The Global View

Where next for the payments industry?

Covid saw internet usage double. Online payments also rose, accelerating the adoption of paying by technologies such as contactless, smartphone and apps.

A report by PWC and Strategy reported an estimated 80% rise in volumes of global cashless payments from 2020 to 2025 as a result of consumers demanding more convenient new technology. 

Trending: Instant gratification 

Real-time payments are in-demand now more than ever.  

Last year, Samsung Pay discovered that almost twothirds (63%) of UK consumers prefer to use their bank cards through a mobile wallet rather than traditional transaction methods.  

To compare the two: the digital consumer shopping experience presents the system of payments in a seamless, time-saving and readily accessible way. Whereas classic forms like cash, checks and In-person banking all require people to have both time and means of travel.    

The fast-paced environment of the world prioritises convenience – at times, even over quality.   

Ginger Baker, Head of Financial Access at Plaid stated that for financial services in 2022 to be successful: “Providers need to embed capabilities and functionality into the experience their customers are already in” – adding that to completely satisfy a customer’s whole experience, companies need to facilitate their emotional requirements.  

One recent example is from the multinational financial service provider, Fiserv who recently launched Carat – a payment solution providing an ecosystem of omnichannel commerce solutions for large companies. 

Carat offers merchants access to its omnichannel services and e-commerce technologies to effectively enrich customer experience. Innovative purchasing methods such as Scan and go, order ahead, voice command and car connected services enable faster and easier order completion for customers.  Potentially, one of the next game-changers for fast-food restaurants like McDonald’s, which experience high demand orders every minute.   

To innovate in-person shopping experiences further, till-free technology has been introduced by Amazon, Tesco, Sainsbury and ALDI which only opened its first checkout-free site last month in London.  

Whilst this new approach to shopping is still emerging, the technology behind it can offer endless possibilities. Trigo Tech, an Israeli company that developed the software for Tesco’s GetGo store,  have already started to reimagine the customer’s journey as a process whereby a QR code is used for entry, followed by multiple cameras synced together to identify products in the shopping basket.   

The EMEA vice president for Faethm AI, James McLeod, predicted in 2021 that future automated systems like till-less checkouts will go mainstream in five years or less time.  

Industry pains and solutions 

Although the emergence of a digital-first society generates growth and a wide range of opportunities, it has also raised concerns about industry threats. Particularly, security breaches within payment systems.  

According to the Digital Fraud prevention company, there was approximately a 70% increase in the average value of attempted fraudulent purchases during the 2020 pandemic. 

The level of competence involved in delivering financial services to consumers heavily relies on the provider’s ability to ensure any transactions and communications are made securely with end-to-end encryption.  

From an ethical perspective, the customer’s privacy and safety always outweigh concerns over capital as risk is greater when the client becomes exposed to danger and the loss of personal assets. 

ClearSale and Sift are two examples of industry leaders that are utilising machine learning-based tools to combat authorised fraud payments. Similarly, risk scoring and mule account modelling tools such as Stripe Radar and BioCatch Mule Account Detection are also being introduced to provide trigger alerts of illegal transaction activities. 

Universally governments and the private sector are working together to develop digital identity systems that will provide solutions to fraud in digital payments. 

In Europe, Business Finland has invested €20million into a five-year digital ID initiative with the Finnish IT software and service company TietoEVRY. They aim to build trusted ecosystems and services within the social, health, welfare, finance, and energy sectors.  

This month, Ecospend, UK’s leading open banking technology provider, has also announced its collaboration with Yoti to provide identity solutions.  Using the Yoti digital app, consumers verify their identities and securely store their details for ‘pay-by-bank’ payments. Such a launch is pivotal not only for consumers, but businesses and governments as they can successfully multiply cost savings and deliver high-quality user experiences.  

Africa, South Asia and South America are all experiencing foreseeable economic development. Through the penetration of smartphones for money transactions, each region will have access to cashless payment systems which – if successfully, efficiently, and ethically supplied – could help to improve financial inequalities amongst citizens.  

The convergence of social media, apps, and payments 

Social media is transforming the payment landscape. 

China’s retail market has seemingly mastered the art of devising payment strategies that lead to further revenue and exposure. By joining merchant engagement with individual consumers on social channels to enhance marketing sales, Chinese retailers arechanging the market.  

Douyin, also known as TikTok in the west, supplies an inclusive and interlocking ecosystem for retailers to market their products and connect with customers on the same platform. Also available via the app are online purchasing tools and product evaluations. Thus, devising an all-encompassing system where users do not have to virtually travel beyond the app for what they require.  

Similarly, cross-border payments which offer overseas banking is growing in popularity.   

In China, Lydia is a financial service super app that allows peer-to-peer payments, flexible sub-accounts, and virtual bank cards.  

One of the earliest mobile banking apps in the UK was Monzo which started in 2015 – and now has 3 million customers acquired from traditional banks, serving, and positioning itself as an alternative.  

Virtual banking is progressively becoming the most cost-effective way for financial service providers to operate and help customers process payments, manage bills and save money.  

Securing Future success  

Although the payments industry is undergoing innovative change, the most successful developments are the ones providing authentic solutions to relevant consumer and industry concerns.  

For end-users, the main priorities to be seen are ease of operational use, transparency, and security. Financial sector businesses will have to make these considerable checkpoints in their approach to payments for growth and market leadership.  

As seen through Ecospend and Yoti, collaboration and inclusion also make up the key ingredients for upcoming payment processes. Past success in leveraging partnerships and third-party involvement has helped financial service providers produce original and transformative ideas that allow people from all around the world to connect and transfer their assets to others.  

There is no telling what can come from the idea pool of payments – but what holds true is that it is an evolving industry set to see real transformations globally.