Open Banking

Open Banking Use Predicted to Double [2023 Update]

According to new research, open banking users are expected to double up and reach 40 million by the end of 2021. On the other hand, payments are predicted to hit $9 billion by 2024.

Juniper Research has predicted that the total number of API technology users aggregating bank accounts and gaining access to new services would rise from 18 million by the end of 2019 to 40 million in 2021.

Another report named, “Open Banking: Opportunities, Challenges & Market Forecasts 2020-2024” found that the pandemic was a reason behind the increasing demand among consumers to aggregate their accounts.

The main motivation behind such a change in behavior was to gain better insights into one’s financial health and how to manage one’s money more efficiently. Since the COVID-19 outbreak people have become more conscious about how and where to make expenses, and how to cut down on their costs by making only the best purchases.

What is Open Banking?

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Open banking is the practice of securely sharing the consumer’s financial information with service providers, to help them provide better user experiences. The process enables you to bring all your accounts into a single place.

For instance, open banking can let consumers view account information, and even access their funds across multiple banks, all without switching platforms.

However, none of your sensitive information would be shared with any third party without your consent. You will never be asked for login details or passwords. The shared data enables service providers to develop and innovate better apps and solutions around banks and other financial institutions.

Open banking has shown consumers new ways to spend and manage their money and purchase more responsibly and cost-effectively. The practice of open banking has been incredibly beneficial for startups, SMBs (small- and medium-sized businesses), financial institutions (like banks), and consumers.

Additionally, open banking can also help businesses explore new revenue streams, have an extended market reach, and have better operational efficiency. It is a more sustainable service model, specifically for the underserved markets. App developers, too, can find it much easier to work with open APIs, saving time and labor.

Since open banking apps have proper access to your financial data, these solutions can recommend you the best products and services to save your money. This improved user experience provided by open banking tools boosted momentum for adopting open banking technologies and principles.

Key Points to Know About the New Research

  • Juniper reported that the rapid growth seen in open banking practices was pioneered in Europe. In Europe, regulators pushed beyond standardization and minimized the barriers to entry. The reports further showed that the practice was later taken up and advanced by the Chinese and the Far Eastern markets.
  • The principle of open banking originated from the 2015 European Union reforms, which were designed to help consumers switch between banks more seamlessly. The technology that supports and enhances this also enables users to make faster and easier real-time money transfers or payments. This alone has boosted the rise of numerous digital payment solutions and so-called “challenger banks.”
  • In the Juniper Research release, Nick Maynard, Juniper analyst, said, “Banks must embrace open banking” to capitalize and accelerate their ongoing digital transformation endeavors. Maynard further said that the practice of adopting open banking could enable banks to introduce more innovative services to their consumers backed by open APIs. Otherwise, they might risk their market position in the face of increasing, digitally agile competition.
  • The research company also states that payments will be vital for accelerating the growth of the industry. In fact, the total volume of payments to be made through open banking technology is predicted to be around $9 billion by the year 2024. It is mostly because open APIs are promising enough to facilitate more secure and protected “direct from account” payments.
  • Further, the report said debit and credit card providers should also adopt the new open banking practices and technologies to avoid falling behind in the market competition during this vital shift.
  • Previously in 2020, Juniper had already reported that open banking “has made significant progress,” in spite of the challenges faced due to the pandemic outbreak.
  • The report added that providing an enhanced open banking experience can be a compelling selling point that differentiates and labels the service provider as a part of a superior digital app experience.
  • Juniper researchers believe that open banking can create a high-level playing field across several markets in which regulatory intervention has resulted in the deployment of open banking practices.
  • However, Juniper highlighted that open banking can be both an opportunity and a threat for many traditional banks and other financial institutions. It is an opportunity because it offers improved consumer experiences and helps them get better deals while efficiently managing their money. It’s a threat because open banking exposes users’ financial information, which can be a boon for potential competitors gaining access to it. And the report states that this threat can be equal for all the players in a specific market.
  • Hence, established banks must build more innovative and advanced open banking services to provide high levels of security. They must offer better benefits to attract users from the still-developing or less innovative markets.

The Future

community banking

With the increasing popularity of open banking technologies, the practice opens doors to several other innovations to be made in the digital payment industry in the upcoming years. It is expected to cause rapid growth in the financial service industry as well, which is keen on taking consumer experiences to the next level.

Besides bringing financial freedom to customers, open banking is also expected to redesign the entire financial service industry and revise the current user flow to eliminate any potential friction points. This is why it is supposed to add value to the consumers while improving their financial lives in the years to come.

FinTech companies and banks have got a new opportunity and way to improve their services, and fix issues such as:

  1. Outdated banking solutions,
  2. Unintuitive user interfaces,
  3. The hassle of switching multiple accounts, and
  4. Lack of resources to bring innovative tools and technologies to the forefront

It’s clear how the adoption of the open banking model by the financial industry can positively impact the future of online banking. If the financial institutions’ transition to open banking becomes successful, then that day is not far when the banking infrastructure or the security and ownership of consumers’ data would not be a decisive factor anymore.

The factors that will matter are a smoother and more convenient user interface, and faster and more secure payment. The banking industry’s transparent future promises to offer seamless access to different accounts, payments, financial data, etc., through any third-party financial solution that can offer limitless financial freedom to users.

MasterCard Takes Contactless Payments to the Cloud

MasterCard Takes Contactless Payments to the Cloud

The past few months, especially since the pandemic outbreak, saw rapid development in contactless payments. The rising need to accept or adopt cashless or contactless payment modes was mainly in response to preventing the spread of coronavirus.

Nowadays, more advanced and smarter technologies are being deployed across several mobile devices, mostly due to factors like convenience, flexibility, and speed. And this is the reason why contactless payments are gradually being moved to the cloud.

contactless payments

With that, the card brand, MasterCard announced on January 11, 2021, that it has partnered with payments gateway NMI, financial tech company Global Payments, and IT services provider CEG (Computer Engineering Group) to launch its first pilot for the new cloud-based point of sale (POS) technology, called Cloud Tap on Phone.

Their aim is to broaden the acceptance of contactless payments for merchants since today’s consumers prefer paying for their purchases using mobile payments on their smartphones. In addition to enhancing and expanding its point-of-sale solutions, MasterCard is also working on improving its cloud POS systems.

mastercard contactless payments

The card network’s goal is to make its Cloud Tap on Phone openly available across various cloud-based environments. It will empower different solution providers and ecosystem partners to build their own cloud POS offerings by integrating newer features, tools, and functionalities. The process, therefore, is also expanding the acceptance of this new cloud-based payment and POS technology.

Nili Klenoff, Senior Vice President, Global Acceptance Solutions at MasterCard, revealed that the pilot for their new cloud POS system is based on three major dynamics in the marketplace:

  1. The digital shift, which she believes won’t change soon, even if the pandemic recedes.
  2. The acceleration in the need for adopting a contactless infrastructure within the retail industry.
  3. The advantage of switching to cloud solutions, which Klenoff believes is democratizing access to digital payments solutions and apps.

MasterCard has further said that in Q3 2020, contactless payments accounted for 41% of global in-person transactions. This was a significant increase from the previous year’s 30%. It indicates that amid the pandemic situation, this new offering received much popularity and acceptance.

mastercard contactless payments - Cloud Tap On Phone

As a result of this launch, other payment players have innovated their digital POS solutions to make them more widely accessible.

For example, towards the end of 2020, Visa came up with its Tap-to-Phone solution across several global markets. Just like MasterCard’s Tap on Phone solution, Visa provides businesses with a mobile POS solution that one can deploy without requiring any additional hardware.

Klenoff reportedly said that the company’s new cloud solution is designed to help users develop and expand the entire payment ecosystem. This is mainly targeted at enabling businesses to enhance their customer engagement and improve their shopping experiences.

This new system from the card company can be especially beneficial for SMBs (small- and medium-sized businesses), who are affected by the pandemic outbreak. Hence, the cloud-based POS solution might also accelerate the global expansion and evolution of digital transactions.

MasterCard Contactless Payments – Key Points

  • Cloud Tap on Phone is one of the card network’s next-gen innovative acceptance products. Furthermore, the software is hosted on the powerful Azure Cloud platform from Microsoft.
  • Microbusinesses and SMBs can gain access to a more cost-efficient contactless POS system without investing in any external hardware. MasterCard’s Cloud Tap on Phone can help businesses with fewer resources for purchasing additional POS hardware.
  • During the COVID-19 crisis, 34% of SMBs have adopted contactless payment solutions to optimize their checkout processes. This was a result of a study conducted by Paysafe that analyzed several SMB checkout processes used in various countries like the US, UK, Italy, Canada, Austria, Bulgaria, and Germany.
  • The Tap on Phone solution from MasterCard is also designed to expand the acceptance of contactless payments across global markets.
  • By introducing this cloud-based POS system, SMBs can also keep pace with larger enterprises that provide a number of different payment modes. It further enables MasterCard to increase their volume of payments.
  • Since the company’s new offering is spreading across numerous countries, businesses operating in markets where digital transaction infrastructures are developing, such as parts of Asia and Africa, are expected to gain access to this cloud POS system. It will further push contactless payment acceptance forward, thus accelerating MasterCard’s payment volume potential.
  • For instance, micromerchants running in India who have seen significant growth in cashless payments are more likely to take up the card network’s offering. Therefore, it will expand the overall acceptance of contactless payments in the near future.
  • Using the Tap on Phone solution, businesses, irrespective of their size, can deliver the best-in-class contactless payment expenses to their consumers via their own smartphones.
  • MasterCard’s new cloud system democratizes POS technology by converting an Android device into an acceptance device. It enables businesses to implement more contactless payment systems at checkout, while cutting down costs on external hardware terminals and other tools or features.
  • The system will help merchants to provide better curbside pay on delivery or pickup facilities for faster checkouts at the store, thus eliminating long queues. It’s a convenient, touch-free, cash alternative for consumers.
  • MasterCard’s cloud POS has become a new channel for businesses to provide more meaningful and value-added services to their consumers.
  • At present, MasterCard’s Tap on Phone software has been rolled out across 16 markets, including Asia Pacific, Europe, Latin America, North America, Africa, and the Middle East. Additionally, pilots are occurring with respective partners in Hong Kong, Costa Rica, Poland, Romania, Kazakhstan, Russia, Canada, the UK, Belarus, Turkey, and several other markets.
  • The card network’s new product development wing, MasterCard Labs, spearheaded the development of the cloud POS technology and its new cloud-based Tap on Phone product. The pilot working with CEG is following product testing sessions on the New York campus of MasterCard’s Purchase.
  • The product, Cloud POS, is a result of the company’s multi-cloud strength, meeting several businesses, financial institutions, partners, and consumers in the Cloud using innovative solutions and applications.

MasterCard has been planning this transition to contactless digital transactions for years. The rising demand for faster, safer, more convenient, and flexible methods to make payments has been a driving force behind this transition.

Today, consumers are willing to use this touch-free transaction experience permanently, even after the pandemic ends.

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Direct-to-Consumer Brands Flourished in 2020, 2021 Looks Even More Promising

The COVID-19 pandemic has been tough for a whole lot of industries, and in fact, some have yet to recover from the hurt inflicted. However, the previous year has unexpectedly accelerated the growth of some sectors, including the direct-to-consumer (D2C) markets.

2020 witnessed a sudden shift in the consumers’ behaviors, preferences, and purchasing patterns, compelling brands to implement major changes in their marketing strategies to cater to their unique needs. E-Commerce has been growing rapidly in recent years, especially in 2020, and the trajectory shows no sign of dropping, at least for the next few years.

A majority of the e-Commerce market is occupied by the D2C sector, mostly in response to the need for maintaining social distancing norms. For example, D2C brands like Casper and Warby Parker have been flourishing continually for quite some time now.

What is the D2C Business Model?

workers office use cad software design house interior 1

As opposed to the B2C (business-to-consumer) model, D2C companies manufacture and deliver their products directly to the end-user without involving any middleman or traditional stores.

B2C companies manufacture the goods and pass them over to a retailer who then delivers them to the customers. In B2C models, there is typically an intermediary retailer, such as Walmart or Amazon, who sell the products of various manufacturers.

The best part about D2C models is that buyers can enjoy a more simplified and streamlined shopping experience. Moreover, retailers no longer need to worry about meeting another company’s policies and standards or stocking up their shelves.

As a result, D2C merchants can develop more meaningful relationships with their customers and build a stronger brand image. This new business model also enables retailers to receive instant feedback on their products and services, thus creating more positive reviews and testimonials.

The Rising Popularity of Online Shopping

The pandemic has greatly accelerated growth in online sales and the D2C movement. After the WHO declared COVID-19 a global pandemic in March 2020, e-Commerce stores and retailers have witnessed a surge in online shopping.

In May, some businesses started reopening, which further gave a significant boost to page views and order counts. The next month saw a steady growth with order count and page view up by 57% and 75% respectively over the previous year.

Since people avoided stepping out, and most of them were working from home, they were ordering their daily essentials online. Since consumers were shopping online and didn’t have to worry about limited cash issues, they were spending more while purchasing online. And this was a huge plus point for retailers, especially the D2C businesses.

Why 2020 Was a Year for D2C Brands

The obvious answer to this is that brands are realizing the benefits of creating direct sales channels to connect with their consumers better. D2C strategies focus on enhancing customer relationships by offering more personalized solutions.

Further, the new business model is encouraging the development of more advanced recurring revenue systems, such as through subscription payments. Some of the key reason behind the success of D2C include:

  1. Creating customized experiences. Direct-to-consumer business models are flexible enough to offer more personalized services to buyers. One can have complete control over the entire experience chain, be it product delivery, sending personalized messages, or offering a seamless website browsing experience. In short, D2C brands aim at providing more value-added services by building an emotional appeal around them.
  1. Improvement of profit margins. D2C brands are now able to cut down distribution costs by eliminating all intermediaries. This further enables them to have greater control over their profit margins.
  1. Taking control of data. If you are maintaining an excellent customer relationship, then you probably have access to all your buyers’ data in real-time. For example, tracking and analyzing vital consumer data like purchase histories, patterns, behaviors, trends, unique needs and preferences, etc., allow you to understand your shoppers better.

Since you know your customers’ tastes and have an idea about what they are likely to purchase next, you can explore new strategies to address their requirements at the right time. For instance, you can implement new marketing automation tools and workflows or try clustering new audiences.

  1. Digital-first marketing opportunities. D2C brands are exploring various opportunities and possibilities of the digital world, getting global control over all their channels. They are working on regulating their brand and merging all their conversion efforts under one funnel. The journey towards D2C models might be through the development of more intelligent workflows throughout the product cycle.

Some Tips for a Better Future!

Now that D2C is going to take center stage for at least the next few months, here are some tips you can try to grow your D2C brand.

1.   Don’t Close Your Physical Doors Entirely

Although online portals have a stronger presence within your target group, there are ways you need to improve your customer relationships. Offering efficient services and quality products at your brick-and-mortar store is among them. In fact, some brands are also providing the option of order pick-ups from a nearby retail store.

2.   Cultivate the Right Talent

Adopting the new D2C model might mean a shift to a new business environment, mindset, and even talents. Whatever your strategies and upgrades, make sure each of your plans is centered around your customers. Use the right talent and hire the right teams to create engaging customer experiences.

3.   Look Beyond SEM and Social Media

Consumer

No, we are not saying that you must abandon special media marketing and SEM strategies altogether. In fact, try to look for better ways to promote your brand side-by-side, making social media strategies.

For instance, try to tie up with the latest streaming and smart TV services to attract your audience better and in more engaging ways. These advertisers are able to reach wider audiences than expected due to the pandemic.

4.   Have a Specific Purpose

The pandemic crisis and lockdown restrictions have forced people to explore new hobbies and talents, which is why the previous year has seen a drastic change in customers’ behaviors and buying trends. Also, people have started to go for less expensive options and alternatives.

So, try to have a specific purpose, a unique value proposition, and a stronger way to engage your consumers.

Frequently Asked Questions

  1. Are direct-to-consumer (DTC) brands growing?

    Yes, DTC brands have experienced significant growth in recent years and continue to thrive. In 2020, they witnessed a surge in popularity, and the trend is expected to continue in 2021 and beyond. This growth can be attributed to various factors such as changing consumer preferences, advancements in e-commerce, and the ability of DTC brands to establish direct connections with customers.

  2. Why are direct-to-consumer brands growing?

    DTC brands are witnessing a surge in their expansion for various compelling reasons. Firstly, they provide customers with a seamless and tailor-made shopping journey, cutting out the middlemen typically found in conventional retail channels. Secondly, DTC brands prioritize delivering superior products at pocket-friendly prices, striking a chord with budget-conscious consumers. Lastly, the advent of social media and digital advertising has empowered DTC brands to efficiently connect with and captivate their desired customer base, cultivating brand allegiance and propelling revenue.

  3. What are direct-to-consumer (DTC) brands?

    DTC brands are enterprises that directly sell their goods or services to consumers, circumventing the involvement of middle entities such as wholesalers, retailers, or third-party distributors. By eliminating intermediaries, DTC brands have full command over the entire customer experience, encompassing production, distribution, and marketing. They predominantly operate through online platforms, harnessing the power of e-commerce and digital promotional tactics to connect with their intended clientele. DTC brands encompass diverse sectors, including fashion, cosmetics, culinary delights, household items, and beyond.

  4. What are the benefits of direct-to-consumer (DTC) brands?

    DTC brands offer several advantages both for businesses and consumers. For businesses, DTC eliminates the need for costly distribution networks and allows for direct customer feedback, enabling faster product iteration and improvement. It also provides greater control over brand messaging, customer experience, and data insights. For consumers, DTC brands often offer competitive pricing, unique product offerings, and personalized shopping experiences. Additionally, the direct relationship between DTC brands and customers fosters a sense of trust, transparency, and community engagement.

  5. How do direct-to-consumer (DTC) brands benefit consumers?

    DTC brands bring numerous advantages to consumers. Firstly, they help save money by cutting out the extra costs typically associated with traditional retail channels. This enables DTC brands to offer top-notch products at more reasonable prices. Secondly, DTC brands prioritize enhancing the customer experience by providing personalized recommendations, hassle-free returns, and prompt customer support. Thirdly, DTC brands often place a strong emphasis on sustainable and ethical practices, allowing consumers to make informed choices that are transparent and mindful. In summary, DTC brands empower consumers by offering greater convenience, value, and alignment with their preferences.

  6. Are direct-to-consumer (DTC) brands limited to specific industries?

    No, DTC brands are not limited to specific industries. While they gained initial popularity in sectors like fashion and beauty, the DTC model has expanded into various industries, including health and wellness, home goods, food and beverages, electronics, and more. The DTC approach is adaptable and can be applied to almost any consumer product or service. As long as there is a demand for direct purchasing and a brand can establish an online presence, DTC brands have the potential to succeed in different market segments.

Installment Plans Gain Traction Among Consumers, Predicted to Grow in 2021

Installment Plans Gain Traction Among Consumers, Predicted to Grow in 2021

The pandemic has been hard on almost all business owners and consumers across the world. With people losing their jobs and expenses rising, millions of consumers have been going through a financial crisis for the last 10-12 months.

Such wide economic gaps are compelling buyers to trim their shopping lists and finding better ways to save. Consumers are also seeking more flexible payment options, especially contactless payments, to prevent the spread of coronavirus.

As a result, the past few months have witnessed a drastic change in people’s purchasing trends and patterns, along with a massive shift in their interests and preferences. For example, according to research, about 4% of Americans preferred the ‘Buy Now, Pay Later’ option during the Black Friday season.

This is why installment payment providers gained significant traction during the past few months all over the US market. COVID-19 has been unexpectedly favorable for these companies and has opened doors for them to grow further.

As mentioned earlier, more shoppers are going for budget-friendly and more flexible purchases. Therefore, numerous merchants are pursuing several methods to accelerate their sales by offering more convenient payment options to their customers.

During lockdown restrictions imposed in various countries across the globe, consumers relied more on e–Commerce stores, which naturally gave a significant push to the growth of online sales for merchants. Another aspect that online shopping gave rise to is installment payments. These are the major causes of the rapid growth seen in M&A activities.

The new ‘Buy Now, Pay Later’ (BNPL) trend is an extremely convenient method for customers, so much so that a study shows that most of them are not willing to buy from merchants not providing this solution. The trend is not only popular in the online shopping platforms, but also in stores, especially during holiday seasons such as Black Friday.

What are Installment Payments?

Installment payments refer to the method by which a customer pays a bill in small parts over a fixed period of time. These kinds of payments are arranged and agreed upon between the buyer and the seller. Examples include ‘Buy Now, Pay Later’ models and point-of-sale financing, which provide buyers with the flexibility to pay their purchase bills over time as per their convenience.

Some merchants even offer installment payment solutions without charging any interest. This is convenient for customers and merchants as well, who get paid by installment providers, thus increasing their conversions and average order values (AOVs).

For this reason, installment payments are most suitable for merchants who are in the high-AOV categories, including furniture, electronics, travel, fashion, and apparel. This is why several market players are occupying the entire installment payments industry. Some popular names among them are PayPal, Afterpay, Credit, Klarna, Affirm, etc.

Benefits of Installment Payments

Some of the top advantages of installment payments for both buyers and sellers include:

For customers:

  • They help customers keep track of their finances.
  • Buyers can stay within their budget limits.
  • They allow consumers to stretch the cost of the purchase through a longer time period.
  • Customers can make low monthly payments easily.

For sellers:

  • You can provide more shopping flexibility for your customers.
  • You can regulate and stabilize your cash flows.
  • You can bring in more sales and boost your profit margins.

How to Track Installment Payments?

One excellent way to record or track your installment payments is through invoicing software, which ensures that your customers are paying their monthly installments on time. Two best methods to record installment payments are via recurring invoices per installment or partial payments for a single invoice.

If you use recurring invoices, you can set that up for every installment amount. The process will be smoother if you have your customer sign a payment contract, explaining to them the payment plan.

If you prefer partial payments, you would first need to generate the invoice for the particular consumer, ensuring you state the installment periods and payment terms clearly on the invoice. Next, when the time comes for the client to pay the first installment amount, you will need to add a partial payment to the created invoice.

Some software will have the option to update the status, such as partially paid, and the remaining amount to be paid.

The Current Status and Future of Installment Payments

For quite some time now, installment payments have been extremely popular in various markets, such as Australia and Europe. However, the trend has gradually been increasing in the United States for the last 12-18 months. The overall 2019 spending in the installment payments markets has been $623 billion.

The adoption of installment payment options has been especially prominent among Millennial and Gen Z customers. According to 451 Research, more than 1 out of 3 buyers within the age group of 18-37 believe that the availability of a flexible and convenient installment option has been a major factor affecting their buying decisions positively.

This is why merchants are noticing a rising demand in this trend and more successful order completions. Gradually, more than 40% of merchants from various industries have started offering this option during checkout, which has also reduced cart abandonment rates.

However, another 43% of the online-centric merchants are considering making the change or are discovering the benefits associated with it. A study in 451 Research’s Q2 2020 Voice of the Enterprise (VotE) revealed that among the top initiatives taken by merchants since the COVID-19 outbreak include adding flexible payment methods to their e-Commerce portals.

Some well-known merchants providing options for flexible installment payments in the US include Sunglass Hut, Walmart, Abercrombie, Peloton, Warby Parker, etc.

The mutual benefit that installment payment plans have for both consumers and merchants means that buyers will be more willing to return to your business and continue to make recurring purchases in the future.

Frequently Asked Questions

  1. What was the purpose of installment plans?

    The purpose of installment plans is to provide consumers with a flexible payment option for purchasing goods or services. Installment plans allow customers to pay for their purchases over time, breaking the total cost into smaller, manageable installments. This makes expensive products or services more accessible to a wider range of consumers who may not have the means to make a full upfront payment. The goal is to increase affordability and enable individuals to enjoy or benefit from a product or service immediately while spreading out the financial burden.

  2. What are the benefits of installment payments?

    Installment payments offer several benefits to consumers. Firstly, they provide a more budget-friendly approach, allowing customers to spread out the cost of a purchase over a set period. This can help individuals manage their finances more effectively and avoid the need for significant upfront payments. Secondly, installment plans often come with low or no interest rates, making them an attractive alternative to credit cards or loans. Additionally, installment payments provide convenience and flexibility, giving consumers the option to choose a payment plan that aligns with their financial situation and cash flow.

  3. How do installment payments work?

    Installment payments typically involve breaking down the total cost of a purchase into equal or predefined amounts to be paid over a specified period. When purchasing with an installment plan, the consumer agrees to pay a down payment (if required) and signs an agreement outlining the installment terms. The remaining balance is divided into regular installments, usually paid monthly, until the full amount is cleared. Depending on the arrangement, installment payments may be managed by the merchant directly or through third-party financing companies.

  4. What is the history of installment plans?

    The concept of installment plans has a long history, dating back to the early 20th century. Installment buying gained prominence in the 1920s when it became popularized as a way to make consumer goods more affordable. This approach revolutionized the retail industry by allowing customers to purchase items like automobiles, appliances, and furniture through installment payments. The availability of credit and the rise of installment plans fueled consumer spending and contributed to economic growth. Over time, installment plans have evolved and adapted to changing consumer needs and technological advancements, becoming a common feature in various industries today.

Stimulus Bill Provides Second Round of PPP Loans

Stimulus Bill Provides Second Round of PPP Loans

Congress finally passed the much-awaited bill of further COVID-19 relief, which is especially beneficial for small businesses. This second stimulus bill was passed this week and included a second round of PPP loans to support all the affected range of small businesses.

The bill is also quite favorable to PPP borrowers as it comes with loan-forgiveness rule changes. This second round of PPP loans made to help small businesses are known as “second draw loans”. However, the law is still awaiting President Trump’s signature.

Although the rules for these second draw loans are quite similar to the original one, and businesses would be quite familiar with it, there are some drastic changes compared to the original program. Therefore, lenders and small businesses need to speed up to get hold of the process.

The legislation, further, includes some favorable changes to the loan forgiveness taxation rules. It has also added a simplified single-page loan-forgiveness application eligible for loan amounts of $150,000 or less.

How Significant is the Second Draw PPP Loans for Small Businesses? How to Qualify for It?

The second draw of PPP loans is considered to be the most significant development in the US legislation, particularly for the small business owners. Besides, the new legislation bill allocates approximately $284 billion. Under this scheme, the new loans are termed as second draw loans.

The loan limit allowed is $2 million. Also, the amount a particular business will be qualified to draw is estimated by taking the average monthly payroll in the previous year, which is then multiplied by 2.5. This means that with the help of the second draw of PPP loans, you can get funding to support 2.5 months of your payroll expenses.

Furthermore, the bill has special provisions and calculations for food businesses and restaurants. For them, the legislation has offered a larger loan amount, which is estimated by taking the average monthly payroll of 3.5 months.

For instance, if you are a small business owner having an average monthly payroll of $100,000 in 2019, then it would qualify for a loan amount of $250,000. And if you are a restaurant or a food chain owner with the same average monthly payroll last year, then you would qualify for a loan amount of $350,000.

As per the eligibility criteria, to qualify for this second round of PPP loans, you must have less than or equal to 300 employees. This has been reduced from the 500 employee threshold seen in the first round. Next, being a small business owner, you must have already used or are planning to use your original funding.

As seen in the first draw, small businesses can use their loan proceeds within 24 weeks. Additionally, they can use the borrowed funds for rent, payroll, and mortgage expenses.

The good news is that the bill has added some new expenses to their original list of “qualifying expenses.” These include workplace protection costs to safeguard one’s employees from COVID-19, operating expenses, and property damage cover.

Additional Criteria: 25% Revenue Loss

A small business applying for the second draw of PPP loans must prove and certify that it has lost a total revenue of 25% or higher in order to get qualified. This new feature is quite different from the original rules set up for qualifying for PPP loans.

In this rule, the small business just needs to state that its financial instability and uncertainty have made the owner go for the PPP loan. Under this 25% loss-of-revenue estimation, small businesses will need to compare their 2020 quarterly revenue, that is, their gross receipts, with the first, second, and third revenue quarters in the previous year.

To qualify for the second round of PPP loan, a borrower must show a loss of 25% revenue or more from a minimum of one quarter of this year compared to that particular quarter last year.

Besides, the second round of PPP loans is forgivable. However, one must spend 60% of the funds on payroll costs. Also, a majority of the small businesses will likely be using 60% of the loan amount on their payroll costs, since the amount depends upon 2.5 months of average payroll. And because they can utilize the funds over a period of 24 weeks.

When Forgiven, PPP Loans Won’t Be Taxable

As per the new legislation, the forgiven PPP loans won’t be taxable for the small business owner. It is applicable to all the existing PPP loans that fall under the original CARES Act, while also including the new second draw ones.

Previously, before the legislation was framed, the IRS (Internal Revenue Service) used to levy taxes on small businesses for their PPP loans. One good news for all small business borrowers is that their PPP loan will be forgiven while still being capable of deducting all their qualifying expenses, such as payroll.

Further, the new law states that emergency EIDL Grants and Advances will also not be taxable to the small businesses. The emergency EIDL Grants and Advances don’t need repayment in most cases and are considered forgiven.

The Simplified Forgiveness Application

The legislation further said that the SBA needs to create a simplified version of the PPP forgiveness application form suitable for small businesses requiring less than $150,000 PPP loans. This simplified application should be designed in a way to fit in one page.

The application will also include loan information, along with a valid certification from the small business owner, wherein s/he must declare and prove that the funds were appropriately used for the purposes and expenses qualified for. However, the certification should not include any calculations or any other additional or unnecessary information.

In fact, the SBA (Small Business Administration) already launched a single-page simplified PPP forgiveness application for all borrowers requiring a loan amount of $50,000 or less. Moreover, it is quite likely that the SBA will be using a similar application for other borrowers with less than $150,000 loans.

After the President signs the law, which is likely to happen as indicated by the White House, the Treasury and SBA are responsible for offering detailed and interpretive guidance and forms associated with the updated forgiveness rules. They are also tasked to provide thorough guidance on loan guidelines and application processes for the second draw of PPP loans.

E Commerce Gift Shopping 30943783

E-Commerce Trends for 2021

Today, businesses of all sizes are moving to an online structure. Brick-and-mortar stores that weren’t online before are quickly adapting as the pandemic continues and consumers avoid physical stores as much as possible.

With the onslaught of e-commerce businesses coming onto the scene, it’s important to know the trends that will change for 2021 so you can make sure your business is on target too.

Voice Search

Today, people are always on-the-go or multi-tasking and they’ve grown quite fond of technology, like Alexa or Siri, where they can speak their questions or demands. That trend is falling over into the e-commerce world, where consumers want to be able to speak what they want to search for rather than typing it in. Whether you add voice search capabilities or even let buyers make purchases using their voice is up to you, but know that it’s an up and coming trend.

Personalized Shopping

Customers today want personalized options. They want their shopping experience to be as seamless as possible. When they log onto your site, they want to see the products they want in the sizes they want.

Customers also love personalized recommendations. “Since you bought this, we’d thought you’d like this” is a great way to upsell and keep loyal customers. They know that you’re watching out for them and care what they think. This goes a long way in the e-commerce world.

Getting Active on Social Media

Today social media accounts aren’t an option – they are a requirement. Consumers want to hear from retailers whether it’s about current promotions, their featured products, or just behind-the-scenes posts that make companies seem ‘real.’

Creating Brand Value

If 2020 was anything, it was a year of turmoil for many. Consumers love it when brands get behind certain movements and aren’t afraid to show it. If you are behind a specific movement or care about certain issues in the world, consumers want to hear about it. Promote your brand value and you may find that you grow your audience just for doing so.

More Payment Options

Consumers today want many more payment options than just credit cards. They want to use their mobile wallets, PayPal balances, and want layaway options for big purchases. Companies like Afterpay are growing by leaps and bounds, especially during the holiday season so families can have a happy holiday season despite not having the immediate funds to pay for items.

E-commerce continues to grow and 2021 promises to be a big year for businesses of all sizes. If your business isn’t online yet, it’s time to start. Companies need to be online to get a larger audience, interact with their customers, and showcase their brand’s values.

It’s time to embrace technology and give consumers what they want. We live in a world of instant gratification today and running an e-commerce business is a great way to give customers what they want when they want it.

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Visa Looks to Streamline B2B Payments

The best way to win your customers’ hearts is to provide them with a more flexible payment system and allowing them to choose how they conduct transactions. We live in a world where faster payment modes are given more preference. In this regard, Visa’s recent efforts to transform the B2B payments space need special attention.

Visa B2B Connect

Visa B2B Connect is an innovative non-card based payment network designed to streamline all cross-border, business-to-business payments. The technology enables the participating banks or other financial institutions together with their business customers to make secure, predictable, and streamlined global business payments.

Visa B2B Connect comes with a multilateral payment system that allows one to make bank-to-bank cross-border transactions between different businesses. In this network, one can make payments between any banks that are connected to one’s specific platform, thus having a more improved, streamlined, and consistent payment experience.

Difference Between Bilateral Network and Visa B2B Connect Multilateral Network

Legacy Bilateral Network

Payments via bilateral networks occur only between two parties or financial institutions at a time. Hence, they require multiple handshakes between disparate systems and banks present across different locations before finally reaching the beneficiary. This process, therefore, can create greater delays in payments while increasing the costs unpredictably and producing inconsistencies in the payment data.

For example, the transaction flow of a bilateral network looks something like this:

  1. The Originator Business starts the transaction process via its Originating Bank.
  2. The bank then sends the transaction information to a Domestic Correspondent Bank.
  3. Next, the Domestic Correspondent Bank sends passes over those payment institutions and information to an Intermediary Bank and then to a Foreign Correspondent Bank.
  4. After this, the amount gets deposited to the Beneficiary Bank, which belongs to the Beneficiary Business.

Therefore, it is quite a long-winding process.

Visa B2B Connect Multilateral Network

The Visa B2B Connect multilateral network, on the other hand, enables a system of one-to-many global payments that are transacted between any participating bank. It helps to streamline the payments with higher predictability, efficiency, and transparency.

In other words, with Visa B2B Connect multilateral network, there would be no multiple intermediary banks involved in the transaction made between the Originator Bank and the Participating Bank that is connected to the network. The funds will straightaway be transferred from Bank A of Company A to Bank B of Company B by passing via the Visa B2B Connect platform.

Benefits of Visa B2B Connect

Visa B2B Connect is designed to address all the limitations present in the existing bilateral wire transfer processes, thus enhancing transacting experiences. Some of the key benefits of Visa B2B Connect include:

●     Real-time Visibility and Predictability

You can gain improved real-time visibility into your transaction status as Visa B2B Connect reduces multiple handoffs or handshakes in the payment chain. It further helps to enhance the predictability of each of your transactions and have better insights into when and how your funds would land on the beneficiary’s bank account.

●     Payment Transparency and Finality

With Visa B2B Connect’s payment network, one can make seamless bank-to-bank transactions using the streamlined and robust data for easier reconciliation and enhanced transaction accuracy. The system offers clear and transparent transaction payment schedules and costs that reduce all payment uncertainties.

●     Digital Identity

All your sensitive business and payment data will be secure and protected as Visa B2B Connect uses unique digital identities to tokenize your data. This further reduced any cybersecurity attacks or fraudulent activities.

●     Consistency of Transaction Data

Visa B2B Connect’s consistent data makes way for a stable and seamless transaction experience for all businesses and financial institutions. Besides, the network allows a much more simplified and smooth reconciliation process.

●     Multilateral Network

Using Visa B2B Connect’s multilateral network, you can transform and streamline the payment path as it offers one-to-many global access. Besides, it boosts the peer-to-peer exchange of essential values and interconnects large-value payments in a multilateral ecosystem.

●     Interoperability

Visa B2B Connect has the ability to work alongside and together with legacy systems, which facilitates the bank’s transition to advanced future payments. Interoperability used in payment systems helps to reduce costs associated while establishing an acceptance network. Additionally, it also improved your value proposition by expanding the type and number of acceptance points for your customers/clients.

●     Reduced Complexity

Using Visa B2B Connect’s centralized network, you can reduce the number of connections and relationships a particular bank needs to manage, which in turn, reduces complexities in the entire payment environment.

●     Advanced Security and Fraud Protection

Visa B2B Connect’s network is strengthened by Visa’s security and advanced distributed ledger technology. In fact, Visa B2B Connect is built with a closed and permissioned network wherein all the members are trustworthy and known. Further, all your account data will be tokenized using a unique digital identity, which helps to prevent fraudulent attempts and opportunities.

●     Flexible and Compatible

Visa B2B Connect provides a wide array of implementation and application options, which caters to the unique requirements of the business. You can also shift to a modern and more improved payments experience, compatible with all your existing business solutions.

●     Global Connectivity and Easy Growth

This cross-border B2B payments network by Visa is developed using the brand’s unparalleled capabilities and core assets. Using Visa B2B Connect, you can enjoy a seamless same-day or next-day access to multiple currencies across the world via a single integration. The best part is the system is highly scalable, so that you can grow your brand and revenue.

Final Words

Visa, therefore, has tremendous abilities to offer a global and more flexible payment solution to all cross-border business transactions. The card brand has proven capabilities to achieve a unique and unsurpassed global network scale. Moreover, VisaNet has happily connected more than 15,500 banks and other financial institutions across the globe.

Visa, being a financial technology innovator, has successfully built thousands of strong relationships with several banks spread across multiple countries, creating a powerful network for the new Visa B2B Connect technology. Coming to the question of trust, Visa is a brand proudly carrying a decade-long track record of top-notch security, safety, and speed.

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HEB Consumers Can Now Pay With SNAP EBT For H-E-B Curbside, Home Delivery

San Antonio-based grocery company H-E-B has recently announced that all of its stores will now accept SNAP EBT (Supplemental Nutrition Assistance Program Electronic Benefit Transfer) payments directly via its mobile app or website, www.heb.com, for all curbside and home delivery orders.

The Process – HEB.com

To do so, customers need to already have or sign up for a SNAP EBT account. Customers input their SNAP EBT information into their H-E-B account on their website, heb.com, or through the My H-E-B app. After the registration is done, customers can place their orders.

During checkout, they can choose the SNAP EBT option where they simply need to enter their PIN. Electronic Benefits Transfer, or EBT, is an electronic system designed to enable a SNAP participant to pay for their food order using the benefits offered by SNAP.

However, for items or payments not eligible on SNAP EBT, one would need a debit or credit card. The company offers options for making payments using gift cards as well. One can view their SNAP EBT card balance by logging into the My H-E-B app or at heb.com. The app is available for both Android and iOS devices and is easily accessible from mobile phones or tablets.

To ensure you are buying SNAP-eligible items at HEB, you can use the filter function while doing a product search. Moreover, one can also check which items are SNAP-eligible on their online shopping cart, which gives a clear indication of the same. The contactless payment option is available at all the curbside and delivery store locations of H-E-B.

This announcement made by the grocery giant on Friday, 18 December 2020, in a news release, has made it easier for consumers to make contactless digital payments for their food or grocery orders, both for curbside or home delivery.

Currently, the grocery chain has over 230 stores having curbside services. Further, the company is planning to expand across over 20 more locations in the state by the end of 2021. The company also added that most of those locations providing curbside services will be offering home delivery facilities as well.

As per the statements of the vice president of H-E-B digital commerce operations, Esther Castelo, this is one of the most essential initiatives that their team has come up with. He further said that the team members are excited to offer their customers this convenience.

According to Texas Health and Human Services, the total number of benefit cases associated with SNAP food purchases was higher than 131,000 in the previous month of November. The best thing about H-E-B is that they provide either same-day or next-day curbside pickup services, in which the stores load the customers’ vehicles with their groceries. This service carries a $4.95 personal shopper charge.

Further, all curbside orders are made free for those who have placed their orders more than 2 days out. And the company will charge a delivery fee of $5 for all home delivery orders. You can place your home delivery or curbside orders seven days in advance.

This new feature is considered a part of the company’s expansion of the SNAP EBT facility, which H-E-B implemented as a pilot to some of its locations in May.

Under the SNAP Online Purchasing Pilot, which was launched by FNS (Food and Nutrition Service) of the US Department of Agriculture, 46 states as well as the District of Columbia are now allowing SNAP beneficiaries to purchase and pay for food and groceries digitally. The retailers participating in this program include Amazon, Walmart, ShopRite, and Aldi, among many others.

SNAP food benefits are included onto a Lone Star Card, and is designed to help people having budget constraints. These cards let people meet certain program rules, such as work rules and income limits.

Previously, H-E-B has said that it will carry the COVID-19 vaccine after it is made available at its pharmaceutical chains, and will distribute it to the public.

In fact, the grocery brand began to foresee the aftermath of the coronavirus pandemic on their industry. Many of its stores started to see much reduced traffic since the lockdown restrictions were declared worldwide. The issue was more prominently seen by mid-April when the company was experiencing initial supply issues.

It also gave rise to the number of digital app use cases among the audience willing to purchase food and groceries, which are the daily essentials. According to research, food was seen as the number one pick to make expenses after federal stimulus funds were distributed to Americans during the early days of the pandemic outbreak.

Meal kit businesses emerged victorious from the crisis, especially when restaurants were closing their doors. Following this trend, the supermarkets like HEB attempted to sell pre-made meals to their consumers.

About H-E-B (and HEB.com)

H-E-B is an American supermarket chain based in the City of San Antonio, Texas. Today, it has more than 340 stores in 150+ communities spread across the state and in northeast Mexico.

As per the 2014 revenue reports, H-E-B was ranked the 20th largest retailer in the US. The grocer donates 5% of its annual pre-tax earnings to charity in and around its store locations. The common institutions the company distributes the money to include educational institutions and food banks.

H-E-B was founded on 26 November 1905 by Florence Butt, who first opened the C.C. Butt Grocery Store at her Kerrville family home. She opened the store with her savings of $60 by realizing her need to support her poor family. The current CEO of the brand is Charles Butt, who inherited his family business in 1971.

The H-E-B Plus team aims to cater to the unique needs of the different lifestyles followed by the people of Texas. HEB is known for selling and delivering a range of services, including fruits and vegetables, bakery products, meat and seafood items, dairy products, pantry items, deli and prepared foods, frozen foods, beverages, health and beauty products, everyday essentials, baby foods and healthcare products, home and outdoor decor items, pet supplies, etc.

The company also has provisions for allowing its visitors to make charity donations of their choice with a minimum of one dollar.

HEB H-E-B and HEB.com
Leather Coats In A Retail Store Shop 26972495

Retail Trends for 2021

Times are changing in all industries, including the retail sector. Consumers don’t shop like they used to, but that doesn’t mean they aren’t spending money. They are just doing it in different ways and if retailers want to keep their sales high, they have to jump on board with what consumers want.

What do consumers want? Here are the latest trends.

Subscription Boxes Increase in Popularity

The subscription box sector is taking the world by storm and it’s not going anywhere anytime soon. Because of the personalization they offer and the excitement they bring for consumers, subscription boxes are popping up in places you’d least expect them. In fact, they could be a way to keep retailers in business when they otherwise may have lost their market.

Delivery is the New Norm

Stores are now offering delivery just like your local pizza joint and we’re not talking FedEx or UPS. Stores either have their own delivery service or they contract out to independent drivers. In our current climate, millions of consumers don’t want to leave their homes, but they want to shop. They’re more likely to shop at the stores that offer same-day or next-day delivery services.

Creating Fulfillment Hubs

Storefronts are quickly going by the wayside as fewer people shop in store. Large stores that were already hurting are quickly seeing a downfall in sales and many are going out of business. In their place aren’t new storefronts, but rather fulfillment hubs for larger stores and even places like Amazon. The distribution centers can offer faster shipping than they would from their central warehouses, increasing customer satisfaction.

Personal Shopping via Video

Video chat is becoming more and more popular and not just for business meetings. Today, personal shopping has gone virtual too. There’s something about being able to see the items even if it’s through a screen, but not on a webpage that makes people want to buy. It could have a lot to do with the personalization of having someone show you the products versus looking at them yourself online.

Private Labels are more Popular

Today, consumers are buying more private labels than ever before. They are skipping the brand names and opting for private labels – labels that provide a more intimate experience than customers are used to but want.

Merchants Have to Think Outside the Box

In today’s changing environment, every merchant must think outside the box. Shopping isn’t what it used to be, but many dare to say that it’s even better. If merchants do it right, shopping is more intimate, exciting, and fulfilling than ever before. Consumers get the products they want, the insight they want to provide, and the safety of contactless payments and curbside pickup.

It’s a changing world we’re living in, but it’s one that we need to continually adapt to and change if we are to compete. Merchants have a lot of opportunity in front of them and if they take advantage of it can be stronger and better than ever before.

Mobile Technology Trends for 2021

Mobile Technology Trends for 2021

Mobile technology continually improves and 2021 is bound to see some of the greatest changes. As we move into another year of living with social distancing, consumers want contactless payments and more capabilities from the comfort and safety of their own homes.

Mobile Wallet Security

It’s not enough to offer mobile wallet payment options next year. While customers want contactless payments, they also want security. Double authentication with mobile wallet payments is crucial.

Rather than just scanning the payment, users will need to enter a PIN or use the facial recognition feature. While it’s another step in the payment process, it’s still touchless and it decreases the risk of fraudulent charges.

Mobile Point of Sale

Mobile

The Apple store used to be one of the only places you’d find a mobile ‘register.’ Today because of the need to have contactless payments and a way to get in and out of a store fast, mobile point of sale is more common everywhere.

mPOS units are great inside a store, checking customers out where they are rather than making them stand in line. Even big stores like Target are doing this. But, mPOS also helps merchants sell their products anywhere – farmer’s markets, trade shows, or mobile trucks.

Increased Use of AR and VR

Augmented Reality and Virtual Reality are becoming more mainstream for all industries, not just by technical companies. Healthcare companies travel, and educational companies are taking advantage too. They also provide more opportunities for companies to increase sales without seeing customers in the physical store.

Increased use of Chatbots

No one likes to sit on hold waiting for a customer service representative. Chatbots are making it easier than ever to answer customer questions instantly. This is just what customers want. In addition to everything mobile and touchless, they want instant answers without wasting time sitting on hold. Chatbots answer the most frequently asked questions quickly and if they can’t answer the question, they pass the customer onto a human advisor.

Social Shopping

There’s a reason social media influencers are the ‘big thing’ right now. Everyone wants what everyone else, which is why the rise in social shopping is so great. With the ability to scroll through Instagram or Facebook and buy what you see others buying, it increases sales quickly. Social shopping decreases the lag time between seeing an item and finding it in store or even online. It uses that instant gratification that customers love, making it easy to make impulse buys or just buy products/services they wanted while they’re thinking about it.

Mobile Technology is Making Changes

2021 is bound to be a year of big changes in the mobile technology industry. With possibilities abound, merchants can make the most of the opportunities to serve customers where and how they want service. With the ability to offer mobile and contactless payments, shopping opportunities, and even sales demonstrations, 2021 should be a year of promise and growth for merchants in all industries.