How Is the eCommerce Boom Reshaping the Financial Industry?
ecomTEAM event - key takeaways
We enjoyed attending this year’s edition of @ecomTEAM, one of the biggest eCommerce events in one of Europe’s fastest growing emerging markets, Romania. The conference brought forward many interesting insights for any global merchant that want to grow and scale their business in emerging markets, which we’re always looking to share with the industry.
As a leader in digital payments, PayU is uniquely positioned to capture evolving industry dynamics. This article highlights key takeaways from our panel discussion on eCommerce trends and the future of the industry in a post-pandemic world, including some noteworthy developments across emerging markets.
The pandemic sparks boom in digital payments
COVID-19 completely transformed the payments market and has been the catalyst for a seismic acceleration from cash to digital transactions. Around the globe, we have seen a continued adoption of mobile payments and this shows no signs of slowing down. In South Africa for example, PayU saw an impressive move to mobile payments with up to 85% of transactions completed on a mobile device in 2020, as compared to 50% in 2019.
In Turkey, zero contact with banknotes became the new normal, and this, in turn, made digital wallets an increasingly popular payment method, leading to a significant decrease in the cash withdrawal rate from ATMs in the country. In the Czech Republic, the share of cash on delivery has significantly declined and the expansion of Google Pay and Apple Pay has contributed to the growing popularity of modern forms of payments.
Overall, digital payments, once a convenience, have become a necessity. Given that new consumer habits are set to become preferences that persist long after the pandemic, there’s unprecedented urgency for merchants to be proactive as digital payments usage continues to grow.
The evolving dynamics of cross-border transactions
The complexity of the cross-border payments landscape is determined by various dynamics at multiple levels, driven by emerging technological innovations, shifting regulatory frameworks, accelerating international commerce and changing customer demands. These factors will continue to serve as a catalyst for innovation in global cross-border payments and finally break down financial borders.
One of the changing behaviors we have witnessed firsthand is a huge increase in online remittances. Even before the pandemic, cross-border remittances in regions like sub-Saharan Africa were predicted to surpass USD 67 billion in 2021. Furthermore, new regulations like the African Free Trade Area agreement, coupled with the right infrastructure and new technologies will pave the way for merchants in further expanding their eCommerce footprint into cross-border trade.
In a competitive, fast-paced, digital world, emerging markets represent attractive destinations for big eCommerce players. 85% of the world’s population live in emerging countries and expansion across these markets can bring tremendous opportunities and business growth for any big brands. In order to compete and thrive, merchants need to invest in the right technologies and partnerships, while financial institutions need to work towards technological solutions that make international digital payments as seamless as domestic ones.
The next Frontier in eCommerce
There are a few interesting industry-shaping themes emerging across key eCommerce verticals globally in response to the pandemic, which could represent what the new normal will look like. While no industry sector escaped disruption from the crisis, the pandemic has negatively impacted the expansion plans for certain merchants across mostly affected verticals, such as tourism, but also enabled others to capture great opportunities and reap business benefits across borders.
Our recent report “The Next Frontier: the most promising markets for emerging e-commerce leaders in 2021 and beyond” examines four of the fastest growing consumer sectors where PayU sees the biggest growth potential over the coming years: beauty & cosmetics, digital goods, fashion & gallantry, and education. Analyzing online consumer spending data across 19 emerging markets (including Romania), our report provides valuable insights that give online and omnichannel merchants the best chances of success when expanding internationally.
Preparing for now and beyond
The rapid acceleration of e-commerce also called for innovation of the digital payments landscape. As such, the post-COVID payments landscape will heavily revolve around the customer experience to accommodate the continued trend of online shopping. In this context, companies need to look for ways to optimize the payment process to ensure a seamless shopping experience for consumers - the most critical step for capitalizing on the post-pandemic eCommerce boom.
To follow our journey in the ever-changing payments and fintech sector, read our updates on the PayU blog here.