Profile picture for user Cognito
Posted By

With the world forced to go fully online due to COVID-19 for almost everything, consumers doubled-down on e-commerce and the payments industry boomed.

As the pandemic stretches into 2021 and the world slowly starts to open back up, though, the payment trends accelerated by the pandemic are here to stay because of consumer convenience. Let’s take a look at five payment trends that’ll not only shape 2021, but the future of payments.

Digital Payments

Pre-covid, digital payments were already becoming commonplace in e-commerce. Yet, the pandemic forced more businesses to speed up their digital transformations to the point where a digital presence became a necessity. Part of this has been offering online payments to pay for goods and services.

The flexibility of digital payments makes them ideal for online retailers, as they can be implemented via something as simple as a payment link in an email or a text message. Their strength also lies in that they can be offered in virtually any online setting.

Many businesses choose payment services providers (PSP) like Worldpay, Adyen, and Stripe to offer payments. PSPs provide multiple digital payment options and easy integration into websites, an advantage for businesses needing to quickly digitise due to the pandemic.

Additionally, e-commerce software platforms like Shopify and Shopware have built-in payments, making it even easier for businesses to quickly set up web shops and offer the payment methods their customers trust. And as more and more products and services cross over to the digital, connected world, digital payments won’t be far behind.

Alternative Payments

Alternative payments are everything that’s not cash or credit cards, and are absolutely indispensable for buying online, as they account for 55% of e-commerce transactions. In terms of payment methods, they cover products like AliPay and PayPal, mobile wallets like Apple Pay, the Netherlands’ iDEAL, Belgium’s Bancontact, Sweden’s Swish, Germany’s Giropay, and QR codes.

The driving factor behind these methods is consumer convenience. Consumers not only expect the payment methods they trust and are used to, the latter of which makes local methods essential for online businesses. Increasingly, consumers also want to make payments, even online, via their mobile phones, which many alternative methods allow. 

Moreover, these methods are all contactless, a necessity due to the coronavirus. Combined with their convenience, ease-of-use, and growing adoption, alternative payment methods will continue to shape payments and be a force well into the future.

Buy now, pay later

Buy now, pay later (BNPL) is quickly becoming a must-have alternative payment method. With BNPL, consumers make purchases via a BNPL provider like Klarna, Affirm or Afterpay, who then pay merchants the full amount of the purchase. Consumers pay the provider in instalments, and many don’t charge any interest unless a consumer fails to pay within the agreed upon schedule. Among the top reasons consumers choose BNPL are convenience, transparency, and control over spending. Combined with zero interest, these motivations are giving BNPL a marked advantage over credit cards amongst shoppers.

It’s unsurprising that BNPL has seen a bump since the Covid-19 pandemic has come and tightened wallets in many households. For online merchants, the alternative payment method can result in larger cart sizes and higher conversion rates, as consumers no longer abandon carts because items are too expensive. Retailers have jumped on the bandwagon. In the past year Gap, Macy’s, and Walmart have all rolled the payment means out.

Hybrid Payment Experiences

During lockdowns, stores compensated for drastically reduced traffic by moving their store inventories online and scheduling pick-ups. In-store pick up where consumers order online and then grab their goods has become commonplace. Moreover, this model has also worked well for one of the pandemic’s hardest-hit sectors—hospitality. Businesses here that could quickly digitally transform and sell online saw payments climb.  

The hybrid experience is convenient and contactless for consumers, and gives businesses yet more touch points to reach them, signalling that online-offline shopping experiences will continue into the future.


The subscription economy was already well on its way pre-pandemic. When it hit, businesses were forced to think creatively about where they can find revenues. One source came in the form of subscriptions. For businesses, they provide a steady income stream. For consumers, subscriptions allow them to have always-updated products and are convenient for those who don’t want to drop a single large sum on a product or service.

What the pandemic is showing is that subscriptions aren’t just the remit of the digital world of entertainment and software: diapers, dog food, shaving products, groceries, and other everyday items are also important parts of the subscription economy. In fact, since the pandemic began, subscriptions are up for everyday goods, and subscriptions in general have increased 22%.

Even stores are beginning to launch their own subscriptions. Pret A Manger rolled out an in-store coffee subscription in the UK, and more stores are expected to follow suit. Moves like these expand the subscription economy which shows no signs of slowing down, just like the more general trends of easy, digital payments.  

What’s next in payments trends?

Convenience and speed will drive tomorrow’s payment methodologies. The advancement of wearables (e.g. Garmin Pay in Garmin’s sports watches), context-based payments (think Uber), mobile apps (think Starbucks) and biometric authentication (think facial recognition) will be next.

Elliot Lyons works in Cognito's Amsterdam office