Payment Trends & Technologies
To prevent your business from falling behind the digital world, it is important to keep up to date with the latest trends and technologies. Digital innovation is advancing faster than ever before, from AI and cloud computing to advances in medicine.
One area of innovation that is critically important for businesses and consumers alike, but is often overlooked is payment technology. How we pay for goods and services is fundamental to many of the things we do as a society, and technology has been developing rapidly to keep up with this need.
Here are the top payment trends and technologies of 2020.
These days, consumers overwhelmingly prefer to pay by credit or debit card: on recent survey found 70% of people prefer to pay by card rather than cash. There are now many different types of card readers available to businesses, and underlying these is contactless technology.
Contactless card readers were first developed in the early 2000’s, but it is only in the last few years that we’ve seen them really catch on. This is largely due to more merchants accepting contactless payments, and now it is standard for businesses all over the world to have card readers that are equipped with contactless technology.
In fact, around 60% of all card transactions in the US are now contactless. This makes payments quicker and easier, which is great for businesses and consumers in a variety of contexts. Public transportation in particular has benefited from contactless payment technology. Transit users can now pay for their fares using contactless technology in a range of cities, keeping foot traffic flows moving and letting passengers get to their bus or train.
We have already seen biometric technology applied at an individual level, with facial recognition and fingerprint scanning used to unlock smart phones. Now biometrics has arrived in the banking sector, with the first biometric fingerprint credit card issued by a UK bank last year. Biometrics has a lot to offer payment systems, potentially representing the most secure types of payments possible.
Biometric technology involves any kind authentication or verification method using an individual’s biological and structural characteristics. Along with fingerprint scanners and facial recognition, biometric methods include iris recognition, heartbeat analysis, and vein mapping. These hold great value in combatting fraud and identify theft, problems that are only increasing in severity in 2020.
AI & Machine Learning
Developments in AI and machine learning have dominated the technological landscape in recent years, and are now seeing applications across just about every sector. This has resulted in useful tools to reduce fraud in online payments. However, machine learning has had applications for fraudsters too, helping them to be more sophisticated in their approaches.
One recent alarming development was the emergence of “synthetic identity fraud”, where criminals create credible fake identities by merging genuine information about real people with fake data. This creates fraudulent profiles that are harder to detect. On the other hand, machine learning is making it easier for banks and financial institutions to detect fraud. An example of this is Strong Customer Authentication (SCA) that is being implemented across Europe at the moment. This requires customers to authenticate certain purchases, in order to eliminate fraudulent transactions.
AI is also helping companies and institutions to analyse their data and make systems more robust against fraud. While fraud is pervasive these days, this also supplies a large amount of data on fraudulent activities and fraudsters. Analysing this data provides valuable insights that financial institutions and companies are using to strengthen anti-fraud activities.
Another big payment trend that we’re seeing at the moment is the use of mobile wallets: a report by Retaildive showed that 2.1 billion customers used mobile wallets in 2019. A mobile wallet is essentially a smart phone app that allows users to send money, receive funds, and store their balance within the mobile wallet. Many mobile wallets also allow consumers to make payments to service providers, or purchase products and services.
Consumers seem to love the convenience of mobile wallets, and they are good news for businesses too. Any tool that makes payment quick and easy reduces the barrier to purchase means more sales and more profits for businesses. In particular, mobile wallets make international payments possible, literary opening up a world of purchasing possibilities for consumers, and giving businesses access to consumers across the globe.
This is particularly beneficial for eCommerce businesses, who can accept mobile wallet payments from their customers from any geographical location. Ecommerce is a booming industry, and is predicted to overtake bricks-and-mortar retail sales by 2036. With mobile wallets and other online payment technology making ecommerce easier than ever, we may even see this expansion accelerate in the next few years.