eCommerce is growing rapidly, with worldwide sales anticipated to be $4 trillion in 2020. The evolution in eCommerce can be partially credited to the developments within financial technology, such as e-wallets, new payment options, in-app purchasing, and peer-to-peer lending and payments.
Fintech is a portmanteau of the terms “Finance” and “Technology” and refers to any business that uses technology to enhance or automate financial services and processes. The term is a broad and rapidly growing industry serving both consumers and businesses. From mobile banking and insurance to cryptocurrency and investment apps, fintech has broad applications.
As consumers have grown increasingly comfortable with online methods of shopping and online payment systems, fintech and payment innovations are making these online transactions much easier and frictionless. Payment systems are growing increasingly secure and efficient, making them attractive for consumers and businesses alike.
As fintech and other payment innovations evolve, the eCommerce market will continue to evolve with it.
Let’s look at three Fintech trends that will continue to evolve the eCommerce industry.
Increasing Global Possibilities
One of the primary benefits of new payment innovations is that payments can be seamlessly made across borders.
PayPal was the first big company that made it possible for the eCommerce to cater to new customer bases by providing the possibilities for global transactions, ushering in all sorts of other payment providers like Transferwise, Transfergo and even Western Union getting into the digital money-transfer game. Thanks to these advancements in payment systems and globalization as a whole, eCommerce companies no longer need to rely solely on their local market to increase sales.
The $1.75 trillion industry, which includes credit cards, account related liquidity, cross border transactions and domestic transactions for consumers and enterprises, will grow at annual rate of 7% over the next 3 years.
The Explosion of mCommerce
Thanks to mobile devices, payments now make up 34% of overall banking compared to 27% in 2011. That number will grow to 36% by 2021, driven by growth in developing nations in Asia and Latin America.
There’s another benefit to the global trend in payment innovations. Fintech benefits emerging markets by offering a secure space to store money for populations who cannot easily access banks. Growth Of M-Commerce Mobile ecommerce sales account for 34.5% of total ecommerce sales in 2017, and that number is growing.
While payments via mobile apps are nothing new, widespread acceptance of it is. Visa sales through mobile devices have grown 53% faster than sales made on a desktop computer. This opens up the possibility for eCommerce businesses to go mobile. With innovations such as Apple Pay and Samsung Pay, users can make a purchase easily, safely, and efficiently.
As mobile payments get easier, the likelihood of customer “Cart abandonment” decreases and eCommerce shops can make more sales. The way payment is made is an important component to customer experience, and fintech has paved the way for an experience rooted in confidence and convenience.
Frictionless Experience Through Increased Cost Saving, Efficiency And Accessibility
Frictionless payments refer to online and offline checkout processes where the barriers of buying have been minimized.
Simply put, they make buying easier for the buyer and selling easier for the seller, effectively reducing churn and decreasing shopping cart abandonment, while increasing revenue and improving customer experience. Moore’s Law, the principle that the speed and capability of computers can be expected to double every two years, is not dead. And fintech is a direct example.
Thanks to the continued advances in software and chip technology, paired with the spike in competition, emerging businesses can now buy financial software packages containing services that otherwise could have cost far more.
Fintech is helping eCommerce companies to evolve by increased efficiency and accessibility. It is changing the way consumers store and spend their money, shaping the future of eCommerce and online financial transactions. Payment innovations make it effortless for consumers to increase spending while also allowing for security, accessibility, convenience, and efficiency.
Consumers initially may have been uncomfortable with the prospect of digitally forfeiting their financial information, making eCommerce a less attractive prospect; however, advanced and increasingly secure payment systems have allowed eCommerce businesses to thrive like never before.
As fintech innovates further, eCommerce will continue to evolve as well.