The changes in digital technology and consumer trends are changing the way people make payments. Keeping up to date with the latest trends in payments is important if you’re an online retailer wanting to meet the financial needs of customers. According to a report by The Financial Brand, here are some of the top trends impacting the future of payments.
1. Cards to Code
Payment accounts were generally identified by a sequence of numbers inscribed on a card or kept in a company’s database. With the introduction of EMV - a global standard for credit and debit payment cards based on chip card technology taking its name from the card schemes Europay, MasterCard, and Visa - the power of code will eventually overtake the purpose of plastic cards. The Financial Brand notes that the transition made possible with advanced codes will affect the way blockchain, augmented reality (AR), the Internet of Things (IoT) and biometrics impact the payments process.
2. Impact of Gen Z
As is the case with the Millennial generation, the Gen Z generation (age 18-21) wants highly personalized experiences and immediacy. According to The Financial Brand, almost 70% of this generation makes use of the mobile banking app on a daily basis. However, even though Gen Z is mobile first, this generation also uses other channels more compared to other generations, such as accessing bank services at their bank branch.
3. Artificial intelligence
Experts believe that artificial intelligence (AI) will transform many industries in the next ten years, including payments. Artificial intelligence makes it possible for brands to combine data better and to incorporate those results to better the commerce experience.
4. CX as a Differentiator
The collection and study of big amounts of data makes room for the foundation of an enhanced customer experience (CX) across all industries, particularly banking and payments. The younger generation desires the improved payment advisory services and they also need a simplified way to shop and pay for purchases on their mobile devices. The Financial Brand report also reports that more than 60% of Millennial and Gen Z Consumers don’t mind sharing their bank account credentials with third parties.
5. Increasing Importance of Security
The increase in reported fraud cases is adding more pressure on the payments industry, increasing the need to balance security with the simplicity the consumer desires. The industry must stay ahead of fraudsters, and this may take the form of new biometric security features upon the inception of a payment. The industry may also introduce improved behind-the-scene features that don’t interfere with the customer experience. Banks are able to check the location of the device against the record they have of the cardholder’s location to determine the potential of fraud.
6. New Infrastructure
According to The Financial Brand, the old payments infrastructure was not designed for real-time, digital payment processing. It is also not suitable for modern fraud detection. The entire payments industry will need to transition from paper to digital processing. Phasing out outdated payments infrastructure will be required to be relevant in the future. Systems in the future will have the ability to adjust to rapid changes in the industry.
These are the top trends driving the future of payments. As we are at the beginning of a new year, the payments landscape continues to expand and transform, and new payment systems will drive changes in customer payment behaviour.