Payment Industry Trends: What Are the Best Digital Payment Options in 2021
If you follow the evolution of payment trends, you would be surprised at the changes over the past 10 years. Only by knowing the main changes, it is possible to conclude the successful or unsuccessful functioning of the new trends. With the development of the Internet, the business also began to move into this plane. Therefore, the appearance of digital payment services was only a matter of time. The first online payment made by a customer happened in 1994. It has since become a more reliable, faster, and easier way. Until 2007, shoppers needed a credit card and a computer, but with the advent of smartphones, things just got easier. However, did the digital payment options bring new risks, such as becoming a victim of fraud? Unfortunately, yes. Therefore, it is being improved to this day. Let’s take a look at a few examples:
- European Payment Services Directive. Creation of a more integrated EU payment market, which contributes to the security of payments. The 2015 updates helped improve security and privacy.
- The Federal Reserve System manages all payments in the United States. The US central bank plays an important role in the digital payment system through interbank payment services. Financial institutions are registered at the state or federal level and are controlled by one or more agencies. There are various payment instruments and settlement mechanisms for fulfilling payment obligations between financial institutions and customers.
- FedNow. The United States is currently looking to upgrade its payment system through FedNow. Currently, non-banks and other organizations outside the United States need to partner with banks to use the payment system. They hope FedNow can change all of this and provide faster-emerging payments technologies. However, development and implementation can take up to 5 years. The United States is studying the latest updates to other global payment processes.
Cashless Society: Pros and Cons
There is such a term as a cashless society. It designates an economic state in which transactions with banknotes and coins are minimized. People use payment industry trends. For example, in Sweden in 2017, cash payments were only 15%.
- Reduced cash in stores, less cash and bank travel, and less fraud and theft.
- Transaction speed has been greatly improved and is more suitable for busy outlets.
- Improved economic data.
- Reduced money laundering and tax evasion with clear paper records.
- Your payments can always be tracked.
- If more companies have your credit card details, it would increase their chances of being stolen.
- The older generation has mixed reactions to the digital payments trends.
- Small businesses rely on cash, and expensive trade services can be costly. Any technical downtime would have negative business implications.
Digital Payment Systems: Players
Major players include buyers, issuers, payment gateways, ISOs, and payment systems. However, we would like to draw your attention to the last player. In other words, such systems are merchant service providers. They work in the background and provide payment processing services. For example, accepting and processing payments for all types of cards, managing the processing of cards; and the adoption of certain measures to combat fraud. There are interfaces and internal payment systems. External directing transactions from the merchant to the bank of the cardholder to request authorization. Internal ones accept payments from external processors and transfer the payment to the merchant’s issuing bank. In addition, payment systems are required to keep pace with payment technology trends.
The Most Popular Digital Payment Technologies
Digitization is a huge step towards achieving the goal of simple, convenient, fast, and secure technology payments methods. The existing methods surprise us with their simple use. If 5 years ago we had been told about one of them, no one would have believed it. However, below we will talk about the main trends.
Biometric was created earlier, but popularity was received in 2020-2021. Such authentication is a verification method that incorporates a person’s biological and structural characteristics. These include fingerprint scanners, facial recognition, iris, heart rate analysis, and vein mapping. As the problem of identity theft and fraud grows, biometric authentication could be the trusted and secure choice for all digital payment solutions in 2021. It is a unique and important payment method because it combines and delivers accuracy, efficiency, and security in one package.
Mobile Point of Sale
mPOS is a revolutionary technology as it frees all merchants from physical stores and in-store payments. This allows them to visit various places such as concerts, exhibitions, food vans, and many other places where customers can accept payments without hindrance. It also makes the in-store checkout process more streamlined and flexible by using mPOS-equipped sales staff to replace the central checkout area, which has a huge impact on the in-store checkout process. mPOS is definitely one of the best future payment solutions.
Smart Speaker Payments
The smart speaker allows the user to give voice commands to the speaker and receive a voice in response. Users can give voice commands for a variety of purposes, such as getting weather updates, traffic information, ordering from any store, or ordering a taxi from Uber. Speakers, which evolved from smart assistants, are primitive in nature because they are limited to telephone devices. However, with the advancement of home automation, smart speakers have also started to go mainstream. By the way, about 30% of people use smart speakers for money transfers or direct payments. However, the security issue is widespread. Near 75% of users are concerned about security when making payments with voice assistants. In addition, they also stated that they may stop payments due to such concerns. Anyway, the future of such emerging payment technologies still looks promising.
Contactless payment allows customers to simply wave their smartphones at a reader. It is faster and more comfortable than inserting a card. Samsung, Apple, and Google already have their own contactless payment technologies: To pay, customers simply download the app, add a card by entering their card details, and then wave their phone at any card reader. You need to have NFC technology on your smartphone. For example, in China and London, it is used as a way to pay for public transport. In Japan, NFC is used to provide information about identity cards.
New Payment Technology
The Covid-19 pandemic has become not only a test for existing systems but also an impetus for the development of new payment methods. Therefore, we will consider those that have been popular for the past 2-3 years.
5G would create connectivity and data rates. It would also bring significant benefits for payments in areas that are not physically connected. For example, the ability to connect data to remote parts of the world so people can conduct business and online transactions. Likewise, the ability to provide more immersive online experiences via remote devices would have a transformative impact on the gaming industry. This future payment system would also enable companies to transfer more data around the world.
Migration to Distributed Cloud
A key area of the payments business would inevitably be the creation of simpler payment services for customers. It includes the development and diffusion of technologies that enable smoother payments. It operates in a distributed cloud mode, the lines of ownership of physical infrastructure are more blurred than before. This new payment system would continue to enable payment companies to provide merchants and consumers with highly flexible solutions to meet the needs of a new digital environment.
In our opinion, digital payment methods must be supported by new levels of security. How do you think, what system is the best due to our pandemic situation? Share in the comments. See you soon!
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