With the welcoming of 2020, industry experts have outlined 9 big trends set to take over the year ahead within the payments space. A common theme that underlines each and every one of these, is the lack of compromise on security in the effort to make the customer experience more streamlined.
Here’s a look ahead at 2020’s year of payments:
1: Add Value Services:
Add Value Services or SaaS (Services as a Software) are set to make themselves known as a key part in the rising competition of payment service providers this year. Omni-channel and all-in-one solutions that streamline customer experiences and stand apart from the standard services offered by payment service providers, are set to truly emerge this year.
2. Real-Time Cross-Border Payments:
Taking away the delay on cross-border payments is just another way industry experts are amping up the pressure on service providers this year. Whilst real-time payments aren’t new to the local, domestic payments market - making and receiving a payment internationally should be expected to be just as instantaneous this year. However, challenges are expected to arise when navigating different banking regulations across the globe.
3. Cloud Technology:
Fintech companies and PSPs have been able to do what other incumbent banks have not, and that is to experiment and launch cloud-based technologies as a standard to clients in order to mitigate risk and tailor services that suit customer preferences. With payment standards easing the door open on open-banking, 2020 could be the year that cloud-banking really fulfills its potential in meeting consumer demand for a catered, instantaneous service available from anywhere on any device.
4. Social and Voice-based Commerce:
With the largest consumer demographics now belonging to millennials and generation Z, social media and voice based commerce is set to become popular this year as another avenue to fulfill customer demand for convenience.
The underlying premise of both social and voice commerce is that consumerism occurs and payments are made almost in the background of everyday life.
Via voice commerce, a customer can potentially make a purchase via a smart speaker in a hands-free action that takes mere seconds; all the while doing something else. This kind of transaction negates the room for buyer’s remorse or a lengthy checkout process hindered by forms to fill out - or simply time itself.
Industry experts are placing bets on voice commerce not only due to its integration popularity, but due to the 39% of shoppers who trust shopping recommendations they get from their smart speaker assistants.
With social commerce, transactions are set to evolve from purchases made from items that are presented to customers mid-scroll of their instagram feed to those tagged within an image itself; with the potential of the year ahead to embed payment options and get rid of hosted payment pages all together.
As Deloitte calls 2020 the year of ‘big bets’, social commerce is one to watch with generation Z spending up to 3x more time on social media than any other consumer.
Whilst online shoppers are thought to make 12 searches before engaging with a specific brand, social commerce has the power to directly plug a consumer into a brand with one image and one-click payments, and rethink the way we shop.
5. APM Offerings
The increased use of e-wallets and mobile banking, is in line with the demand for faster checkout experience, meeting the need for alternative payment methods. By 2021, more than 50% of online payments will be made via an alternative payment method. This leaves us to consider, not only the devices payments will be made on but the need for merchants to cater to the rise in social commerce and quicker checkout methods.
Currently, APMs such as Apple Pay and Google Pay offered up to a 20% quicker checkout time over traditional payment methods. Making up the largest consumer demographic - with a culminative spending power alongside Gen Z’ers that exceeded over 350bn USD (267bn GBP) in the US in 2019- Visa Europe predicted that 92% of european millennials would be using mobile payments this year -with a lot of payment methods to be offered via the technology, fintech firms and banks have a lot to offer in terms of both loyalty and payment schemes.
6. Ecosystem competition:
Following this point, Fintech firms will rally against incumbent banks for their services this year, with a culmination of add-value services and APM offerings; most predictably in the form of UX friendly APIs that cater to millennial and generation Z consumers.
7. Payment Standards:
With SCA regulatory standards finally being brought into compliance by December 2020 and AMLD5 (regulations to require tighter parameters on KYCs in the EU) similarly being brought into law this month; the governance of cash flows will allow fintech firms more credibility in what has otherwise been seen as a controversy on compliance. There has since been an increased need for PSP services in the mitigation of APM offerings in a move to maintain conversion rates and seek assistance to meet compliance parameters.
Following, is a resultant need for easy payment standard and PCI compliance to be integrated into a variety of e-commerce platforms. Merchants should expect a payment service provider to support cross-border payments and APMs across multiple currencies that can be easily managed, reconciled and mitigated.
9. Internet of Things:
The ‘internet of things’ is a term long familiar to the hospitality industry because of the way it sought to make previously offline objects - online - in order to increase efficiency and save time. Set to be integrated into new areas this year and increase the scope of transactions, the ‘internet of things’ can be considered an expansion on automation.
Whilst payment capabilities have been embedded via contactless technology into smartwear and other NFC items, a new predicted trend is to find payment taking facilities in cars that automate and streamline toll roads and fuel top-up payments.
When looking at these trends for the year ahead, it’s important to stress what hubspot defines as omni-channel commerce, as a baseline for understanding the intention of these developments.
According to hubspot; a leading marketing platform, the omni-channel experience should be one that delivers a seamless and consistent service tailored to the devices that a merchant’s demographic interacts with.
Whether any of these trends will actually emerge as key players in the payment space this year is yet to be seen. However, these predictions do shed some light on the changing landscape on consumer demographics and demands.
To learn more about how Total Processing can assist you with a variety of these services, contact us today!