It is important to keep up to date with the latest trends and technologies to prevent your business from falling behind in the digital world. 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 our activities as a society, and technology has been developing rapidly to meet this need.
Here are the top payment trends and technologies of 2020.
Contactless Technology
These days, consumers overwhelmingly prefer to pay by credit or debit card: a recent survey found that 70% of people prefer to pay by card rather than cash. Many different types of card readers are now 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 catch on. This is largely due to more merchants accepting contactless payments, and now it is standard for businesses worldwide to have card readers equipped with contactless technology.
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 various contexts. Public transportation, in particular, has benefited from contactless payment technology. Transit users can now pay for their fares using contactless technology in various cities, keeping foot traffic flows moving and letting passengers get to their bus or train.
Biometrics
We have already seen biometric technology applied individually, with facial recognition and fingerprint scanning used to unlock smartphones. 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 of 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 identity theft, problems that only increase 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 also had applications for fraudsters, 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), which is currently being implemented across Europe. This requires customers to authenticate certain purchases to eliminate fraudulent transactions.
AI is also helping companies and institutions to analyze 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. Analyzing this data provides valuable insights that financial institutions and companies use to strengthen anti-fraud activities.
Mobile Wallets
Another big payment trend 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 smartphone app that allows users to send money, receive funds, and store their balance within the app. 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, which means more sales and more profits for businesses. In particular, mobile wallets make international payments possible, opening up a world of purchasing possibilities for consumers, and giving businesses access to consumers across the globe.
This is particularly beneficial for e-commerce businesses, who can accept mobile wallet payments from their customers anywhere. E-commerce is a booming industry predicted to overtake brick-and-mortar retail sales by 2036. With mobile wallets and other online payment technology making e-commerce easier than ever, we may even see this expansion accelerate in the next few years.
