Keeping up with the changing payments landscape
There has been great change in how charities make and receive payments with the technology used ever evolving, but what does this mean for fundraisers? Scott Gray, Head of Payments at The Access Group, takes a look.
The payments landscape is evolving continuously and faster than ever before. As the popularity of Direct Debit continues to grow, contactless and digital payments are also on the rise, with cash on the decline as people increasingly seek greater control over all of their payments, including their regular outgoings.
These are big changes in the consumer world that also of course impact on fundraising and will continue to do so, presenting charities with opportunities as well as challenges. It’s an area that we, as the Institute of Fundraising’s Payments Partner for the next three years, will be keeping a close eye on, and working with the IoF to support charities through regular updates and research.
Certainly, the speed at which people are adopting new ways to pay while also increasing how much they pay for via Direct Debit is testament to their desire for easy ways to transact that fit the immediacy of modern living.
In fact, debit card payments already outnumber cash payments, overtaking them for the first time in 2017, while almost a third of consumers use their smartphones to make payments, and over two-thirds say they make more payments digitally now than they did five years ago, our research on the Changing Face of Payments shows. Figures from UK Finance also show that contactless payments increased by 31% in 2018 compared to the previous year.
At the same time, the convenience and ease of Direct Debit sees it continuing to grow as a favoured regular payment method. And, while use of cash and cheques may be declining, with 70% of charities seeing a drop in cash donations over the last three years, Direct Debit is the main driver of regular giving income.
Shifting payments landscape
The shifting payments landscape is greatly influenced by evolving technology and subsequent consumer behaviours, which is evidently already changing how people give to charities. And, as digital banking services and giving habits evolve, people are also beginning to expect greater control over their payments – and that includes donations.
Nowadays we have immediate online access to our bank accounts with the ability to make payments and transfers and to manage our savings and Direct Debits, all at the click of a button. It makes sense then that expectations are also growing into consumer demand in this area. Direct Debit remains one of the most popular ways to give to charity, and people are increasingly seeking more flexibility and control where their regular donations are concerned.
Our research showed 74% of people felt they should be able to fully control these payments each month, with the most popular options being to adjust the level of donation, skip a payment, or take a payment ‘holiday’. Our response to this demand was to launch Control My Payment, a tool for charities to enable new levels of payment controls for their supporters, and that can play a part in supporting an enriched donor experience and long-term engagement.
The future of fundraising
Looking into the future, more changes are already afoot that are likely to have an effect on fundraising. AI is starting to make an impact as chatbots come to the fore in commercial markets, helping with simple transactions and information requests to support the customer experience.
On the legislation side, something else charities will need to be aware of this year as online donations continue to rise, is Strong Customer Authentication (SCA), as this blog made clear. This comes into force in September as part of the EU Payment Services Directive, that took effect in January 2018 bringing in new laws aimed at enhancing consumer rights and reducing online fraud. A key element is an additional layer of security authentications for online transactions over €30. How SCA will impact online donor sign ups and the donor experience remains to be seen and it is certainly something to keep an eye on.
The changing face of payments, and giving, means that all charities must ensure they are on top of the trends, and offering a range of options that empower supporters to give in a way that suits their payment preferences, and offers them greater control over their giving journey.
And, with recent reports from the Institute of Fundraising and PwC, and Charities Aid Foundation revealing that less people are giving to charity, the more charities can do to engage with supporters, the better.
Ultimately, by offering donors choice: of payment routes, and of how and when they give with added flexibility, there is a real opportunity to improve the giving experience, and so strengthen relationships. All of which could help to prevent unnecessary attrition and build brand loyalty, as well as make giving a more attractive option to potential supporters.
At Rapidata, we make a point of listening to our charity partners because it’s so important in our understanding and appreciation of this sector and its payment needs. In the same spirit, I encourage feedback from IoF members: we would welcome your payments queries and suggestions for specific areas for our partnership to focus on.
Rapidata, part of The Access Group, is the Institute of Fundraising's payment partner.
Scott Gray is Head of Payments for The Access Group.