The future of payments
September 27, 2019
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It’s nearly 2020, and while cars still don’t fly, a lot has changed in the way payments are executed and processed, and we’re here for it!
In the last 70 years, payment technology has changed and evolved at a lightning fast rate. From credit cards to digital point-of-sale machines and now wire transfers, cryptocurrencies, and mobile payments. At the moment, the future of this technology seems infinite.
So what’s in store?
The future of payments technology has everything to do with meeting the growing and changing needs of businesses, and their customers.
The future is the customer
A customer isn’t just the busy parent ordering groceries online or the teenager using his Starbucks app to order ahead, it could also be the small business owner finding ways to get more clients online.
Every day, companies are coming to the forefront of the tech world, offering accessible tools that make payments easier to send, receive, and understand.
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Consumers are changing. And in the US specifically, the attitude toward payment technology boils down to 4 factors: changing demographics, technological history, business attitudes, and a culture of security.
According to a report by Accenture, by 2020, the inherently digital Gen Zers (those born between the mid-‘90s to mid-‘00s) will make up 40% of all US consumers. And of that, 68% of Gen Z consumers are interested in instant peer-to-peer payments – more than any other age group.
This means that more and more of the technology being produced and/or updated will need to meet the standards that make mobile P2P payments easy and accessible, helping to ensure that Gen Zers are given more incentive to join the payment revolution.
When card as payment was first introduced in the US, they operated on the same point-of-sale systems that simplified the payment process for merchants. Nowadays, these systems are outdated, but it’s hard to change established processes like these.
Payments have also moved past “transactions” as the only feature offered by their preferred payments provider. People want to do more, including get a better understanding and control of their personal spending. 61% of consumers welcome open access to their finances so they can see checking account or credit card balances when paying with mobile apps.
Attitude plays a huge role in the integration of alternative payment methods. For example, as new payment technologies are created, China has asked itself, “How can we integrate payments into new technology?” Whereas the US has asked, “How can we integrate new technology into existing payment infrastructure?”
Businesses in the US are concerned about the reliability of technology meeting the needs of consumers. If the technology were to fail for the customer, the concern for businesses becomes losing clientele which could also influence the network effect based on negative reviews.
Culture of security
Finally, at the end of the day, the US businesses included in the study have repeatedly chosen profits over security. In the US, high-profile data breaches at major online companies have emphasized the need for better security, and yet, data regulation is comparatively nonexistent to that of Europe.
The future of payments will need to address these concerns to build an audience that trusts the technology and meets the changing needs of the consumer.
The future is invisible
One of the most transformative aspects of payments has been making the visible invisible. In other words, making payment technology as seamless as possible by taking the transaction process from the foreground to the background of any exchange. It’s like you don’t even have to think about it.
In doing this, businesses are able to drive conversion by removing the friction that could get in the way of a consumer, merchant,or business partner doing business.
This is not to say that in making payments invisible, you’re delimiting the transparency that customers strive for when it comes to online payments. This is just removing some barriers that can prevent a start to end transaction.
Seamless payments look like this: users are no longer forced to enter credentials every time they want to buy something, improving the odds that they’ll make a purchase.
Orders that are made ahead of time for in-store pickup, ensuring consumers don’t have to wait in line or risk not being able to get what they want.
According to PYMNTS.com, another revolution in seamless payments occurs when marketplaces like Amazon or Ebay make brands less visible. This means that rather than online stores displaying items by brand, they will just offer all the options of the item you’re looking to purchase. The odds will increase that a consumer will buy something because they are presented with more choices this way.
Sometimes payment technology is just about evolving old systems and other times it’s about creating entirely new systems. In the future, and across devices, AI and machine learning will power smart, personalized, and secure experiences and will be able to anticipate needs and make suggestions – or just automatically make purchases.
The prediction is that “invisible” will define the next decade of payments innovations. Transaction volumes will increase as frictions decrease and everything becomes digital — and the act of transacting becomes seamless, secure, and consistent.
The future is relationships
Our world is, more than ever, connected. Technology and digital innovation have turned miles into steps and days into seconds, in more ways than we can imagine. Part of this work has involved the removal of intermediaries from transactions. Direct-to-consumer sales are growing, Uber and Lyft connect riders directly with drivers, and you can rent a room or your whole house on AirBnB without a real estate agent.
Given the cost of intermediary banks and financial institutions, something needed to change in this space. It seemed like this style worked for other industries, but would it work for payments? Turns out, it does.
At Veem, the future of payments is relationships. Connecting parties directly, removing the intermediaries that make payments slow, expensive, and insecure, while putting the power into the hands of the people actually paying and getting paid, is something sorely missed in this space. Like Uber, AirBnB, and other connection-based platforms, Veem is the new standard in a space ripe for innovation.
Simplify your business payments with Veem.