The universe of banking and payments is ever evolving. 2018 has seen a number of significant changes in the payments industry, thanks to advances in technology. Consumers now have access to a myriad of ways to pay. Payment service providers embrace numerous innovations to keep up with the rising consumer demands. In result, many digital payment trends emerge, redesigning the value chain.
In this new competitive landscape, traditional banks and financial service providers are having to fight back to reclaim market share. While they recognise it’s hard for them to change legacy systems and processes quickly, the savvy among them can also see that the threat is as much about customer interaction as it is about “being digital”.
It’s no secret that smartphones pay a huge role in the customer journey, right down to the physical store experience. In less than 20 years, high speed internet access has become available across the globe, banking transactions can be conducted entirely online and mobile devices have reached ubiquity. These changes and others have laid the groundwork for the exponential expansion of technology to continue, and it will have fundamental consequences for the banking system.
The digital payment market is projected to reach USD 86.76 billion by 2023, at a CAGR of 18.0% during the forecast period. Major factors driving the growth of the digital payment market include initiatives undertaken for the promotion of digital payments, high proliferation of smartphones, and the need to provide improved customer service at POS terminals. On the other hand, lack of global standards for cross-border payments is a key factor expected to restrain the growth of the digital payment market.
Payment service providers embrace numerous innovations to keep up with the rising consumer demands. In result, many digital payment trends emerge, redesigning the value chain. Payment services and products are being created, deployed, and used in line with the trends reshaping the payments ecosystem. Many of them have already made their way into headlines, but seven particulars differ from the rest.
A new approach which is getting popular among large ecommerce and brick & mortar retailers. Corporations with wide customer base access are launcing fintech services that cover the low hanging fruits of use cases, namely omnichannel payments and basket micro financing. In order for that endeavors to succedd in 2K19 a sophisticated rewards and benefits strategy needs to be developed and implemented, in order to strenthen customer retention and education in using such frictionless innovative services.
WarplyPay together with Warply Engage is one of the most complete merchant wallet solution merging payments and tokenization for card present or card not present environments with loyalty points, coupons, ticket restaurant and credit card loyalty programs.
Closed loop systems that many central banks are deploying across the world, especially in developing countries, mostly inspired by the India’s UPI example.
The UPI is a digital platform built and operated by the state-run National Payments Corporation of India in a country where even today most people find it hard to believe that something built by the government can work smoothly. In December 2018, the Unified Payments Interface (UPI) in the country saw more than 620 million transactions worth 1.02 trillion (nearly $15 billion). The volume of transactions grew 18% month-on-month. These systems that facilitate payment from account to account are essentially settling the transaction in real time, rather than waiting for 6-12 months to settle (schemes and card payments systems).
One of the top European companies in Mobile Loyalty & Payments, Warply enters dynamically in the digital payment sector and launches WarplyPay®, the first digital merchant wallet which can integarte seamless to closed loop payment initiatives by central banks all over the world.
Digital currencies are emerging in the world payments system and will revolutionize the whole ecosystem of investments and monetary financing due to the characteristics of technological innovation, immediacy, security and even simplicity that represent the “raw materials” of services that appeals to new generations of consumers and professionals.
Cryptocurrency transactions provide an alternative by limiting the amount of transaction data to mere numbers also known as cryptocurrency wallet addresses and transaction IDs confirming that a wallet-to-wallet transaction took place.
Many Bitcoin users know that one of the holy-grails for Bitcoin adoption is the integration of Bitcoin payments into Amazon. Whenever there is a mere rumor of an Amazon Bitcoin integration, the markets rally. Sometimes, Bitcoin users try to interpret minor actions like Amazon buying domain names as evidence of eventual integration.
However, for those users that really wanted to purchase goods on Amazon with Bitcoin, there is an interesting alternative that is often overlooked. This is Purse.io and they offer bitcoin users an option to buy through the Amazon gift card holders.
Purse allows users to select a discount from a sliding scale depending on how fast they want their items. The scale ranges from five percent to 33%, with higher discounts taking more time to fulfill. Users who select the five percent discount option can expect to receive their products within two to five days and those orders are fulfilled by Purse.io. This does mean that even the lowest discount leads to slower transactions than ordering directly from Amazon Prime.
Banks and fin-tech players may have gotten off to a rocky start several years ago when a slew of new startup companies burst onto the scene vowing to disrupt the banking system. But that road has long since smoothed, ushering in a new era of strong partnerships and exciting synergies.
Fintech companies recognize the advantage of having financial industry partners that understand the regulatory framework and have access to the payments system, while banks are reaping the rewards of working with smart, savvy innovators and bringing exciting new products to their customers. The result of these partnerships is a better customer experience and a greater sense of unity in the effort to modernize the payments system.
Digital-only banks are now gaining popularity among millennials as they can receive services at the comfort of their homes or offices, and no longer have to visit banks, now they visit banks via websites and apps. Fintech is spreading like wildfire and so visits to bank branches are expected to drop 36% between 2017 and 2022, while mobile transactions are expected to grow 121% in the same period.
With an eye on gaining a competitive edge in the marketplace, one of the giants of Banking System Citibank has recently established a succession of innovative partnerships with cutting edge tech companies to expand and improve its services. Through Citi Ventures, CitiBank has made a strategic investment in Feedzai, a leading global data science enterprise that works in real-time to identify and eradicate fraud in all avenues of commerce including online and in-person banking.
Biometric authentication — examples include fingerprint ID and financial recognition — will be used in more than 18 billion transactions by 2021. Apple Pay and Samsung Pay both use fingerprint identification, but not all platforms offer these levels of security. But the technology as a whole is more reliable and cost-effective, reducing password administrations costs and decreasing the likelihood of loss prevention. With the steady increase in fraudulent transactions and security breaches, adoption of this technology is essential to making customers feel more at ease with making their purchase.
As AI and machine learning (ML) developments continue to advance how we fight fraud on the back-end, consumers will reap the benefits of greater simplicity and seamlessness that biometrics offer on the front-end which will ultimately, help fuel the adoption of new ways to pay.
Mastercard is leading the way and has already announced last January, that all consumers will be able to identify themselves with biometrics such as fingerprints or facial recognition, when they shop and pay with Mastercard by April 2019.
In practice it means that banks issuing Mastercard-branded cards will have to be able to offer biometric authentication for remote transactions, alongside existing PIN and password verification. It will also apply to all contactless transactions made at terminals with a mobile device.
Consumers nowadays are being inundated with new digital experiences, and banks must find a way to stand out from the Amazons and Apples of the world. It’s no longer enough just to offer an online and mobile banking platform—consumers now expect a fully integrated, fluid digital experience. Today’s alternative payment options are not replacements, but rather improvements on previous methods.
Younger generations agree: More than 60 percent of millennial and Generation Z customers willing to share their bank account credentials with third-party vendors. That total will only increase as customers become more familiar with alternative payment options.
Warply launched the new Warply Keyboard Payments for mobile payments and P2P transactions via messaging apps. The new innovative solution is available exclusively for mobile banking apps, globally. Warply Keyboard Payments is a unique solution, due to the fast integration process with any banking app - since it uses banks' existing infrastructure - and the easy customization in look and feel.
Tokenization is the process of protecting sensitive data by replacing it with an algorithmically generated number called a token. Often times tokenization is used to prevent credit card fraud. In credit card tokenization, the customer’s primary account number (PAN) is replaced with a series of randomly-generated numbers, which is called the “token.”
These tokens can then been passed through the internet or the various wireless networks needed to process the payment without actual bank details being exposed. The actual bank account number is held safe in a secure token vault. Although customers may not see it, banks are adopting many invisible technologies to protect against fraud.
Following the introduction of the EU Payment Services Directive (PSD2) from January 2018, online services that you allow to access your account data or make payments on your behalf will be regulated by the Financial Conduct Authority.
An Account Information Service Provider (AISP) lets you see all of your account information from different bank accounts in one place online or in a mobile app. AISPs can include budgeting apps and price comparison websites offering budgeting help and product recommendations. An AISP needs your explicit consent to provide you with these services.
Fintech is a big world with constant innovation. So, while banking is more resistant to change than some other industries, the changes are still happening, and they are happening fast. A portmanteau of financial technology, has a bright promising and looks like it will produce some interesting products and services. Keeping an eye on the future and staying informed about the latest payment processing trends in this ever-changing environment.