Close this search box.

GUEST COMMENT How Covid changed Christmas: the evolving role of payments in ecommerce

Image: Fotolia

The UK’s second national lockdown came with only a few days’ notice, coinciding exactly with retail’s busiest trading period. The impact of evolving social distancing rules has been tumultuous. With non-essential brick and mortar stores closed and consumer spending once again curbed, the entire industry is feeling the pressure and uncertainty is high.

Getting the next few weeks ‘right’ will be pivotal. Black Friday, Christmas and Boxing Day sales are critical peaks that, if capitalised on, could represent vital growth and recovery after a difficult year. But what does the wider macroeconomic uncertainty, expected rises in online sales volumes and a need to reduce operational costs and drive margin mean as ecommerce players prepare for the busiest shopping period of the year? 

Payments, therefore, – as a key touchpoint in customers’ experience with a retailer – is quickly emerging as a key strategic pillar in any retailers’ plans for recovery and growth. 

Here are the key trends retailers should expect:

1. New customer base, new competitors

The pandemic has seen new user groups with particular payment preferences taking to the online world for the first time. According to a Mintel report, following the first national lockdown, 42% of Britssaid they had done more online shopping since the start of the pandemic. Additionally, the over-65s were as likely as the average consumer to have shopped more online since the start of Covid-19 (43% versus 42% of all adults). That being said, Gen Z and Millenials remain the consumer segment that is most engaged with ecommerce and is expected to continue to drive online shopping sales. As it stands, 63% of brits under-45 own a delivery pass subscription service such as Amazon Prime. In the US,9% of consumerssaid they purchased something online for the first time following the implementation of social distancing rules.

These customer segments will have different comfort levels, preferences, expectations and security concerns when it comes to processing payments online that retailers will need to address. Adopting a progressive payments strategy which incorporates a variety of payment methods will provide consumers with greater choice, broaden an ecommerce provider’s total addressable market and boost conversions.

2. The rise of Buy Now Pay Later

A fluctuating economic climate has created demand for flexible payment plans supported by the likes of Klarna. The popularity in this model is evidenced by the number of competitors emerging in this space. 

As online purchases increase and consumers look for more secure ways to pay due to Covid-19, buy-now-pay-later has accelerated, representing a 39% year-on-year increase in the proportion of buy now, pay later payments in the UK in 2019. By making these additional services accessible to their customers, retailers can help provide shoppers with additional flexibility, allowing them to buy with confidence, especially in these difficult times.  

3. Rapid innovation cycles and unprecedented customer expectations

Technology that retailers were expected to adopt in five years is being implemented in mere months. Research from Growth Intelligence revealed that over 85,000 businesses have launched online over the last four months as lockdown sparks one of the most significant transformations the UK retail sector has ever seen. Mollie itself on-boarded more than 10,000 merchants in a single week. For many this will be their first online Christmas and first Black Friday. 

But not all online payments experiences are created equal. Ecommerce retailers looking to avoid checkout abandonment and boost conversion rates must understand how their checkouts can be re-architected with a smooth payment experience in mind. Real-time reporting will help them understand any issues as well as identify where value is being derived so they can adjust online offers and promotions accordingly. 

4.A strategic differentiator

The global recession induced by Covid-19 has thrust payments into the spotlight. The ability to pay whenever and however they choose has become a prerequisite for consumers looking for a familiar, secure and transparent payment experience. Increasingly, a solid and intuitive payment experience is emerging as a strategic differentiator for brands looking to maximise sales during this final quarter of 2020. If executed correctly, payments could well be a vital catalyst for growth, just when ecommerce retailers need it most. 


Ken Serdons, Chief Commercial Officer, Mollie

Read More

Register for Newsletter

Group 4 Copy 3Created with Sketch.

Receive 3 newsletters per week

Group 3Created with Sketch.

Gain access to all Top500 research

Group 4Created with Sketch.

Personalise your experience on