How 5G internet will affect the development of online business (and how 4G is already affecting it)

The proportion of people shopping in online stores or social networks via phone is growing year by year. Different agencies and large e-commerce platforms name different numbers. For example, Picodi says about 34% of buyers from smartphones. This is a very real average figure for Ukraine, but in the capital it will clearly exceed 50%. The main reason — there are the most actively developed coverage of 3G and 4G networks in Kyiv. The emergence of modern communication standards has not only brought smartphone sales to a new level, but also fundamentally changed the payment habits of customers. I have spoken about this many times already. But today I want to analyze how 5G can accelerate the transition to mobile platforms and how business should react to it.

Deploying an even faster connection will connect sellers and customers, making them as close as possible. A higher internet speed and reduced latency in performance will set new requirements for the “seamlessness” of payments made via mobile device. Everyone who works in the transactional business should be prepared for that. Get ready now, not when it’s too late. Why is this important from a practical point of view?

Mobile Shopping Growth

The share of mobile payments is growing worldwide. The global figure is approaching 45% of transactions. Due to the specifics of the market, Asia and CIS are developing faster in this direction than Europe. I wrote about the reasons for this before: the European consumer is more conservative and sees no reason to go beyond the already existing infrastructure. Therefore, in Ukraine, new technologies take root so quickly: we’re not «spoiled» by payment comfort. 5G should cause an unprecedented increase in mobile transactions, because the speed of the Internet can be higher than on Wi-Fi.

Whether this is good or not, the «fast fashion» and the trend for active purchases have not disappeared, although the concept of “informed consumption” also makes corrections to them. Therefore, people are looking for more simple and quick ways to make purchases. For example: a person rides the subway and sees a cool jacket or sneakers on someone. He/she clearly wants to be able to instantly make this purchase on-the-go, simply by taking a photo of the product and doing a search on it.

With wider coverage areas and higher speeds, 5G will turn such a user scenario into reality. The customer should be able to see the product in advertising and instantly purchase it online, regardless of where it is located. Yes, it is a challenge for business to improve payment forms, work on UI in order to optimize payment steps. Who doesn’t have time for this, will not increase customer loyalty. And loyalty is, first and foremost, quality that creates quantity. That which brings people back to you without money on marketing.

The role of mobile wallets

The Internet speed increase will lead to an increase in the volume of tokenized transactions in Apple Pay and Google Pay. With the advent of 5G, the number of payments in them will only grow.

Here we can talk about direct and indirect metrics. Let’s start with the last: the better the Internet, the more often there are purchases of goods and payments for services via smartphone. Due to this, payments via wallets from Apple and Google in offline merchants will also be used more often. We can call it the influence of the ecosystem. The direct metric is the active integration of the Apple Pay and Google Pay by businesses as payment methods on their websites / applications. You can work with customer properly in the 5G age without it, but it is extremely useful right now.

Of course, an important point here is the adequate deployment of infrastructure. High-speed mobile internet should be not only in cities with population over one million people and regional centers. It must work adequately everywhere, without ignoring the inhabitants of small towns and villages. However, large cities are the drivers of innovations. And the way, how actively mobile payments are used in Ukraine, gives the business a green light in the development of the most innovative payment solutions.

CEO of the international payment system LEO, the shareholder of IBOX Bank

CEO of the international payment system LEO, the shareholder of IBOX Bank