As the demand for online purchases skyrockets, so there is a greater need for more diverse and effective payment solutions to benefit both buyers and merchants
The acceleration of ecommerce as the global Covid-19 pandemic revolutionises buying trends is giving rise to exciting new developments in the financial technology industry.
According to research by the United Nations Conference on Trade and Development (UNCTAD), e-commerce’s share of global retail trade grew from 14% in 2019 to about 17% in 2020.
And the phenomenon shows no signs of slowing down.
“Businesses and consumers who were able to ‘go digital’ have helped mitigate the economic downturn caused by the pandemic,” says UNCTAD Acting Secretary-General Isabelle Durant
“But they have also sped up a digital transition that will have lasting impacts on our societies and daily lives … Developing countries should not only be consumers but also active players and thus producers of the digital economy.”
It is not surprising that ecommerce’s meteoric rise has birthed new financial products and technologies that are able to align with needs of merchants and consumers.
In March, the New York Times described startup fintech companies as “hot tickets” among investors, and with good reason. Any company not investing in online banking and digital tools will be left behind as the economic landscape undergoes a complete overhaul.
The result is that some fintech companies have already begun to list on the New York Stock Exchange, and this is only the beginning.
Closer to home, FinTech magazine forecasts that the financial technology sector will be “critical to the recovery” of numerous countries in Africa in the wake of the pandemic.
Figures from early 2020 show that venture capital funding for African fintech startups had risen by 51%. It was reported that new fintechs raised almost $350-million (R4.9-billion) during the first quarter of 2020, with South Africa leading the way with $112m (R1.6bn) in investments.
Projects included virtual banking projects, consumer credit checks and finance apps.
Against this backdrop, it was a ‘no-brainer’ for South African internet auction and online marketplace bidorbuy to partner with local e-commerce payment solutions company Payflex.
Payflex allows shoppers to pay off their purchase over six weeks, interest free, which obviously is also to the benefit of merchants as it will attract more consumers to their platforms.
“Payflex allows buyers on the platform to get the benefit of getting the product they want right away, but the flexibility of paying that off over six weeks, is a huge advantage. There is no catch and there is no interest charged on the repayments,” says bidorbuy CEO Craig Lubbe.
While bidorbuy is yet to see which categories are most popular for payments with Payflex, Lubbe expects that it will enable shoppers to have access to products that would, in many instances, be slightly out of reach in terms of value.
The marketplace also recognises that there is an ongoing shift from more established methods of payment such as EFTs (electronic funds transfers), to credit card and other contactless payment options.
“We also expect to see further developments within the e-wallet payment space,” Lubbe says.
“Because payment options are evolving as the needs of consumers change, we truly believe that we should offer our shoppers as much choice as possible. Not only does this include the wide assortment of new and used goods for sale, but also that our shoppers can pay in the way that is most convenient to them. Not every option suits the needs of every customer and we’d like to be as accommodating as possible to all who transact on our platform.”
Payflex CEO Paul Behrmann believes the partnership with bidorbuy will be a “win-win” for buyers and sellers on the marketplace.
“Our innovative payment solution helps buyers on bidorbuy purchase what they want to today – and pay for it later at no additional cost. And for sellers on bidorbuy, it makes it easier to close a sale by making purchases more affordable to buyers,” he says.
“At Payflex our primary ambition is to introduce innovative debt-free payment solutions that make shopping more accessible and affordable to all. By adding bidorbuy as a Payflex store, we can now offer thousands of Payflex shoppers the opportunity to shop with Payflex at the best marketplace in South Africa. A big-win for Payflex shoppers – which is a big-win for us”.
As part of the launch campaign, Payflex and bidorbuy will be offering new bidorbuy Payflex customers a number of promotions when they use Payflex on bidorbuy.
The partnership is very much in keeping with the latest international trends.
In the United Kingdom, buy now pay later (BNPL) is the fastest growing payment method, with a growth rate that is double that of bank transfers and more than triple that of digital wallets, according to finder.com.
Its research shows that 37% of British consumers have used a BNPL service, and more than half of (52%) of BNPL users are using these services more during the Covid-19 period.
Similar statistics are being reflected in the United States, where a recent study found that 42% of respondents had used a BNPL service before.