Will Consumer Payment Behavior Change After COVID-19? Sionic Mobile Says, “Definitely”

The coronavirus pandemic is proving detrimental to businesses, and consumers are reacting.

SMBs, corporations, and nonprofits suffer effects daily that they have never experienced before. Volatility and uncertainty surround many sectors, and there’s no definitive solution in sight.

With a fresh perspective on safety, consumer habits have changed. Everything from going to the grocery store to a simple greeting can no longer be taken for granted. This behavior will likely have lasting effects.

So, the real question is, will consumers change their payment behavior for good? Sionic Mobile thinks so. This change could finally tip the scales to mobile, digital, and alternative payments. Will plastic cards be a thing of the past?

Sionic Mobile Knows Mobile Payments

Our company spent years working with payment processors and security providers. As time passed, we finessed our payment prowess. In the end, Sionic Mobile created a secure, digital payments and rewards platform.

So, why are consumers using mobile and alternative payments more today?

First, they are safe. With tokenization, payment card information is secure. And, mobile payment transactions are safe using encryption. Processing is efficient, and fraud mitigation protocols are in place.

Next, they are fast and easy — no pulling out a plastic card. Apple Pay, Google Pay, and other digital wallets make paying at the point of sale a breeze. Holding a phone near the payment terminal is a far better experience than inserting a card.

Finally, they are convenient, and a stellar payment experience is a crucial element. Tech Donut predicts that by 2025, 65% of all settled transactions will be via smartphone. Evolving payment technology will likely push that number even higher in later years.

The Millennial and Gen Z Driving Forces

Younger, payment-savvy individuals are often early adopters of alternative payments. Millennials are the largest current generation. They grew up at a time when computer technology was transforming.

Gen Z embraced technology pretty much their entire lives with tablets and smartphones. It’s no wonder that these groups, particularly Gen Z, are paving the way to a new world of payments. They’ve become more accustomed to alternative payments than plastic cards or cash.

Stats from a recent article in Payments Journal reveal some insightful data:

(Original Source: Electronic Transactions Association)

• 40% of Gen Z consumers have made in-app payments, with 15% having done so on a regular basis;
• 34% of Gen Z consumers have used a mobile wallet, and 14% use them often. In contrast, only 10% of non-Gen Z consumers use mobile wallets on a regular basis;
• 47% of Gen Z and Millennials buy goods on their smartphones more often than any other platform. In contrast, 28% of Gen X and 10% of Baby Boomers prefer mobile shopping;
• 8 in 10 Gen Z still use cash, yet 53% like shopping in stores that offer contactless payments. Furthermore, 52% said they would be open to trying voice-enabled alternative payments.

Primed and Ready for Opportunities

There has never been a better time to innovate digital and alternative payments than now. Consumers are looking for new ways to manage their finances and make payments. In the long run, could this lead to a decline in the use of credit and debit cards?

Let’s take a look at neobanks. Some of you may not be familiar with the term. These direct banks operate only online, challenging traditional banks. There are two main types of neobanks. There are those that have their own banking license. Then, those that partnered with a traditional bank to provide those financial services.

Neobanks don’t have physical locations but offer consumers compelling products, savings, and benefits.

In the U.S., the top neobanks are Aspiration, AXOS, Chime, NOVO, Simple, and Varo. Each has a unique feature or focus.

Aspiration’s tag line is “Do Well. Do Good.” They offer socially conscious and sustainable cash management services and investment products. Aspiration wants you to make money while making the world a better place.

One of the first digital banks in the U.S. is AXOS. It’s a direct bank offering personal and business services. Offerings are online banking, mortgages, checking accounts, money market accounts, and CDs.

Chime provides access to online and mobile banking with no hidden fees. They offer direct deposit of paychecks up to two days early. They also have fee-free overdraft service. Chime partnered with The Bancorp for financial services.

NOVO dedicates itself to serving small businesses. It offers free checking accounts and simple online services for small business owners. Entrepreneurs and freelancers receive these services as well. NOVO partnered with Middlesex Federal Savings for financial services.

Simple focuses on banking and budgeting with a tag line “Master your money with one easy app.” Simple offers online checking, high yield accounts, shared checking, and certificates of deposit. It partnered with BBVA bank for financial services.

Closest to Chime in service offerings is Varo. It targets the underbanked and unbanked with online checking and savings accounts. Varo also offers overdraft protection and second chance banking. It partnered with The Bancorp for financial services.

The Opportunity — Sionic Mobile Can Help

There is a common, singular offering that neobanks currently do not provide. That is mobile consumer to mobile merchant payments. Many of these banks already offer an ideal app ecosystem ripe for providing payments.

New app opportunities could exist by adding a mobile payments and rewards component.

First, it could give consumers a daily app touchpoint and increase app usage. Creating a reason for consumers to open your app daily could be a win-win scenario.

Second, it could provide consumers with what they want. And, that’s an opportunity to pay at merchants using their phones and earn rewards for doing so. This is on top of the account benefits your app already provides, and consumers enjoy.

Third, this is where Sionic Mobile may come into play. Our ION Commerce Engine® (ICE) is a multi-tenant, dual-cloud platform. ICE facilitates secure mobile payments and merchant-funded rewards at the point of sale.

Our cloud-based mobile commerce platform can power partners’ existing mobile pay & loyalty apps. It may also enhance mobile banking apps, giving consumers more chances to use them.

ICE gives our clients and partners the option to white-label our mobile apps or enhance their own. Our mobile software developer kit (SDK) and content can enhance many existing apps.

The Turning Point

After the COVID-19 pandemic ends, will consumers be ready to go all-in on alternative payments? Not hardly. But, will they have changed the way they manage finances and make payments? Definitely.

Going forward, consumers will likely be reluctant to hand over their cards. They will also probably be more hesitant about swiping, dipping, or keying in PIN codes on terminals as well. The safety, security, and convenience of mobile payments will have lasting effects. This may also open new doors and create growth opportunities for alternative payments.

Online shopping, mobile order-ahead for curbside pickup, and delivery services are growing. Convenience services, once reserved for an as-needed basis, are now essential. A recent USA Today article echoes this. It states that buy-online for in-store and curbside pickup jumped 87% year over year. That timeframe is between late February and March 29. This according to data from Adobe Analytics.

This is only the tip of the iceberg. We see this trend continuing as people continue to practice safer shopping routines.

What may be more compelling will be how this proliferates throughout commerce ecosystems. Ordering from vehicle dashboards for curbside pickup will likely see new growth. Also, bourgeoning technologies like paying ahead for parking and fuel will become commonplace.

We hope that our ULink™ (universal linking) technology will pave the way to simplifying this. Sionic Mobile’s ULink is the first universal linking service, which consumers create one profile. There, they connect their preferred payment type to many merchants to pay for food. Consumers may also pay for goods and services or find parking, all through a single account.

Consumers searching, using mobile apps like Google, Chrome, Maps, and Assistant use ULink.

Looking Beyond

None of us know what the future holds. What we do know is that times and technology will continue to evolve. Every aspect of our lives will, at some point, change to adjust to this evolution.

How we live, where we go, and how we pay for things may be forever altered by the COVID-19 pandemic. Our safety and security will be further dependent on technology supplementing human interaction.