In 2018, consumer interfaces, security, and software innovation will be the pivotal points in the payments industry. These trends were revealed in a fresh study conducted by sponsored IDC Market Spotlight and sponsored by the Electronic Transaction Association (ETA) released in January 2018.
New interfaces to drive commerce
According to the CEO of ETA, Jason Oxman, financial institutions, payment processors, fintechs, and networks are innovating by integrating new interfaces and higher security features to boost commerce for both consumers and retailers. In this light, 2018 should unfold fresh opportunities in the payment industry where payments and technology will have key roles.
2018 will unfold new channels in the payment industry
This year, new channels such as Voice, AI and the Internet of Things (IoT) are expected to receive a dramatic boost in the payments industry. IDC Market Spotlight forecasts that about 30 billion devices will be connected to the internet throughout this year. Merchants and vendors will experiment with the integration of new channels such as connected devices managing purchasing decisions and payments, voice-enabled commerce through in-home devices, and chatbots initiating payments on social networks. The research also predicts that connected devices should generate $150 billion in transactions this year.
“Voice is a natural way to communicate and it will become a very important part of commerce as we move forward,” highlighted James Wester, Research Director for IDC. Hence, voice commerce will be chosen as a seamless, easier and natural mode to make payment. The Market Spotlight also advises financial institutions and payment technology vendors to lay emphasis on their preparedness in the face of the rapidly developing IoT, especially with regards to the assignment of customer identities and accounts to connected devices.
Point of Sales (PoS) will undergo drastic changes
In the U.S., merchants are expected to spend about $1.7 billion on POS hardware in each of the next two years. As POS systems continue to evolve, in 2018, large retailers will seek to adapt their POS to handle more than the transaction while small retailers seek powerful, comprehensive, and affordable POS options.
Already, the POS is one of the pivotal points in the whole retail experience, relied upon to bring value to a seamless shopping experience. Transactions are no longer restricted to the cash register at the counter. Transactions today encompass rewards and loyalty programs while POS systems are also expected to help merchants take decisions on pricing and logistics.
Adoption of payment and security software will witness a rapid growth
Alongside the POS, applications, and software are also expected to extend beyond payment acceptance. The IDC Market Spotlight forecasts that U.S. merchants will spend $2.2 billion in 2018 and $2.4 billion in 2019 to acquire POS software alone. Moreover, customer analytics and loyalty management solutions expenditure is expected to attain $1.4 billion in 2018 and $1.6 billion in 2019, according to the survey.
On a parallel note, transmission networks are also seen to evolve. The focus will be laid on new payments networks to carry transaction volume as financial institutions will be upgrading their back-end systems to seamlessly connect across multiple channels.
The report also underlines that U.S. vendors are keeping a budget of $1 billion to spend on security software this year. New tools and technologies to combat the growing cybersecurity and fraud threats that merchants face online and in-store will equally witness a rapid development.