly heading. This innovation will bring a myriad of benefits for consumers, merchants, as well as payment providers, but it absolutely must provide a seamless experience that is built on a foundation of security and consistency.”

Advice from the Experts

Zeigler says changes in consumer behaviors are creating new opportunities for VARs and ISOs. “Solution providers no longer have to sell the concept of alternative payment methods because the benefits to both the merchant and consumer are clear thanks to the paradigm shift brought on by COVID-19.” The most successful solutions providers will consolidate in-store, above-store and alternative payments through the same processing platform to avoid unnecessary complexity for the merchant.

Tierney adds that communication and strong partnerships are key to helping merchants successfully implement digital payments. “Talk to your partners as well as everyday consumers to find out where there are lingering pain points with technological integrations at the point of sale involving payments,” he says.

Tierney also recommends:

  • Knowing your product stack and offerings so you can assist your customers through this transition
  • Finding a payment provider that can assist you through equipment subsidies, technology, and additional revenue streams
  • Upgrading all of your customers with the latest technology—or the competition will do it for you

Lenz says to bear in mind that reducing time to market will be critical since the change cycle is faster and will continue to shorten.

He also stresses, “Now, possibly more than ever before, we need to be true consultants to our merchants, especially in the SMB space. Helping this segment keep up with rapidly shifting trends in payment acceptance technology, many they may not even be aware of, is going to be critical to their future success.”

Zeigler says that it’s vital to evolve along payments and your market to give your business the best opportunities for success. “In an industry where solution providers are competing against direct-to-merchant POS-in-a-box offerings from processors, the channel needs to redefine its role,” he says.

“There is no longer a place for providers who are content to be ‘order-takers,’” Zeigler says. “Partner with vendors who are forward-thinking and with staying power, get educated on what functionality is currently available and what’s in the pipeline and get in front of the merchant’s needs before they ask,” he says.

He advises staying informed, conduct proactive needs assessments for merchants and make recommendations that include novel solutions that will save the merchant money or grow their revenue via new business—or both.