An increase in online sales and a decrease  in sales in-store as a consequence of the lockdown: this is how we could summarise the impact of the pandemic on purchases in Europe, but we know there is much more to it and that a more careful analysis of the data can provide everyone with a broader perspective of what has occurred. 

To understand what has changed in recent months, let’s take a look at some useful data as food for thought for online retail which must transform in order to keep up. The analysis of public data attributable to DESI (Digital Economy and Society Index), an index that monitors the overall digital performance of Europe and the progress of digital competitiveness in European Union countries, offers a snapshot of a situation of overall growth in digital accessibility alongside a growth in digital consumption. In terms of digital accessibility, in 2019, NGA (Next Generation Access) coverage increased to 86%, +3% compared to the previous year, and 17 EU countries are already at an advanced stage of developing 5G connections1. 

The tools for easier and faster network access are not lacking, nor is the consumption of digital services - increasingly satisfying needs which were purely analogue in the past. Even before the pandemic, 85% of European citizens regularly accessed the internet - with peaks of 95% for Denmark - and of these, 66% use internet banking services and 71% buy online. 

A general framework highlights a growing approach towards digital, in some contexts meeting typically analogue needs. A good example of this is the increase in those using digital services in the field of fitness. Estimates indicate users will have increased to 158 million in Europe2 by the end of 2020; Virgin Active Europe has declared a 150% increase in the use of its content since the beginning of the year. 

How to detect digital consumer needs

The DESI snapshot of data before the pandemic and lockdown period that marked much of Europe in the first two quarters of 2020, shows the conditions exist to successfully approach more and more consumers online.. What aspects should we focus on in order to capture the potential online market globally? 

A first solution is to integrate collection platforms that combine the advantages of digital with the opportunities offered by in-store customer management. Accompanying the classic strengths of offline – for example payment cards and more traditional instruments –  typical online payment instruments, for example digital wallets, can contribute to the loyalty and acquisition of new customers. New-generation platforms exist that let merchants request a payment by sending an email or showing a QR-code, offering customers the chance to pay from their devices, at any time and in any place.  

Offering alternative payments

In the European context, as well as internationally, the use of alternative payments beyond the more traditional options such as credit cards is increasingly common.. According to a report published by Bernstein Research, Apple Pay generates 5% of global card transactions, which will increase to 10% by 2025. The other digital wallets are also hard at work: just think that by the end of 2020 Google Pay and Samsung Pay are expected to have about 100 million users each, compared to the 227 million users of Apple Pay3. 

The possible alternative payments include more than just digital wallets. There are different types depending on the location of users, the type of payment needs (B2C or BTB), age or a combination of these elements. For example, MyBank and iDEAL are perfect for B2B payments, since the underlying tool is bank transfers. WeChat Pay, Alipay and Unionpay – two digital wallets and a credit card circuit – are the most widely used tools in China. With its platforms, KLARNA Payments responds to different needs, from B2B payment to payment in instalments, and is essential for those working with Northern European markets, especially in the fashion industry. 

Multi-acquiring Platform

Even more so today, focusing only on the European market in certain contexts and for certain product sectors – think of fashion, for example – can be a limitation. A successful strategic aspect involves identifying a payment gateway that can offer a multi-acquiring platform, as it brings multiple advantages and could be a differentiating element for revenue generation and cost reduction. 

The opportunity to connect to multiple buyers can contribute to an increase in authorisations and conversion rates, improving the shopping experience. Local acquirers have better knowledge of buyers with cards issued by issuers from the same country, resulting in higher authorisation rates and conversion rates in general. 

“Developing markets are driving growth in noncash payments, expecting a compound annual growth rate of 23.5% between 2017 and 2022.”

World Payments Report
2019 | Capgemini

Fraud Prevention and Circuit Tokenization

With the introduction of PSD2, the European Union has actively contributed to the reduction of online fraud, but one of the possible outcomes could be an impact on authorisation and conversion rates. Thus the challenge is being able to combine the Strong Customer Authentication (SCA) introduced by PSD2 with the highest possible conversion rates, without affecting payment security.  

Having a platform which is able to exploit the potential of artificial intelligence and machine learning in the identification of fraud and, in particular, in the reduction of false positives, i.e., genuine transactions mistakenly identified as malicious, with the advantages of circuit tokens, is key. Visa and Mastercard, to name two of the most well-known – which can further contribute to cart conversion rates at checkout thanks to the strategic role that this type of solution can have in the initial buyer authentication phase – becomes strategic, and can be a differentiating element in the customer journey itself. 

How Axerve can help

Axerve is part of Fabrick’s FinTech ecosystem and the first Payments Hub in ItalyA client base of over 100 thousand active customers makes Axerve the partner for business development. Ihelps large corporations, retail chains and small merchants to identify all of the opportunities that innovative payment systems create in terms of strengthening relations with the final customerAxerve offers consists of a single platform to accept all types of payment, from all channels, clearly, simply and securely, through physical and digital gateways, such as POS, e-commerce solutions, cash-in machines and innovative omnichannel applications.

To find out more about Axerve and the services they provide to the retail industry, click here.

This article was also published in The Retailer, our quarterly online magazine providing thought-leading insights from BRC experts and Associate Members.

1 Digital Economy and Society Index 2020
2 Forecast for the number of online users in the eServices Fitness market in Europe from 2017 to 2024 | Statista
3 Number of Apple Pay, Samsung Pay and Google Pay contactless payment users in 2018 and 2020 | Statista