In today's society, a consumer can get almost anything delivered door-to-door in an hour. You can order groceries or medication online and have them delivered to your doorstep. Mostly everything you do now is heavily reliant on being present in some form of digital space from the comfort of your home.
What does the future hold in store for us, and how will future payment technology impact already-existing business models? Let’s discover some predictions for the future of payments.
Digital Payment Trends in 2021
The shift in digital transformation and our perception of everyday transactions have heavily impacted businesses and individuals worldwide. The average individual daily consumption of the internet has risen to over 403 minutes per day. That would mean that you spend at least six hours browsing, shopping, or interacting with content online.
That also means you leave a digital footprint wherever you go. Security aspects of going online have become one of the most relevant topics today, especially concerning digital payments. Convenience often comes with a price, but not all current and future digital payment trends are ominous.
Digital payments also come with a number of benefits. Consumers are offered:
More accessible services;
Reduced dependency on cash;
Fast transfer speed;
Higher payment security;
More customer-friendly experiences.
Regardless of how we feel about digital payments, some futuristic trends are coming our way, whether we like it or not. Choosing the way we want to buy and the way we want to pay is something all businesses need to consider in the future. How both the average business and the financial institutions change and adapt to the market needs will determine the world's future. So, what does the future of payment systems look like?
The mobile commerce (mCommerce) market is expanding every day. There are over 5 billion unique mobile users globally meaning that almost 70% of the entire population of Earth is using a mobile phone.
With nearly 90 million new users annually, the mCommerce market is the main focus of most businesses. Business websites are made mobile-friendly more frequently than not — otherwise, they might suffer penalties by Google. The user experience is often modeled to better serve the mobile user rather than the desktop user. This wasn't the case only ten years ago.
AI and ML in payment technology
Additionally, with the introduction of new technologies into the equation, the security aspect is increased. That is partially due to artificial intelligence (AI) and machine learning (ML).
AI and ML help a lot with fraud detection, process automation, and improving reliability because of their ability to parse massive amounts of data.
The development of small biometric scanners, AI scanning technology, and other similar concepts allow users to be the only ones in full control of the transaction. But the rapid change doesn't stop there.
Before the pandemic, on average, 1.5 billion tourists per year have been recorded to cross borders and travel to all types of destinations globally. That requires new and cheaper solutions for making transactions overseas or the more liberated flow of money. This comes at the best time possible, given the recent attempts to overcome the traditional currencies.
Cryptocurrencies and blockchain
Cryptocurrencies and blockchain technologies are breaking the global barriers and forever changing the way we sell, buy, or pay for goods and services. All of these trends require fast and user-friendly payment solutions. They cater to the global customers' needs, allow them to make purchases online, send, receive, and withdraw money, all within a short time frame.
Response to emerging market trends is always followed by significant advancements in available technologies. The digital payment market is no exception. Keep reading to find out what digital payment technologies we can expect in the future.
Future Digital Payment Technologies for Businesses
When looking at businesses and emerging transaction markets, some future payment tech changes are already taking place. So let’s see what technologies are taking over.
The FinTech market is currently on the way to over 300 billion USD valuation. Considering its short presence on the global markets, this industry's growth is nothing less than extraordinary — traditional banks have been around for more than five centuries.
Companies are offering convenient services tailored to each user individually. According to Ernst & Young research, almost 50% of consumers use FinTech money transfer and payments services. Some Voice over Internet Protocol (VoIP) apps are copying their current systems in terms of convenient money transfers or user experience in sharing costs, such as paying a bill in a restaurant.
The key features of this system are:
FinTech allows for B2B services, like mobile banking, where both the businesses and consumers are at more convenience with digitized proof of transaction as well as ledgers. PayPal, for instance, is one of the worlds' first FinTech companies, currently earning 2.4 billion USD.
FinTech also provides consumer-to-consumer services, like helping people transfer money to each other with more ease and smaller applied charges than in traditional banks.
FinTech companies allow for a narrower, bespoke approach to their customers, creating tailored experiences for each user.
Open platforms, collaboration, and networks payments
This is one of the most recent, innovative payment technologies of the future that opens up opportunities for businesses and entrepreneurs to engage in a variety of programs ranging from fraud prevention to outreach for future purchases. Creating an open platform for data flow — this concept goes far beyond simply answering the question of whether to accept or deny a transaction of data.
The key features of this relatively new payment system are:
Offers both the average and industrial end-user the same access to tailor the transaction software to suit both of their needs;
Tailoring needs do not affect the flow of money;
Allows real-time interaction;
In most cases, has an approachable, and easy to manipulate interface for all users.
For example, when businesses enable access to the cardholder's funds at a point in time, the security and comfort levels will impact the quality of the transaction. Engaging in this future payment system will positively impact the situation allowing both ends to have a unique experience.
Seamless, invisible payments
If you've ever ordered an Uber, you've most certainly encountered this new “invisible” payment. One of the critical aspects of this trend expanding is the current infrastructure allowing for cheap and stable broadband internet coverage. Some countries have not acquired the necessary technology but have made commitments to tap into this emerging market and develop access to a reliable and relatively simple way of conducting business.
The key features of these payments are:
The transaction is triggered automatically upon the completion of the service.
The technology requires no direct contact between the customer and the service provider.
The purchases can be made without leaving an app or entering card details.
Imagine just walking out of the supermarket with your groceries without having to interact with the cashier or the cash register – convenient, huh? The younger generation, worldwide, has no trust issues with companies such as Google, Apple, Facebook, and Amazon (GAFA), who have already begun leading the world in contactless payments, making life easier for those more active. Even traditional banks are catching up in this race, enabling their customers to engage in tailored, highly responsive payment services.
Generally, not having to make extra moves or leaving an app while making a purchase improves ease of use, and that is not the only example. However, while this emerging market allows for a great user experience, this payment system only succeeds if the consumer trusts in the security, framework, and transparency of all parties involved in the process.
Biometrics and digital identity payments
The GAFA (big tech) platforms, as mentioned above, partially allow for such future payment solutions to exist. If you're trying to buy an app or service online through Google or Apple, you can authorize your payment with your fingerprint or Face ID. This security aspect makes sure that only you can confirm a transaction, and is a leading factor behind the expansion of biometric payment systems.
This, of course, means you need a biometric scanner on your mobile device or have hardware capable to act as one. Most modern mobile devices have this hardware installed.
The key features of this payment system are:
Has no limit on what amount you can spend;
Doesn’t require the user to memorize their PIN;
Reduces the amount of administration needed for the transaction to take place;
Identifies the user instantly, so it reduces the risk of fraud significantly.
However, there are security concerns. Biometric transactions are still heavily reliant on traditional banks in most parts of the globe. Active policies prevent companies that use biometric technology from overcoming transaction ledgers instead of banks and require you to share your debit or credit card data with them. This created some trust issues, especially in this day and age where data is used as currency.
The security upside is that this payment system still requires interaction between the seller and buyer.
Artificial intelligence algorithms in payment systems
AI and ML models are used to learn about customers’ habits.
Their key features are:
Tailor the payment services to customers' exact needs.
Provide comprehensive insight into purchasing and decision-making habits.
Help companies make all the right choices and tailor their services towards the customer more efficiently.
Improve the security aspects due to the advanced technological requirements.
This future payment system fosters innovation and requires constant growth, which ultimately leads businesses to grow with it. And this innovation is sure to grow into the implementation of voice recognition systems into payment systems to simplify user interaction and improve satisfaction.
The problem of paying higher rates when purchasing goods or services when you're out of your native country is almost solved. Companies such as PayPal, Skrill, Apple Pay, Google Pay all offer something called an eWallet – a software-based wallet allowing you to pay for online or in-store transactions for a fixed fee, regardless of the currency.
In a few years, this current system is likely to develop into a new payment system that offers cryptocurrency and blockchain payments as well. With the emergence of the global financial phenomenon of cryptocurrencies, FinTech companies and traditional banks have shifted their focus on allowing cross-border transactions to occur more conveniently.
The key features of these digital payment technologies are:
Easy functionality, where the payment happens through one eWallet;
Transaction transparency, where both users are only familiar with each other;
Online purchases, since this payment systems’ usability is exclusively online;
Sending, receiving, and withdrawing money.
On the downside, blockchain payments take several days to clear right now due to differences in legal frameworks in different countries and continents. Unfortunately, not everyone has the same access to technology, and today's differences are still something that has to be overcome.
The number of devices utilizing voice recognition software has grown by over 100% in the past three years. This payment solution is closely connected with the implementation of machine learning and artificial intelligence in everyday life. It reduces administration and makes payments significantly more convenient.
The key features are:
A hands-free experience, where the user opens up the potential to have faster everyday operations on the run;
Safer payment practices, where just like the biometric payment system, it relies on the specific physical characteristics of one user;
Reduction of administration costs required to process the payment.
Future payment technology is only going to keep evolving. With all of the different available future trends in payments, implementing the right business and user-oriented solution that best suits all ends is difficult.
Trust, transparency, and collaboration between clients and businesses are key in identifying these opportunities and being informed and well equipped to tackle such difficult obstacles. Knowledge in data science, mobile and web development, and creating a friendly user interface can make all the difference.
However, there are some services providing full guidance through such processes.
You don't have to be Google to implement the latest technology. The right software partner may be just what you need to stay within budget and make needed changes. With years of practice in the FinTech industry, Geniusee can help you in designing future payment solutions.