The eCommerce revolution is in full swing, and there's no turning back. Brick and mortar stores have been closing at an alarming rate over the past decade, while online sales continue to surge.
According to Statistica, worldwide eCommerce purchases will reach US$5.4tr in 2022. So what is driving this significant shift? A big part of it is the rise of fintech, the fusion of financial services and technology.
This feature article explores the fintech eCommerce revolution in detail, including some of the key technologies and trends in play.
Fintech trends in eCommerce
One of the most recent fintech trends to hit the eCommerce space in recent years is BNPL, or buy now pay later. This involves a merchant extending credit to a customer, who then has a set time to repay the debt.
"Now the eCommerce companies also give the option to pay in instalments. This policy helps them to attract more customers," said Christian Velitchkov, Co-Founder at Twiz LLC. "This payment type is usually preferred for large purchases."
BNPL is also a good way of providing financial inclusion to those who may not have access to traditional credit products. Furthermore, it gives buyers a sense of flexibility and control over their spending.
"Increased offerings of 'try before you buy' and 'buy now, pay later' will continue to pay dividends for eCommerce companies that invest in them," said Gregory Zakowicz, Senior Ecommerce Expert at Omnisend. "These offerings give consumers increased trust in doing business with brands."
Another key trend in fintech eCommerce is the rise of mobile payments. This trend involves customers making payments using their smartphones or other mobile devices.
One of the advantages of mobile payments is that they are convenient and fast. Customers can simply scan a QR code to make a payment without entering any details such as card numbers or addresses.
For example, there has been a tremendous increase in mobile payments usage in Brazil, accounting for 8% of all e-commerce transactions based on research by JP Morgan. This fact is primarily due to the widespread adoption of smartphones and the growth of fintech in the country.
Making payments in real-time while using a chat interface is another trend in fintech eCommerce. This trend involves customers making payments using chatbots as a convenient way for customers to make payments, as they can do so without leaving the chat interface. They also provide a more personalised experience, as chatbots can remember customer preferences and behaviour.
Integration with existing messaging apps are another category of chat commerce, and these involve companies integrating their payment services into existing messaging apps such as WhatsApp, Facebook Messenger and WeChat.
"Businesses will add new mobile channels within their existing systems to reach more customers. More personal, targeted, and relevant communications and checkout experiences will enhance customer experience beyond standard messaging," said Pieter de Villiers, Co-Founder, and CEO of Clickatell. "Chat Commerce will enable buying, paying, and selling through more personal interactions between the consumer and merchant, including eventual automation and smart chatbot-powered interactions."
As most customers are familiar with the process of making a purchase online, retailers are looking for ways to make the checkout process faster and simpler. One way of doing this is through single-click checkout, which involves customers making a purchase by clicking one button rather than filling out multiple fields.
According to Aman Ghataura, Head of Growth at Alphagreen Group, "Start-up fintech companies like Primer.io optimise payment gateways to show customers the most suitable checkout providers."
In addition, single-click checkout can help retailers increase conversion rates, making the purchase process faster and simpler. As a result, customers are less likely to abandon their shopping cart during the checkout process.
Another trend in fintech eCommerce is the use of data-driven technologies. This trend involves retailers using data analytics to understand their customers' purchase behaviour and preferences.
Data-driven fintech helps retailers to personalise the shopping experience for their customers, which leads to a better customer experience.
"Price optimisation and management software allow internal teams to bring in data, adjust pricing strategy, and deliver dynamic price adjustments in real-time to eCommerce while maintaining consistency with traditional channels," noted Lee Rehwinkel, VP of Science and Analytics at Zilliant.
Democratising access to sales
Another development involves making it easier for small businesses and entrepreneurs to sell their products and services online. One way of doing this is through the use of marketplaces, which are platforms where small businesses can sell their products and services.
"Digital assets like mobile apps, eCommerce stores - especially Shopify and Amazon stores - blogs, Saas companies, and other online businesses are the hot new alternative asset class for acquisition investors and digital entrepreneurs," stated Blake Hutchison, CEO of Flippa.
Of course, there are also problems with the lack of some solutions. "Ecommerce is exploding, yet the industry is still lacking sufficient financial solutions that serve small and midsize international merchants," added Ricardo Pero, CEO of SellersFunding.
Some additional trends in fintech eCommerce include the use of cryptocurrencies and blockchain technology, as well as the increasing popularity of subscription-based models. QR codes are also being used more frequently as a way of making payments.
In addition to consumer-facing trends, there are also a number of business-to-business trends in fintech eCommerce. "Offering instant decisioning and credit to B2B customers can be achieved through an effective embedded payments experience to help e-commerce merchants increase sales and attract new, repeat customers who buy more, more often," stated Brandon Spear, CEO of TreviPay.
Cybersecurity is also a major concern, "as cybercriminals find ways to bypass login checks it is necessary to implement additional checkpoints that provide broader visibility and control over account activity," added Ido Safruti, Co-Founder and CTO of PerimeterX.
Furthermore, this post does not address a number of additional intriguing trends; nevertheless, the ones above provide a good representation of some of the most significant developments in this area.
Without fintech, there would be no eCommerce
As the fintech eCommerce revolution evolves, one can expect to see even more innovative and exciting trends emerging in the coming years.
"Advancements in Fintech have allowed e-commerce companies to remove friction from checkout allowing the brand to sell their products to more people more quickly," said Kirsten Shepard, Director of Enterprise Systems Product at Saatva.
In conclusion, it's an exciting time to be involved in the eCommerce industry, and without fintech, the industry would not have existed.
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