Click "Buy", click "Pay"

The growing virtual sector is having an increasingly tangible influence on a number of industries – from logistics operators and warehouse developers, through electronic payment systems and banks, to mobile app producers By Beata Socha E-commerce has seen some remarkable growth in Poland over the past years, growing at a pace of 15-17 percent a year, according to data by research firm PMR. In 2014, it accounted for 3.9 percent of total retail sales and is set to grow to 6 percent by 2020. There are several reasons for the rapid growth of the virtual sector. The proportion of internet users has increased from 30 percent in 2005 to 65 percent in 2014, according to Eurostat. A third of all Poles are e-shoppers, reported data from Dotcom River. The fact that a lot of Poles live in small towns (70 percent of Poles live in areas outside of hypermarkets’ catchment areas, according to the Polish Chamber of Commerce) is also a contributing factor. “Interestingly, due to the limited range of traditional stores, online shopping is more popular in small towns of below 20,000 residents, which often poses a challenge in terms of delivery,” wrote real estate consultancy JLL in a joint report with warehouse space operator Prologis. A matter of time E-shoppers are looking not only for variety, but also for convenience and expedience. The growth of the e-commerce market is putting pressure on vendors and logistics operators to shorten delivery times. “Customers require rapid deliveries, typically same-day or next-day, as opposed to store deliveries on a weekly or bi-weekly basis,” JLL said. The rapid development of the e-commerce sector will likely lead to significant changes in real estate, as well. As much as 71 percent of third-party logistics firms declared they will develop returns processing centers and specialized e-fulfillment stores over the next five years, JLL also stated. [caption id="attachment_98295" align="alignleft" width="300"] Image: Shutterstock[/caption] Going mobile The growth rate of the e-commerce business pales in comparison to the pace at which the m-commerce section of the market is growing. According to a report by Mobile Institute “mShopper,” 44 percent of Poles use smart phones (and as much as 65 percent of Poles between the ages 19 and 24). On top of that, over a third of Poles use mobile devices to shop. “We will do our shopping more and more using mobile devices – our needs are driven by impulse, emotion, and increasingly effective marketing campaigns,” said Patrycja Sass-Staniszewska, board member at eCommerce Polska, a business chamber with focus on internet commerce. The market is still relatively small (some PLN 2 billion), compared to the entire e-commerce business (approx. PLN 30 billion), according to estimates by Deloitte, but is expected to grow at a rocketing pace over the next few years – over 100 percent annually according to the “mShoppper” report. Naturally, retail is a two-way exchange. With the revolution in delivery logistics and mobile apps making things better and faster, there must be an equal expedience in electronic payment systems. After all, customers expect their electronic purchases on their doorstep no later than two or three days after clicking the “Buy” button. Wasting a day or two for some ones and zeros to travel between two financial institutions seems an extreme waste of time. Early bird? There are aspects of a country’s development, where the early bird does not catch the worm – the latecomer does. Such is the case with sewage systems – cities that developed their drainage systems centuries ago are now struggling with their limited capacity and the need for modernization. The same goes for payment systems. The countries that have had electronic payments the longest are now far behind countries that developed them relatively recently. The problem lies in the costs of switching from one technology to another, and the larger the system is, the more pricy upgrading it gets. That’s why the US still uses checks, which never really caught on in Poland. “Americans have very modern technology, but they will use more obsolete solutions if those devices don’t earn their value. They are paying the price for being at the technological forefront some time ago,” explained Mieczysław Groszek, deputy chair of the Polish Bank Association. It is also why Poland’s relatively new electronic payment system falls behind only that of Turkey, another latecomer to the table. The standard delivery time for a wire transfer in Poland is one working day. Period. Any longer and it’s considered a major nuisance. “There are several hundred banks in the world that want to catch up with Poland or Turkey,” said Bartłomiej Wyszyński, a strategy director at Artegance, a digital agency. But even that is not good enough for e-shoppers, and faster systems had to be adopted. Thanks to such systems as Przelewy24 or PayU, payment is made instantaneously, thus reducing time between placing an order and delivery. Mobile everywhere Poles have also taken to cashless payments in brick-and-mortar stores. The country was one of the first in Europe to introduce NFC payment cards and has one of the highest shares of NFC payment cards in Europe. It also adopted mobile phone NFC payments as the third country in Europe, a year after the UK and France. Market analysts expect mobile phone payments to have the greatest potential for growth. It is also the area in which technology is developing most rapidly in order to make these payments as secure as possible. “It’s all absolutely secure. It relies on a multi-step verification process between the smart phone and the client’s bank,” said Łukasz Gołębiowski, editor at Komputer Świat, an IT industry magazine, talking about the latest mobile payment technology developed by VISA and presented at the Mobile World Congress conference in Barcelona in February of this year. Not for Poland Despite being at the technological forefront of electronic payment systems, Poland has been ignored by global giants such as the likes of Google, Apple and Samsung as far as mobile payments are concerned. Digital wallets, such as Apple Pay, Android Pay and Samsung Pay were the topic of 97 percent of social media conversations on mobile payments worldwide. Yet, there is no support for them in Poland. Luckily, local players are taking advantage of the absence of the tech giants and developing their own products for the Polish market, such as HCE payment by lender Pekao, supported by MasterCard. The system is now also available for Windows 10. We’re in the future VISA is also looking to appropriate more of the mobile payment market with its new technologies. Imagine the following scenario: while you’re driving, your car runs out of gas. Your car tells you about it, finds the nearest gas station and directs you there. (If you have a Tesla with Autopilot, it will also take you there itself.) Then, at the station, you can pay for the gas without leaving your car, via the on-board computer equipped with mobile payment system. Sounds like the future? Some mobile payment methods are even more futuristic, like straight out of a science fiction movie. According to a study by MasterCard, payment with wearables is the nest big thing. One step further – biometric verification system, which has already been incorporated in Fujitsu computers and may soon make its way into payment systems. A scenario where you wave your hand over a scanner to pay for your groceries, or looking into a camera that scans your face for verification are no longer far-fetched. Poles – technology-enthusiasts that they are, will likely be one of the first in line to adopt “Selfie Pays” and bio-scan payments. Just wait and see.