The Fintech sector is leading the way in focusing on a single sector of finance. The bank sector, however, is lagging as it focuses on numerous verticals such as insurance, payments, credit card issuing, and so on.
Following are popular themes for how payments may evolve in the future:
1. Payment Value Chain Built On Data
With APIs in open banking, transactional data in payments provide considerable value. The data uncovered by this analysis reveals multiple opportunities to prevent fraud as well as streamline financial planning for both consumers and corporations.
Competitive players that can effectively use these data will have an advantage. Among the key technologies in payments, data analytics tools and artificial intelligence (AI) continue to be prominent.
This will change the entire value chain within the payments industry. Increasingly, businesses will realize the importance of payment data analysis. If they can pay less for goods and services, then consumers will agree to share more data.
2. Frictionless Payments
To stay competitive in the modern digital world, e-commerce and retail businesses need to eliminate customer friction.
Payments made with frictionless technology use data from websites, devices, and apps to enable customers to buy faster and the merchant to sell more easily. This helps merchants increase revenue, reduce cart abandonment, and improve customer experience.
To qualify as frictionless, the checkout process should fulfil some or all of the following requirements:
- Faster checkout
- Fewer steps to complete checkout
- Feels like a natural part of the customer experience
- Reduces the cardholder’s cognitive strain
- Minimizes or eliminates waiting time
There are various frictionless payment options, including contactless card payments, mobile or e- wallets, and auto-renewing recurring payments or subscriptions, invisible payments, in-app payments, one-click payments, and device-initiated payments.
3. Cashless Economy
The pandemic has had an impact on the way people pay for goods, even though cash will likely never completely replace cash. As a result, e-commerce has grown and card payments have increased.
The use of cash had already decreased before COVID-19, but it is predicted to continue once social distancing is no longer necessary. Consumers will likely opt for cashless payments in the future.
4. Contactless Payments
In response to the pandemic, contactless payments grew. People are coming to realize the convenience of mobile payments, as consumer behaviour continues to change. The use of credit cards is expected to decrease and be replaced with digital wallets. The point of sale (POS) will transition from a permanent physical location to a mobile one.
In addition to large retailers, software-based POS systems are becoming increasingly popular. The new payment method is also available to customers of smaller businesses.
5. Moving Forward with The Future of Payments
In the past three to five years, the Coronavirus has significantly accelerated the growth of e-commerce and digital payments. Behaviour is evolving, and self-service and contactless methods of payment are no longer viable. They are indispensable.
Developing seamless, efficient payment systems will enable you to connect with your customers and provide them with a better shopping experience in the future.
Infographic created by Clover, a merchant services company