1) Essential goods matter most
Another aspect which has been widely ignored is the importance of payment solutions for essential goods and services, especially in-store. A significant share of essential goods and services are provided and consumed in-store, e.g., medical treatments or car repairs. There is no real alternative as these services often require physical infrastructure for fulfillment.
The combination of reduced income and the need for often expensive essential services during the COVID-19 crisis means that consumers will probably be looking for opportunities spread one or more payments over time. ‘Buy now pay later’ was already very attractive to the younger demographic before COVID-19. Going forward, it may play a crucial role as financially astute people want to manage their cash flows smartly, across all essential parts of their life: the health and the wellbeing of their families (including their pets), investments in their home, mobility and education.
The ‘Buy now, pay later’ providers who offer higher-value, longer-term plans in these purchase categories will emerge as partners of choice for people to manage their budgets and keep control of their spending.
2) Flexible payment terms, and no hidden catches
Customers are willing to pay for a good service and accept transparent fees, but don’t like hidden catches like ballooning interest burdens associated with some payment products. Some ‘Buy now, pay later’ providers offer their customers flexible payment dates, e.g., setting payments after receiving their next salary, without incurring a late payment fee.
People who have been impacted by COVID-19 expect their payment service providers to respond swiftly in case of financial hardship and provide support including extension or deferral of payments, and reversal of fees.
Openpay’s “better way to pay”
Openpay is an established, fast-growing provider of ‘Buy now, pay smarter’ in Australia and the UK. Its mission is “to change the way people pay, for the better”.
We partner with merchants to offer their customers flexible payment plans of up to $20,000 and up to 24 months, in-store and online. Openpay’s ‘Buy now, pay smarter’ product requires customers to pay a fee for plan management and set up on high value purchases, but it is always interest free, with no surprises.
More than some other providers, Openpay helps merchants across multiple sectors to offer or promote their essential services and products:
- Supporting retailers in providing information on how to access health and hygiene products like face masks and hand sanitisers for the safety of all Australians through joint marketing campaigns;
- Introducing variations of payment plans for car dealers offering their customers mobile car and tyre services;
- Onboarding new clinics and practices for medical services in times of COVID-19, particularly in the veterinary space, to meet increased demand for payment plans;
- For people spending more time at home, Openpay meets their increased demand for home improvement, office supplies, furniture and DIY products.
Openpay applies high standards to provide a responsible payments service:
- Openpay undertakes careful credit checks to ensure that customers can afford what they buy;
- The product allows customers to set the first date of repayment;
- Customers can also defer a payment to optimise their cash flow, e.g., setting the next plan payment after the next salary payment without incurring a late payment fee;
- Openpay is working with merchants to ensure customers are not over-exposed during this time driving a focus on plans for six months or less.
For COVID-19, Openpay has refined its policy and process to support in cases of true financial hardship:
- Openpay is continually optimising its credit risk management system to reflect the changing economic situation. Stricter credit rules have been adopted to support Openpay’s responsible approach by limiting exposure to those who are unable to afford repayments;
- The hardship process has been improved with the introduction of an online processing capability to reduce waiting times for applicants;
- Each hardship case is assessed on an individual basis. There are several supportive options available including extension of payments, deferral of payments and reversal of fees.
To conclude, COVID-19 has the potential to become the catalyst of major changes in human life: governments interpreting (or shaping) their constitutions, societies redefining their social contracts, and modern economies considering their basic principles of global supply chains, productivity and usage of capital.
Payments, the lifeblood for most of our modern-day choices, will be impacted by these trends. Payments will define their own new paradigms driven by people, businesses and regulators. The consumer payments sector has been heavily disrupted over the last few years with contactless payments and Buy now, pay later; this trend, which will continue and accelerate with COVID-19 and its aftermath is a great opportunity for those businesses who can take the lead to define and deliver new ways to pay.
Based on its strong, flexible technology platform and responsible approach, Openpay is uniquely positioned to provide clean, safe, flexible and better ways to pay, in-store and online, not only during COVID-19 but for the long haul.
So, there’s Michael’s thoughts on changing consumer payment behaviour and COVID-19 – we hope you found the article series interesting. If you want to know more about Openpay’s services, get in touch: https://help.openpay.com.au/hc/en-au