The financial services industry is currently transforming into a completely digital sector, with payments being one of the key areas experiencing rapid growth. Consumers have a variety of alternative payment options to select from, including open banking, e-wallets, mobile payments, prepaid cards, and distributed ledgers, which all derive from major industry trends.
Keep on reading to discover the most important payments trends at the moment.
Digital payment options
Users will benefit from the transformation of physical-world transactions to online transactions, which will provide convenience and tangible advantages. Online commerce and payments started moving to smartphones, making mobile payments more convenient, simple, and secure. Paying using wearables, automobiles, and appliances is also in the future. As IoT technology advances, so does the number of device alternatives, forcing organizations to implement a complete, multichannel payment solution. Contactless cards to mobile, contactless payment to P2P payments, in-app payments, store value cards, gift cards, and other new digital payment methods are emerging.
Mobile payment companies such as Google Pay, PayPal, Apple Pay, Amazon Pay, Samsung Pay, and Android Pay have seen a huge rise in popularity. These mobile payments, also known as mobile wallets, are now commonly accepted by businesses of all sizes since they enable customers to make payments, earn loyalty points, and redeem coupons without having to carry a real card.
It’s widely known that anything on the internet is vulnerable to cybersecurity threats; thus, now that digital payments appear to be the way to go, we must keep security in mind as we embrace them.
Payment businesses will put a lot of effort into enhancing their current security architecture shortly. AI (Artificial Intelligence) and ML (Machine Learning) powered systems may be able to seize the lead in this way.
Furthermore, the CA (Customer Authentication) process may become crucial to give another layer of protection to payments. Face recognition, biometrics, and voice-enabled payments are all important components of a secure CA process.
Payments using the Internet of Things technology
With the development of IoT, the corporate world is transforming, and even entire towns can communicate through connected devices. In the future, we may see IoT gadgets will act as commerce portals, building an “Internet of Payments” that allows customers to make safe, reliable, and seamless payments using wearables such as watches, wristbands, or even their cars. In-car payment technology—the next big trend will be to incorporate onboard payment technology into vehicles. You will be able to pay for gas, parking, taxes, and other services immediately from your dashboard, eliminating the need to exit the vehicle.
AI in the Payments Industry
Artificial intelligence (AI) solutions can help companies in detecting fraudulent transactions in real-time, customer risk scoring, identity verification, payment transaction authorization, and monitoring, and customer turnover.
With new payment techniques such as card-not-present transactions, online payment fraud has become a constant and growing problem. Artificial Intelligence (AI) and Machine Learning (ML) technology not only detects but also prevents abnormalities and potential cases of fraud. Because they are taught via supervised learning, where the robust models are provided a large amount of labeled data, these AI and ML models can already find patterns and generate hidden insights.
Traditional companies are being forced to open up their products (such as banking, payments, and so on) to third-party developers as a result of regulations like and open banking. This form of data integration is achievable thanks to open APIs, which allow for secure, scalable, and fast two-way data sharing between banks and third parties. This innovation has created a new form of collaboration and rivalry to build an ecosystem around the brand.
Opening APIs is an opportunity to broaden customer reach, make new use cases relevant to low-income clients easier to develop, and generate new revenue streams. It does, however, transform a company in a variety of ways, involving changes to corporate culture, processes, skills, business models, sales and marketing strategies, and technology.
The evolution of peer-to-peer payments
Peer-to-peer payments, often known as P2P payments, are digital transactions that can be used for everything from splitting a dinner bill among friends to paying a tenant’s rent. These payments enable the transfer of money between two parties via an online or mobile app, utilizing their banking accounts or credit cards.
Since the pandemic, the market for P2P (peer-to-peer) payments has grown to include everyone from tech-savvy millennials to the elderly. Platforms such as PayPal have expanded in popularity, and their typical transaction volumes have increased.
However, expanding their services and increasing revenue may be the next step for them. Many payment networks already offer other services such as investment and trading, cryptocurrency transactions, and debit card options. They’re on their way to becoming something similar to a bank.
The expansion of Pay as a Service has been driven by COVID-19. New technologies, such as blockchain and artificial intelligence, as well as new players and global macroeconomic issues, are all factors to consider. This trend has been accelerated by the entry of large technology companies into the payments business and the development of innovative antidotes to fintech technology.
Payments as a platform, a new concept expected to transform payments processing, is being developed by Amazon, Facebook, and other BigTech businesses. Payment efficiency, quicker time to compliance, scalability, and flexibility are all advantages of the innovative new Platform-as-a-Service architecture, which addresses all payments processing needs today and in the future.
What the future will look like
In the near future, non-banking digital enterprises will revolutionize the customer experience and payment systems, as well as financial services in general. Non-bank extra players, including both tech startups and technology giants, have invaded the field, posing intense competition for banks.
Fintech companies, in reality, are reshaping the banking industry by capitalizing on trends such as the rise of smartphones and mobile channels, as well as quickly evolving client expectations. Financial services organizations will need to adapt to these developments with new capabilities, products, and operating models to keep their connections with customers relevant.
Do you want to incorporate one of these payment trends in your solution? Do you want to know which ones will have the most influence on your local market? Contact us and let’s start a discussion on how the payments industry is evolving today.