The Year In Data: Measuring 2020’s Payments Innovation

How We Will Pay: Home As The Consumer Command Center

This study showed that the home had become the consumer’s commerce command center as they changed their daily routines to do more of their work and more of their once-physical errands from home.

Key Data Points:

Consumers are performing 12 percent more activities at home in 2020 than they did in 2019 and making purchases during 12 percent of those activities, on average.

• 6.7 percent made voice-assisted purchases while shopping for groceries or retail goods in the last 24 hours
• 14.2 percent made purchases via mobile in the last 24 hours
• 55 percent shop on marketplace apps more now than before the pandemic
• 31 percent bank via app

Main Street SMBs: The 18-Month Outlook

Main Street small- to medium-sized businesses’ (SMBs’) confidence of survival has progressed as the pandemic has continued. PYMNTS research showed that 54 percent of merchants now feel that they are very or extremely likely to survive the pandemic, whereas 48 percent said the same in June. The recent news surrounding the approval of vaccines has helped further improve merchants’ perception of survival by 1.8 percentage points. Should a new lockdown occur, however, 8.5 percent fewer Main Street SMBs are hopeful of survival.

Key Data Points:

• 46 percent of SMBs experienced an increase in demand for their products or services
• 68 percent of tech SMBs grew during the third quarter
• 35 percent of retail businesses have experienced an increase in demand
• 30 percent saw a decline

Restaurant Readiness Index

This study assessed how restaurants’ customer engagement strategies have evolved since the pandemic’s onset, and helped identify the key digital innovations that can help restaurants deliver improved user experiences and boost their average unit volumes (AUVs).

Key Data Points:

• 60 percent of small restaurant operators have had their revenues decline since the pandemic began
• 56 percent of restaurants with customers who are using mobile order-ahead features more often have experienced increased revenues
• 92 percent of top performers allow their customers to place mobile orders ahead of time, and the same share also provide access to loyalty and rewards programs

Subscription Commerce Conversion Index: Adding Value With Subscription Features

This report detailed the surge in consumers’ use of subscription services and an overall improvement in merchants’ subscription offerings, which are good news, but subscription service providers should not rest on their laurels. Consumers are continuing to hunker down at home and engage with activities and content there, so a growing share of merchants are now offering features that provide the flexibility their customers crave, allowing subscribers to easily alter the terms of their subscriptions and choose from a variety of subscription plans.

Key Data Points:

• 15 million new subscribers signed up for 96 million new subscriptions between February and July
• 13 percent of subscribers said they would likely cancel their services in July, whereas 16 percent said so in February
• 52 percent of merchants allow subscribers to make changes to their plans, and three-quarters offer plan options

Accelerating The Real-Time Payments Demand Curve: What Banks Need To Know About What Consumers Want And Need

This study showed that consumers display significant interest in real-time payments once they fully understand them. This is especially true for certain use cases, and consumers are even willing to pay fees to ensure that recipients can access funds quickly and seamlessly. This is the case for nearly 40 percent of consumers making tuition payments, 35 percent of those paying their contractors, and 25 percent of those making P2P payments.

Key Data Points:

• Three out of 10 consumers say that having access to real-time payments is one of the most important features they look for in financial institutions.
• 70 percent of consumers who have used real-time payments before would be “very” or “extremely” likely to use the option again if it were available for free
• 50.7 percent of millennials believe it is “very” important to receive payments in real time

Cross-Border Merchant Friction Index

This study made the case that earning international customers is no easy task. It takes more than a slick website design and solid products to convince them to press “buy.” Taking full advantage of this opportunity requires that merchants successfully offer seamless eCommerce checkout experiences that cater to international audiences, understand the checkout features that help create friction-free, cross-border checkout and deploy the checkout features that are better suited to the nature and variety of products sold on global platforms. It scored the friction associated with checkout experiences on a scale of 0 to 100. The lower the score, the more friction-laden the checkout experience — and the more likely customers would be unable to check out. The higher the score, the easier it is to complete transactions.

Key Data Points:

• It takes only 78.5 seconds to complete a purchase on the average Top 20 merchant site — almost three times less than the time it takes to check out with Bottom 20 merchants.
• 56.5 percent of European sites use IP recognition compared to 32 percent of North American sites
• 12.4 percent more B2C merchants than B2B merchants offer discounts, for example, and 11.1 percent more B2C merchants than B2B merchants allow their customers to rate products and write reviews

Disbursement Satisfaction: Sizing The Choice Gap

Today’s consumers and microbusinesses have many options for disbursements, yet they receive a significant share of such payments through non-instant digital methods and even old-school methods such as paper checks. These payment types often deprive receivers of immediate access to funds. Instant payment methods promise to deliver superior disbursement experiences, but they have yet to gain traction — perhaps because most receivers are not very familiar with such options. This study assessed consumers’ and microbusinesses’ preferences for payment methods and their interest in adopting instant payments for future disbursements.

Key Data Points:

• Same-day ACH is used for only 29.2 percent and 20.3 percent of disbursements that are made to consumers and microbusinesses, respectively.
• 52.8 percent of consumers and 42.5 percent of microbusinesses are “not at all” or “slightly” familiar with instant payment methods
• 39.9 percent of consumers and 43.2 percent of microbusinesses are “very” or “extremely” likely to choose instant methods for their future disbursements

Remote Payments: How Life On Lockdown Has Transformed Consumer Spending

This report quantified the pandemic’s economic impacts as it marked an inflection point in the connected economy, accelerating a massive migration in consumer demand from the physical world to the digital one. Consumers living under stay-at-home orders and mandated lockdowns turned to their connected devices for social, professional and shopping experiences they had traditionally sought in person.

Key Data Points:

• The portion of consumers shopping and paying for retail goods online increased 34.9 percent during the past year, while the share of those seeking and purchasing retail goods in stores was down 24 percent.
• 23.7 percent of consumers bought groceries online in 2020, compared to the 18.6 percent of consumers who did so in 2019 — an increase of 27.4 percent
• Consumers’ use of mobile devices to help them shop in stores rose by 25.2 percentage points.

Buy Now Pay Later: Millennials And The Shifting Dynamics Of Online Credit

Millennials are big fans of buy now, pay later (BNPL), as this report showed. Not only do millennials make up an outsized share of early installment credit adopters in the United States, but also close to 40 percent of them would be very interested in using such financing options if they were more widely available within digital wallets.

Key Data Points:

• 68.2 percent of bridge millennials report using credit when paying online, while 66.3 percent use debit cards and 42.1 percent use digital wallets
• 11.5 percent of bridge millennials have used BNPL, increasing usage of the financing solution most since March, with use surging from 8.9 percent to 11.5 percent, a 28 percent rise
• 37.2 percent of consumers consider convenience when using BNPL, 36.7 percent consider the number of merchants accept BNPL, and 33.1 percent trust that their information is secure

How We Shop: Winning The Digital-First Shopper

This report showed that the demand for digital-first shopping is being led by consumers living in urban areas, 47 percent of whom have shifted from in-store retail shopping to online shopping since the pandemic began. Consumers living in urban areas are also 42 percent more likely to have switched to ordering food online than those living in rural areas, and 24 percent more of these urban shifters than their rural counterparts plan to keep ordering their food online even after the pandemic.

Key Data Points:

• 97.3 million U.S. consumers have now switched to performing at least one routine activity online
• 47 percent of all consumers who live in large cities have shifted from in-store retail shopping to online retail shopping,
• 76 percent of consumers in large cities who have shifted to buying groceries online want to keep doing so after the pandemic has subsided