For most of us 2020 isn’t going to be a year to linger fondly in the memory. It’s been a monumental slog in the face of grim news and little cheer but from a payments perspective we’ve seen an unsurprising surge in interest in all things payment related.

People have moved from cash to electronic payments – contactless transaction numbers have soared. People moved from face to face purchases to online. And, there’s been a ton of stress on payment systems as people have demanded refunds for holidays and flights they couldn’t take due to various travel restrictions. It’s been a year like never before.

We can expect this to be exacerbated over what will likely be an extended Black Friday and Christmas holiday shopping period. Online payments are expected to grow even though economies are in recession. For us in Europe it’s the last hurrah before PSD2 requirements on strong customer authentication come into force on January 1st. Merchants and payment companies will be well staffed on News Year Eve as they wait and see how the systems will hold up, and what sort of abandonment figures they’ll see as puzzled customers are presented with confusing authentication screens. We can probably expect a flood of concerned calls about phishing which are actually Strong Customer Authentication requests.

Yet, so far, the payments industry has performed credibly in the face of unprecedented change. Systems have, by and large, proved to be resilient and robust. Payment service providers have been innovative in enabling merchants to accept new payment types. New, higher, contactless limits have been introduced largely without issue. Contact free payment methods have been deployed quickly. We’re seeing widespread deployment of QR codes for non-payment purposes – for contact tracing and contact free food ordering, for instance – we can expect QR triggered payments to follow.

Perhaps the biggest plus of all for the payments industry is how people have adapted to the new environment. Consumers are very resistant to new payment technologies and for good reason – they trust what they know and will only reluctantly use something they don’t understand. A world full of scare stories about how insecure contactless or online payments doesn’t help. However, they’re also endlessly innovative when pushed into a corner, and this has been seen strongly in 2020. People who’d previously been cash only have found themselves using cards. People who’d never shopped online before have found themselves browsing and paying. Mobile payments have surged. Where people have been forced to they’ve adapted – and they’ve found it OK, once they got over the initial barriers.

As an example of the underlying changes we’re seeing growth in the older age groups using online payments. In the UK over 65% of people over 65 made online purchases in 2020, up 9% from the previous year. The UK’s Office for National Statistics’ latest numbers show that online retail payments are up 60%, year on year.  You’d expect some reversion post-pandemic, but we’re unlikely to return to the old normal ever.

Some sectors, of course, have seen little cheer. The travel industry in particular has been seriously hurt by the pandemic. This isn’t simply a question of customers not wanting to travel, there’s also a serious public relations issue as stressed travel companies have used increasingly desperate means to avoid making legitimate refunds. Quite how that squares with asking customers for more cash for future holidays remains to be seen. It’s likely the business model for payments in travel is going to have to change.

So as we slide into 2021 on the back of increasingly good news about Covid-19 vaccines bringing hope of some kind of normality in the not too distant future we know that many of the trends we’ve seen in payments won’t reverse. People who’ve become adept and comfortable at shopping online will continue to do so where it makes sense and they’ll continue using contact-free payments in environments where it’s easy to do so.  It would be a big call to argue that POS payments are on the way out, but nothing that’s happened so far in 2020 would suggest otherwise.

This year Black Friday will merge, imperceptibly, into Cyber Christmas. Next year, as we’ll shortly see in our Live 5 for 2021, is likely to be both a continuation of trends and a break with the past. On 3rd December, Consult Hyperion will be releasing the Live 5. Our chance to reflect a little on the year that’s been but also an opportunity to think about the future and what societal and technological change is on the horizon for 2021 – how will our world of secure electronic transactions be impacted. Join us for our webinar at 4 pm GMT to find out more.

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