In this post, Alex Hillsberg blogs on the trends emerging this year in the online payments sector. Alex is editor-in-chief of FinancesOnline and a head of their review team. He specialises in writing about the SaaS and B2B software market, and the role of software and cloud-based solutions in helping companies grow and acquire more customers.
The online payment industry is witnessing fast improvements in technology that are making it simple to transfer funds and accept payments. In 2017, these developments have become more efficient and common. This article summarizes the key online payment trends in 2017 that are redefining the industry and making things more comfortable for consumers.
Cash is Passe
The world over cash payments and ATM and check usage is declining as digital payments are becoming more popular. This is because online payments offer more value, control, and convenience in this digitalized world compared to cash. Consumers can store their account information and preferences securely so that they can personalize and automate payments anytime, anywhere when they wish to buy anything.
Other advantages are you can manage your budgets and finances more efficiently and control your expenses. Vendors are boosting this trend by offering extended services and offers that are customized for customers’ needs and location.
Mobile Payments are In
Mobile payments are not yet completely dominant but they are making fast inroads thanks to the availability of Near Field Communication (NFC) smartphones. Apps are offering friendlier interfaces and shops are using MCX readers or NFC-powered POS terminals to encourage consumers to use their mobile phones to make convenient payments.
A recent survey reveals that a good percentage of shoppers used their mobile phones for holiday shopping and have downloaded their favorite retailers’ apps on their devices. Brands like Facebook, Google, Samsung, and Apple are capitalizing on this trend by making use of payment services that enable their customers to use their smartphones to make payments.
Smartwatch Payments are the Next Big Thing
If you thought mobile payments are revolutionary, technology has already gone one up with smartwatch payments. You can now simply tap or wave your NFC-powered smartwatch over a POS machine at the shop to make the payment. So the smartwatch is not just fashionable and trendy, it has become payable too. Besides smartwatches, other wearables such as the Lyle & Scott bPay jacket, bPay Band, and the Jawbone UP4 can store your debit or credit card data.
Simply wave your wearable at the shop checkout to complete the transaction.
Mobile Apps Dominate
Mobile apps are changing the manner in which consumers buy and pay for services and products. Domino’s Pizza reports that 35% of its global sales are through mobile apps, Groupon says 50% of its transactions are on mobile, and Taco Bell informs that two million users downloaded its mobile application. The advantages of mobile apps are more payment options, tracking, coupons, accuracy, personalisation, and speed. The only downside is you miss the chance to flirt with the checkout chicks while waiting in line at the shop!
Contextual Commerce is the Trend
The integration of mobile devices, apps, and social media is revolutionizing the manner in which consumers pay for services and products. Sellers are boosting their conversion rates by making the purchase process simpler, engaged, and more relevant for consumers. The customer is already present on their app or website and is ready to buy, so why drive them away to another seller? This is the reason Pinterest, Twitter, and Facebook are making good use of the impulse buy button to tempt customers and ensure merchants get faster payments. Smart sellers are focusing on commerce, context and convenience to boost their sales.
Integration of Mobile Payments with Loyalty
Merchants and payment companies are integrating payment services with loyalty features to differentiate their offerings. Starbucks has hitched its loyalty scheme with its payment app. Consumers get loyalty points when they use their mobile device to pay for their coffee and they can track their points easily. A good percentage of smartphone users opine they would like to have loyalty schemes on their devices and merchants see the benefit of offering them the same.
Another benefit is sellers get insightful data on customer behavior as well as effective ways to convey their messages to their patrons. It is a win-win for all as customers reap the benefits of being loyal to their preferred brand and payment companies can offer faster and more secure payment methods that do not violate data ownership or consumer privacy.
Advanced Payment Features
Payment providers look to serve consumers in multiple commerce channels by expanding their capabilities to make use of reliability testing, quicker product development, application program interfaces (APIs), and cloud-based data warehousing. These technologies help payment companies to compare consumer spends and minimize risk and fraud.
Merchants need to fully support their customers through their decision cycle which consists of searching, evaluating, buying, paying, and brand loyalty. They also need to track buyers across various shopping channels like mobile and online. To help merchants’ needs, payment providers are looking to expand their products by forming alliances with cloud-based applicators, data analytics specialists, app developers, and digital innovators to offer integrated payment solutions. Thus, it has become important to form technological and strategic partnerships to stay relevant and competitive.
Blockchain Technology is Gaining Ground
Blockchain is the key technology behind Bitcoin and many established financial institutions like Capital One, Citi Ventures, and Visa are investing in Chain, a blockchain services provider. This technology is becoming important and can impact the entire financial industry because it has the capability to offer convenient and secure online payments to users. Among its many benefits is the capability to analyze and process a huge amount of digital data. The technology can significantly improve cash management in banks and make the process more transparent. It can reduce the time needed for the settlement window to just a few hours from days and also eliminate risk.
Subscription Services are Becoming Popular
The e-commerce arena is witnessing the growing popularity of subscription services such as the Dollar Shave Club. Therefore, it is not surprising that enterprising companies like Adobe and Microsoft have successfully adopted the subscription model. The reason for this trend is Millennials prefer the various pricing models offered by subscription and they can also stay connected across the multiple devices they use in their daily life.
EMV stands for ‘Europay, MasterCard, and Visa’ and these companies are issuing new credit cards with embedded microprocessor chips. These secure cards have become mandatory in the US and consumers can make safer payments as this technology makes it more difficult to steal data. However, it will take time for the credit card companies to ensure all their cards have the secure embedded microprocessor chip.
Big Data Benefits
Big data crunching is throwing up predictive analytics that is enabling companies to offer more relevant discounts, promotions, coupons, and deals to their loyal customers by reviewing their purchase history and shopping habits. Consumers are indicating that they prefer to be offered loyalty program rewards inside a mobile wallet. This trend has been successfully exploited by enterprising brands like Starbucks and Kohl’s and more companies are expected to follow them.
Beacons and Sensors
This technology is having a big impact on the payment industry. This is because companies are using it to attract customers with quick sales offers when they visit their area. Another benefit is consumers can make purchases and pay more quickly without even stepping inside a store. They can also make advance payments, for example, they can order and pay for a pizza on their way home. The impact of beacons and sensors is expected to grow with more widespread adoption of the Internet of Things.
Savvy customers are constantly looking for software alternatives and technological developments they can benefit from. We hope this article has adequately informed you about the leading trends in online payments that are making life easier and more convenient for consumers. If you have benefitted from these technology advances or know about other popular trends and developments that are having a big impact on the online payments industry, please share your experiences and knowledge with us.