Key trends in digital payments affecting Kiwi businesses

The ‘Covid years’ accelerated the uptake of ecommerce shopping across all age groups and demographics in New Zealand. It’s no surprise in a country that has often led the way in adoption of new payment technologies, you may recall we were ahead of the curve in adoption of solutions such as Eftpos when they were in their infancy.

Covid pushed us into contactless transactions – we had to use Paywave and avoid touching anything, least of all cash. Those who had experimented with Apple Pay, Afterpay and other APP based payment options found them increasingly useful, those who had never tried suddenly had a reason to give it a go.

The payments industry advanced in an irreversible quantum leap during COVID-19, which will have massive consequences for years to come.” said Marc-Henri Desportes, Deputy CEO, Worldline, a global payments and transactional services company.

A recent global study by Mastercard found that Kiwis are enthusiastic adopters of digital payment technology with 86 per cent having used digital wallets, QR codes, buy now pay later, cryptocurrency and biometrics (fingerprint, facial recognition or gait analysis) in the last year.

Ruth Riviere, country manager New Zealand and Pacific Islands at Mastercard, said the pandemic was a catalyst for unprecedented and rapid uptake of digital payments. “New Zealand does rank highly in terms of the appetite. We are ahead of the global average in terms of having used at least one digital payment method in the last year.”

Of particular note for Kiwi businesses – 74% of respondents said that they would shop at small businesses with greater frequency if they offered additional payment options.

Key trends in digital payments SBA Small Business Accounting

As might be expected, millennials and centennials in the Mastercard survey, were more comfortable using cryptocurrency (41%) than Gen X and Boomers (26%), with 71% of millennials saying they were more open to using it than they were a year ago.

So what can NZ businesses expect next?

CoinHQ Will Enable NZ Businesses to Accept and Receive Digital Payments, Securely

Here are the highlights from a recent Price Waterhouse Coopers study outlining ‘6 Macro Trends Affecting the Future of Digital Payments’.

  1. Inclusion and Trust
    The World Bank has a stated goal to provide access to a transaction account to store money and send and receive payments for the vast number of adults around the globe who are not currently part of any formal financial system. As smartphone penetration is tipped to reach 80% by 2025, it makes sense for this to be digital via a mobile device, as it’s convenient and affordable. Therefore expect even more growth in mobile APP based digital payment solutions and improvement in systems to ensure we can have trust in mobile payment gateways, including data privacy.
  2. Digital Currencies
    A recent BIS survey suggests that 60% of central banks are considering Central Bank Digital Currencies (CBDCs), and 14% are actively conducting pilot tests. The introduction of bank controlled digital currencies and private sector cryptocurrencies are predicted to have the biggest disruptive impact on the banking sector over the next 20 years. Digital currencies are here to stay and will become increasingly important.
  3. Digital Wallets
    Digital wallets such as Apple Pay, the relaunched Google Pay and the rise of super-apps such as WeChat Pay and Alipay in China are becoming pivotal as a payment “front end” in the retail sector. Businesses can look forward to increased investment by fintech providers in mobile technology beyond retail payments to support business-to-business (B2B) payments and the digitalisation of supply chains.
  4. Battle of the Rails
    If the digital wallet is the front end of modern payment methods, the back end is the behind the scenes payments processing or payments ‘rails’. The most popular payment rails include Automated Clearing House (ACH), Mastercard, VISA (and other major credit card providers), PayPal, the RTP Network, blockchain, SWIFT, and SEPA. Regulators are forcing the industry to strengthen the payments infrastructure as many of these payment rails have been too slow, too expensive, and not good enough at enabling cross-border payments. We expect to see increased adoption of blockchain as a payment rail, as Central Bank Digital Currencies are rolled out.
  5. Cross Border Payments
    Users expect low cost, instant global payments, something traditional banks cannot provide. This frustration has led to a proliferation of new players and solutions that can provide the level of service more and more customers rightly expect. A recent pilot by Faster Payments Service, owned and operated by British retail payments authority Pay.UK, saw the fastest payment ever sent from Australia to a UK beneficiary, with confirmation of credit and funds available in just 36 seconds. Singapore and Thailand recently linked their respective national systems PayNow and PromptPay, allowing registered users on either system to instantly send money between the two countries using only a mobile phone number.
  6. Preventing Financial Crime
    Expect to see greater collaboration among banks, payment providers and the public sector in preventing fraud and money laundering, with expected trade-offs between cybersecurity measures and customer convenience. As these measures come into effect, expect trust in digital currencies and payment methods to grow, but the need to work with a secure and trusted platform to remain an essential requirement.

CoinHQ is a bespoke, streamlined platform to facilitate the management of digital assets for New Zealand businesses, particularly SBA customers.. Launching in Q4 2022, our base functionality is the ability to buy, sell and securely store digital assets with institutional grade custody.

As CoinHQ’s modules are rolled out, the ability to enable your business to transact in digital currencies will be a key feature – enabling you to accept payments and pay suppliers and staff in digital currencies.

Wherever your business is at right now in terms of adoption of digital payments technology, you can rest assured it will become an increasingly important aspect of your offering over the next 5 years.

CoinHQ is here to help you on that journey, providing a safe and secure NZ based platform with real customer support staff you can call for advice!

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