The phenomenal transformation in the payment landscape as a whole cannot be ignored, and it will continue to disrupt the way things are done in this competitive market.
In the past few decades alone, we have seen tremendous changes in the payment revolution with the rise of mobile transactions, eCommerce, and many more advanced innovations that have revolutionized the way companies process payments. Bank and credit unions, for instance, are now focusing on digital payment trends that could keep them at par with the future of eCommerce as well as satisfy the ever-changing needs and demands of modern customers. This is a trend that is expected to continue in 2020 and beyond.
The big takeaway is, payment methods are becoming prevalent – and this represents a huge opportunity for businesses and platforms. Here, we reveal some of the most influential payment trends to watch in 2020.
Modernized, Seamless Customer Experience
Customer satisfaction is a major factor in payments. A study by Accenture shows that as the payment landscape changes, customer experience becomes the main focus as a way to stand out from the competition.
Brands are in stiff competition to make the customer experience as seamless as possible with frictionless payments. For decades, the trends have been going to a store to get what you need or shopping online by entering your basic information on a checkout form. Today, with invisible, frictionless payments, these experiences are slowly blending. Millennials and Generation Z are expected to make up two-thirds of the entire population by 2020, which provides a valuable opportunity for brands that want to target a tech-savvy, digital-first generation that is looking for information online to fulfill their banking choices and decisions. They have time to compare offers and have a connection with financial brands that demonstrate they can cater to their needs and financial well-being.
Most companies will have advanced payment options such that customers won’t have to input their basic information to pay. The payment can be automatically done through eWallets. For instance, Uber focuses on getting a ride for the customer – not paying for it – by storing the customer’s information on their database and charging them automatically. In 2020, we expect to see more of these and even greater payment experiences as companies compete to remain relevant and provide the best customer experience out there.
FinTechs and Banks, Coming Together
There is no doubt that the payment sphere has already been disrupted by fintech companies. In fact, it’s predicted that banks and traditional financial providers, may not survive the ever-growing customer demands of Millennials without joining forces with fintechs.
The partnerships between banks and fintechs will see note-worth improvement because of the transformative cutting-edge technologies involved. According to a recent report by PWC, banks are planning to increase their collaboration with fintech companies over the next three to five years. From this partnership, they expect an average ROI of 20%. The partnership has several other benefits for both parties: traditional providers have solid infrastructure, industrial knowledge, brand recognition, and a wide customer base, but they fall short of flexibility and low-risk tolerance. Meanwhile, fintech counterparts, are agile innovators with disruptive digital technologies, but well-established. Investors are now thinking about investing in more partnerships like these ones. A quick look at what is trending shows that fintech and bank partnerships are already in the payment industry. And we expect to see more of it in 2020.
The Rise of Biometric Authentication
What was once a futuristic idea showcased in some popular sci-fi movies such as The Fifth Element in 1997, has become a real-life scene with greater improvement thanks to cutting-edge technology.
Biometric authentication that is responsible for identifying your true identity with the help of their biological features, is expected to rise in the next couple of years with the discovery of advanced technologies such as finger scans, facial recognition, voice identification, retina scans, vein mapping, iris recognition, and heartbeat analysis.
With mobile apps such as Apple Pay and Android Pay being the first adopters of biometric authentication, it’s clear that this trend will continue in 2020. Already, some businesses are including upgraded software in their system to support biometric authentication as a payment option. China has been integrating facial recognition throughout its self-service checkouts and chain stores, and soon the rest of the world will follow.
Unlike traditional payment methods, biometric authentication is set to improve security, efficiency, and accuracy. In some years to come, manual data entry and physical cards will no longer be relevant, fingerprint or facial recognition will take over completely.
Increased use of Mobile Payments
As more advanced payment methods for mobile phones continue to hit the market, more customers are ditching credit cards and loyalty cards to embrace the rise of mobile payment technologies.
Projections show that the global mobile payment is expected to over $4.5 billion by 2023, with an annual growth rate of about 33.8% between 2017 and 2023. Similarly, Accenture indicates that a staggering 64% of users plan to use a mobile wallet in the coming year alone.
A lot of focus is going into improving customer experience and making the payment methods more accurate, flexible, and instant. Banks and financial providers are also investing in mobile payment and making it the center of their marketing campaign. Users are making it possible for this trend to thrive as they crave for mobile wallets that provide them with a holistic view of their finances instead of using a separate app for each service. We also expect to witness more of social media integration and advanced loyalty and reward systems in the mobile payment landscape.
Smarter Fraud Prevention with Artificial Intelligence
Cybercrime and fraud threats are on the rise for retailers and businesses that accept digital payments and banks are not being spared either. As a result, security is becoming a major concern in testing the practicability of any payment system. Most digital businesses are increasingly turning to artificial intelligence to help build a robust security system that enables better decisions making, especially in making the right transactions and rejecting the fraudulent ones.
Fraud is becoming more prevalent and relying on machine learning can help deal with the security breach menace. According to Accenture, the banking industry is projected to have lost about $31.3billion globally as a result of card losses in 2018. This figure has been increasing by 18% since 2013. This, thus, calls for cutting-edge digital payment methods that will prevent fraudulent activities from happening. AI can be easily integrated into the payment gateways to help the merchant catch fraud quick and early. A smarter technology to include for this case would be the use of advanced biometric security features to authenticate user’s payments.
Shift from Rewards Cards to QR Codes
A few years ago, a series of unique numbers on a card was used to identify a customer’s bank account. But, with the arrival of sophisticated technology such as EMV, more secure and advanced techniques are being introduced.
For example, China leads the pack in adopting mobile payment technology with the help of QR codes. Although the QR codes saw a slow adoption rate in the western countries, China has taken full advantage of this payment method with over 65% of the total population using it.
In the coming years, the use of QR codes will likely surpass credit cards as more users especially Generation Z continue to look for more flexible and secure payment systems. As the codes are cheap and easy to acquire, it’s likely that even the small stores will be using them to accept payment come next year. This will also shape how payments are handled by advanced technologies such as the Internet of Things (IoT), blockchain, and augmented reality.
Alternative Payment Methods like Contactless and Wearables
Contactless payment is one of the modern ways of payment that involves purchasing products with credit, debit, or smartcard powered by FRID technology to complete a transaction. Some payment methods such as swiping cards are now considered slow, while users highlight the ease of using the money as the main reason for now switching to digital payment methods.
Alternative payment options such as wearables and contactless are expected to change the way transactions are done in the future. The widespread use of mobile phones, mobile payment applications, and wearables have made it easier to access these methods on the go. Users can now use contactless payment methods for daily purchases, particularly for small transactions, quickly and safely. These methods help improve the customer experience as they facilitate faster and more seamless transactions. This trend is expected to continue in 2020 and the future is even more promising.
We are at a point where technology is driving most industries and the payment sphere is no exception. In a span of five years, consumer interest and expectations have changed the way we make and receive payments. Unlike before when users had to ask some questions before making a payment, now they can pay when, where, and how they want.
The change in behaviour has resulted in new payment methods entering the market at a rate that has never seen before. What we are sure of is that innovations and new trends will not stop there, but will be even more advanced next year with new technologies. Make sure your part of the big shift.