Throughout 2018, new technologies continued disrupting traditional payment processing methods across the globe. Cryptocurrencies, P2P payments, and mobile wallets are just a few of the innovations that are gradually gaining momentum to eventually overtake cash and cards.
With so many new elements vying to play a role in the future of financial transactions, it’s important to pay attention in order to adopt rising trends early. In doing so, you’ll serve your future consumers’ needs, rather than being left in the past. Use this summary of 2018 in the world of payments to inform your plans for payment processing going into the new year.
The Growing Impact of Generation Z.
Members of Generation Z (born between 1995 and 2012) are the first people to truly grow up with the internet. As such, they demand the same instant and highly personalized experience with their finances that they get with streaming, email, and social networks. To illustrate this point, almost 70% of this generation uses mobile banking apps daily, and 68% desire instant P2P payments.
The Rise of Mobile Wallets.
The rise of mobile wallets is supported by global giants such as Apple, Google, Samsung, Chase, GAP, Sears, 7-Eleven, Target, and Walmart adopting the technology. In fact, in 2016 mobile wallet transaction accounted for about 8.6% of all non-cash transactions, equivalent to $41.8 billion. Large technology companies, such as Google, Amazon, Facebook, Apple, Alibaba, and Tencent, drove this movement, being responsible for about 71% of mobile wallet transactions.
Advances in Biometric Security.
Biometric security finally started hitting the consumer market in the past few years. This technology adds another level of security to makes mobile payments more secure and preventing theft. Once implemented, these systems will allow credit card payments to be authorised via fingerprint or facial recognition.
Consumers Want Better Loyalty Programs and More Rewards.
It’s becoming increasingly evident that consumers want more rewards from their transactions. One study showed that 48% of consumers are willing to switch their primary card to receive higher rewards. Furthermore, 66% of consumers want to redeem rewards as they swipe their card to check out. This demand provides an opportunity for payment players to deliver rewards that meet their consumer’s needs in real time when consumers are still in the store.
Increased Use of AI in Transactions and Monitoring.
Although they are a relatively simple form of AI, chatbots are revolutionising routine mobile transactions. After gaining approval from customers, these bots are able to prepare and execute transactions. Furthermore, based on simple voice commands, they can provide basic financial snapshots and transfer funds to other customers.
Fintech-Bank Collaborations and API Based Partnerships.
Payment ecosystems are expanding as fin-tech companies collaborate with financial institutions. Fin-tech companies offer banks easy access to modern technology, innovative ideas, and modern analytical tools while banks provide fin-tech companies with large customer bases, brand name support, and guidance through regulatory obstacles. Through the growing use of APIs and other digital technologies that arise from these partnerships, the user payment experience will be vastly improved.
Growing Adoption of Blockchain Technology.
The hype surrounding Bitcoin this year wasn’t for nothing; blockchain technology holds the power to make transactions much more transparent and secure. Expect financial institutions to adopt this innovative technology as we move into 2019 to capitalize in its ability to create instant payments, smart contracts, and reduced errors.
Payments as a Digital Experience Factor in eCommerce.
Recently it’s become clear that payment infrastructure is a key factor in the customer experience. How streamlined and enjoyable the payment process is will affect a consumer’s likelihood of making a purchase and returning. Accepting digital wallets and local payment methods is a great way to begin doing this.
P2P Payments are Taking Off.
As popular messaging platforms such as Facebook Messenger, WeChat, and WhatsApp implement P2P payment options, more people are transitioning to a cashless lifestyle. Now, rather than paying back a friend for lunch via paper bills, one can directly transfer the funds via their smartphone. In fact, 16% of people aged between 18 and 24 use P2P payments at least once a week, and 23% of respondents aged 25-34 do the same.
Judging by the momentum of all these new technologies, it’s clear that these trends won’t be slowing down in 2019. For that reason, it’s best to get on board with the movement towards eCommerce as soon as possible. In doing so, your business will be on its way to serving the customers of the future.