Ecommerce debit card payments are becoming increasingly popular. The pandemic has turbocharged eCommerce debit card payments, fueling a move away from cash. Payflex outlines why eCommerce debit card payments are fast becoming a preferred payment method:
Contactless the new normal
The contactless trend was on the rise prior to the pandemic with card-not-present transactions representing 27% of all debit transactions. But contactless payments are now more critical than ever before due to the pandemic.
2020 was the first time many used contactless payment methods. These payments are now regarded as ‘the new normal’, and used for every day purchases. In a Mastercard global consumer study, 75% of South African consumers said they use contactless payments.
Youth gravitate to eCommerce debit card payments
Younger consumers are taking on less credit card debt compared to previous generations. This generation of consumers grew up in the shadows of the 2008 recession. As a result, they are far more weary of interest-bearing finance options than their parents were.
For this generation, a credit card represents debt, interest, and fees. And that’s where alternative solutions like eCommerce debit card payments and buy now pay later come in. 52% of Gen Z and 41% of millennials prefer to use debit cards, according to Deloitte research.
In addition, many consumers may have struggled to access credit due to lenders tightening their requirements. Others are simply less likely to use credit during the current economic uncertainty.
Data from a recent TransUnion Survey confirms this,finding the credit card is the only credit product to show high levels of continued origination decline since the beginning of the pandemic (down 23% YoY in Q2 2020, 63.2% YoY in Q3 2020 and 48.6% YoY in Q4 2020).
Evolution of debit cards
Debit cards have undergone an evolution in recent years, becoming either contactless or virtual in the form of mobile or digital wallets.
The Global Payments Report 2021 confirms this, finding the use of mobile wallets exceeded cash for the first time for in-store payments. At the same time, it predicts that digital wallets will account for more than half of all eCommerce payments worldwide by 2024.
Similarly, alternative and flexible payment platforms like Payflex, have experienced significant growth, as consumers seek interest-free payment methods as well as great transparency and control over their finances. In fact, many consumers are using their debit cards to buy now and pay later.
This growing appetite for alternative payment platforms will further drive demand for eCommerce debit card payment solutions.
Where to from here for eCommerce debit card payments?
Debit cards have become one of the most frequently used payment methods in the UK, used for four in ten payments. While in the US, debit payments volume increased 21% year-over-year. Closer to home, South Africans will follow suit. Especially in the face of continued economic instability and the recent third wave of the pandemic.
The pandemic will continue influencing payment trends and consumer spending patterns. As such, eCommerce debit card payments will remain a preferred way to pay for many.
Therefore, eCommerce merchants need to ensure that they cater to evolving payment preferences. This means offering a host of payment methods at checkout including eCommerce debit card payment options. Those who don’t risk, getting left behind in an increasingly competitive eCommerce marketplace.