The Future of Consumer Payment Methods
PayPal had over 286 million users and in 2019, its total payment volume amounted to more than 712 billion U.S. dollars, representing a 23 percent growth from 2018. The company works with over 2,000 different global banks and financial institutions. From small local banks to major global institutions, there is an enormous number of banks that trust PayPal as a payment service for their customers. All these numbers prove that the future of digital payments will involve an explosion of tech.
No longer are there only options for deposits and remittances. With instant payments made possible, online businesses can send money directly to one another at the speed of thought, eliminating many of the payment delays that plague the banking industry.
Customers no longer have to contend with old payment methods like bank statements. They want more than ever before. Online payments have an unprecedented opportunity to reshape consumer payments and improve customer experience through frictionless, transparent, and instant payment experience.
Contactless Card Payments Will Increase
Contactless cards that have chips are ubiquitous and are widely accepted by most retailers today, including shops, fast food chains, and restaurants. All those industries are actively seeking contactless adoption, as it offers greater convenience and reduces the time spent waiting for cash. Contactless also makes paying with credit cards much safer and easier as it can reduce fraud, and is faster than using a card.
Let’s take Apple Pay as an example. Since Apple Pay has been in existence for just over six years, it has yet to gain widespread acceptance across the world, but Apple’s services can be valuable in driving adoption. While Apple Pay is a cashless payment solution, it is also a platform on which other companies such as Square, and others can build their services and monetize through subscriptions, and selling additional services or accessories.
Mobile Wallets Are On The Rise
Smartphones have changed the way we interact with the world around us. They have changed the way we do business, purchase items, conduct customer service, and make purchases. And mobile wallets are at the heart of it.
Mobile wallets are gaining popularity because the technology that powers them makes it easy to pay anywhere with a compatible device. Many experts agree that the entire mobile revolution will be powered by mobile payments and their benefits to consumers and businesses. While mobile wallets have been around for years, their popularity continues to grow, and many brands are starting to take advantage of this market to deliver their value proposition.
Big Tech Expands Into Financial Services
Silicon Valley, with its rapid growth, seems to be attracting increased attention. The technology giants have moved into the payments industry. The mobile payment app Samsung Pay was released in 2015 followed by Google Pay a couple of years later. In March of 2019, Apple launched its Apple Card. In June of 2019, Facebook introduced its blockchain-based payment system Libra, and also created Facebook Pay, which lets customers make payments and transfer funds via Messenger, Instagram, and WhatsApp. In 2018, Google introduced its Google Pay e-wallet and partnered with Stanford Federal Credit Union and ContiGroup in 2020 to offer smart debit cards.
In an environment of increased competition in the tech sector, banks are choosing to partner with tech companies to increase their market share. PayPal, Alipay, Apple Pay, Amazon Pay are the clear leader in the space with the biggest share of the mobile payments market. If these companies keep being successful, it will further drive banks into partnerships and away from competing directly in the mobile payment space.
Mobile wallets are increasingly becoming a popular alternative to banks as well as other traditional financial institutions and their appeal for customers is that unlike the financial industry, tech companies are good at providing seamless customer experience. According to a 2019 survey by J.D Power & Associates, the overall customer satisfaction for retail banking mobile is down 15 points from 2018 because banking apps were confusing and hard to use. This puts tech companies like Google and Apple in a position to fill the gaps by offering more user-friendly payment solutions.
The future of payments will be marked by the continued development of voice-activated payment solutions. The global digital payments trends associated with payment apps are no longer about the current devices being connected or used, but what can be done with this connectivity and the customers’ increasing willingness to pay online.
According to a report by Tractica, the number of people using virtual digital assistants will reach 1.8 billion by the end of 2021. Voice-enabled banking (VEB) has the potential to be a new revolution in banking services that will completely revolutionize the business models of banks and the potential services they can deliver to their customers.
Mobile banks have a distinct advantage over other competitors due to their multi-channel services and the ability to have a presence in multiple areas. Banks are already well-entrenched with their loyal customers and can use these customer bases to create a strong voice banking ecosystem. However, the barrier to the adoption of voice-enabled banking services lies in the lack of clarity over consumer expectations. For a seamless experience, customers should decide what they want their assistant to be able to do so that the banks could provide the functionality they are looking for.
A plethora of technologies is currently integrated to make the VEB service a reality. These include speech analytics, speech-to-text translation, smart speaker recognition, digital assistant-based systems, and more.
Despite the obvious benefits of voice technology, a very important aspect to consider is security. By using voice to make banking transactions, consumers may assume that the device and network are secure, but this is not always the case. A breach in any of these systems can be detrimental to a consumer’s security.
For mobile banking to be successful, security is of paramount importance. Security threats in the global financial system are increasingly becoming more advanced and we’re seeing greater monetary losses as a result. Therefore, we need to look at new ways to ensure the safety of our customers’ data.
The Next Wave of Banking
Modern technologies have made their mark in the banking industry and are evolving to accommodate the constantly-changing changing consumer demands. By integrating the technologies into their existing channels, banks are providing customers with greater ease of access. It allows consumers to manage their money more quickly and efficiently while making banking easier.
However, banks now need to think about how they can leverage these technologies and integrate them into their current business models. It’s clear that online payments are here to stay, but there are still a few wrinkles to iron out. Banks that manage to utilize modern technologies in a secure and transparent way will reap the rewards of the burgeoning market.