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GUEST COMMENT: The payment trends shaping 2021

Image: Fotolia

Image: Fotolia

2020 has pushed a lot of sectors to breaking point and has been a lesson for us all in the importance of agility, creativity, and sheer teeth-gritting determination. Many things have had to change. But in many ways, the changes we have seen in the retail industry have simply been an acceleration of what was happening already: The growth in online shopping, the adoption of cross-channel experiences (like click and collect), and an increasing demand for connected experiences.

Last year, even the most tech-averse consumers reached for their computers in order to buy groceries or catch up with friends. Retail turnover stemming from online sales grew significantly – from 19% of all sales in January 2020 up to 28% in October. This migration from brick-and-mortar stores to their digital counterparts will create a permanent behaviour change, both for consumers and for retailers. In fact, our research suggests that more than a third of UK consumers are going to shop online more often as a result of the pandemic.

With all this upheaval, it’s not surprising that the appetite for tech-enhanced experiences has increased. Our research also found that 41% of UK consumers are more likely to shop with retailers that use technology to improve the shopping experience. This includes adding new ways to pay.

As businesses look to bounce back following the pandemic, here are the key payments trends that once seemed revolutionary but that we now expect to become the norm in 2021.


As the world sought to meet hygiene requirements to stem the spread of coronavirus, there’s been a huge shift towards contactless payments and digital wallets. Our research shows that over half (59%) of consumers in the UK are concerned about the hygiene of payment terminals and would prefer to use contactless methods. The industry has done its best to support this. Back in April the contactless limits were increased. And Visa used its Tap to Phone to expand contactless payment availability to businesses.

Last year also saw the resurgence of the QR code, especially in the hospitality sector. The code was used for seamless experiences not just at point-of-sale but at multiple points along the customer journey, such as viewing menus and placing orders. It’s also been used on apps such as the NHS track and trace.

Our research found that 41% of consumers globally preferred cash, but since the pandemic they have switched to cards or digital wallets. This might not signify the end of the cash dynasty quite yet, but you can expect to see more cash-free brick-and-mortar businesses in the UK following the pandemic.


The pandemic has taken its toll on us all. More than nine million jobs were furloughed in 2020 and redundancies and job losses signify huge financial challenges. So, it’s no wonder there’s been an increase in retailers offering Buy Now Pay Later (BNPL) options and we expect adoption to grow even more next year.

In fact, this form of payment has become a deciding factor when online shopping. Nearly 10 million Brits have avoided retailers that don’t offer BNPL options, with nearly 9 million planning to use the service more in the future.


Payment tokens are used to replace a consumer’s sensitive data, such as a primary account number or card number, during the payments process. The sensitive data is replaced by a token in real time and used online in predetermined domains and payment environments. This means sensitive data is never used in the transaction and there is very little possibility that the token can be used for fraudulent activity.

Tokens make it even easier for consumers to securely save or share their payment details with merchants or on devices. This opens up a range of possibilities for one-click, or even no-click payments experiences. For example, tokens can be used if a consumer wants to purchase a film through a streaming app directly to their smart TV.

There are plenty of benefits for retailers as well, which is why network tokens will continue to rise in 2021. First, these seamless payment experiences help to improve payment authorisation rates and conversions. Using network tokens, provided by the card schemes, also helps businesses ensure they have the most up-to-date payment details for their customers. This helps to reduce involuntary churn and give each transaction the highest chance of approval.


With more transactions taking place online there’s sadly more opportunities for fraudulent activity to occur. Card-not-present fraud is now directly responsible for the loss of around £470 million every year in the UK. And, with UK adults spending an average of four hours online per day, it is no wonder that people feel more vulnerable to online fraud. According to a survey carried out by the Merchant Risk Council (MRC), 41% of respondents said that they felt just as, if not more, vulnerable to fraud than they did 12 months ago. As fraud rises and fraudsters adapt, so must our defences.Fraud is something that we have seen more frequently since the start of the pandemic. Payments data, AI, and machine learning will become even more important to help identify the shopper behind each transaction and reduce payment fraud.


Building on the theme of payments fraud, the PSD2 EU regulation deadline is around the corner. Businesses will have to upgrade their systems to comply with the new security requirements by September this year.

This is a good thing. PSD2 is an opportunity for businesses to re-evaluate their processes to create a better customer experience. If you view PSD2 as purely a compliance or security requirement then you’re missing a trick. There are plenty of ways to modernise payments processes to comply with PSD2 regulations which will keep customers safe without adding friction at the checkout.


SMEs are increasingly turning to SaaS platforms as a means of reaching a critical mass of customers quickly. In 2019, $1.97 trillion was spent on the top 100 online marketplaces with gross merchandise sales growing 18%. In an age where high streets are being forced to evolve, start-up businesses are rapidly moving from individual stores to relying on platforms to draw in revenues. So, it’s crucial that platforms and marketplaces can offer streamlined onboarding processes and rapid pay-outs.


Unfortunately, the pandemic has not disappeared and the difficulties that retailers faced in 2020 are likely to continue well into this year. This year’s success will likely be dependent on how well we apply our learnings from last year and how much retailers are willing to continue to adapt to work under such difficult conditions. Agility will be crucial. Understanding trends and developments in consumer behaviour will be key to success in 2021.


Myles Dawson, UK Managing Director, Adyen

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