Various crucial shifts such as changes in consumer behavior, the advent of new technologies and morphing of the regulatory landscape are causing major changes in the payment ecosystem. This year is poised to witness unprecedented makeover whereby three principal trends will affect the industry, largely boosted by a high level of demand.
Three major trends that will present great opportunities
The shifts in the payment system will be seen as not only great opportunities but as considerable challenges too. Following are the three principal trends that will mark the industry.
The demand for safer data
It is a fact that payment options are under constant evolution. Shopping habits are changing, urging merchants and brands to adapt their payment methods. As a result, in-app and one-click ordering is gaining traction. On a parallel note, much progress is being carried out to design new and high-end payment methods thanks to the emergence of the Internet of Things (IoT). One of the latest developments in this field is connected cars.
Nonetheless, despite the array of payment options, consumers remain very much concerned with the level of security accompanying these methods. As a result, issuers and merchants should take care to deliver varied and up-to-date payment experiences without sacrificing the level of security. EMV chip cards have proven to secure physical Point-of-Sale (PoS). If this has been seen as a boon for in-store purchases, it has, however, urged criminals to adapt and shift to weaker systems and e-commerce channels are still viewed as being vulnerable.
Issuers and merchants should hence aim at delivering up-to-date payment experiences without sacrificing the security aspects. This measure is not beneficial just for the customer but for merchants and issuers as well; the average cost of a breach may cost up to $ 4million. Fines for failing to ensure that proper recommended measures are put in place are also growing heavier.
Faster payment options should also be more efficient
Not all payment methods are rapid despite the multitude of payment options. Account-to-account transactions, such as payment of salaries or utility bills can still take several days before clearing and settlement. Consumers are increasingly demanding real-time transactions and many issuers are doing their best to respond to this demand. This year, it is expected that instant account-based payments will grow exponentially. If this type of transactions is well-acclaimed by consumers and clients, banks seem to stay wary as it means that they will literally have just some seconds to assess risks and identify potential suspicious activities. It is no surprise that history has linked certain spikes in fraud to such instantaneous transactions. Tokenization may be adopted by banks to mitigate this type of fraud.
Digital retail wallets are in high demand
If initially, digital wallets and payment apps proposed by retailers failed to gain traction and banks were poised to dominate the payment landscape, such is no more the case. As a matter of fact, an increasing number of retailers are launching their own wallets. Examples are Tesco Pay, Decat pay and Walmart just to name a few. Consumers are no more as wary as before and they have grasped the array of benefits in using a retailer’s wallet. For instance, these wallets may allow shoppers the hassle of waiting in line by offering scan-and-go purchasing options.
Artificial Intelligence (AI) is equally being used to further enhance the shopping experience and maximize convenience. For retailers, this technology is a powerful tool in consolidating customer engagement and loyalty and to subsequently boost sales.