The Future State of Payments Beyond FinTech


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A subset within finance, the payments sector has been evolving at blistering pace as the world moves towards a cashless society.  With the innovation of fintech, the last decade has opened up payments from everyday purchase transactions and transfers  to monthly bills, to be made through mobile applications — providing flexible alternatives to paying in person with cash, card, or a check.   Consumers demand convenience and simplicity, requesting more and more businesses to offer multiple options for payment.  Numerous trends and technologies are intersecting now that will take payments past a future state of a cashless and paperless transactions, to a completely open, digital world marketplace.

Point of Origin for Payments

Despite the high pace of innovation, half of all payments in the US are still being processed manually (as of 2016 AFP Electronic Payments Survey Report).  Not only do these manual payments take time to process and clear, but they also come at a higher cost than newer digital alternatives.  What’s left is an industry in which businesses are looking to speed up transactions and reduce costs, and customers are asking for easy and convenient ways to pay for things. These increasingly high expectations (from both consumers and business), widespread mobile usage, and a growing contractor workforce —  are all actively determining how quick the landscape for payments will change.

Industry Trends  

  • Frictionless user experience: providing personal and seamless ways of making payments through purchase flows continue to be critical for businesses; convenience and speed are benefits that today’s consumer must have in their experience with a company. Businesses are able to quickly differentiate through the user experience they provide both online and offline.

  • Mobile ecosystem: the growing usage of mobile phones globally, especially ones that are able to send and receive payments, continues to drive the bulk of market share in payments; from food delivery to car share, a phone is all you need now to make a purchase.  Wearables, such as smart watches, are the next part to be added to this ecosystem.

  • Growth of the contract workforce: as more people take on part-time or full-time work through on-demand platforms, they expect to receive pay faster than traditional payroll calendars; offering immediate payout options is becoming increasingly popular with the top gig companies such as Uber, Lyft, and Doordash.

Technologies Disrupting the Payments Sector

In addition to trends impacting the development of new and innovative payments, there are also new areas of technology that are creating improved and more enhanced long-term solutions and capabilities:

  • Blockchain: the distributed ledger technology behind bitcoin and other cryptocurrencies, is also improving global payments through increased speed, transparency, and security; companies such as Ripple, have already leveraged their platform and token (XRP) to facilitate cross-border transfers;

  • Internet of Things: as more devices at work or at home are connected online, there also comes added functionality of enabling payments that enhance a user’s experience;  being able to pay with smart devices such as speakers or TVs will be become an available option for everyone;

  • Artificial Intelligence and Machine Learning: AI is already being actively used in online / mobile chatbot options that allow customers to request payments and transfers easily; machine learning is also currently being adopted within networks to detect fraud and deter new online attacks on financial companies;

  • APIs: Application Programming Interfaces that tie into apps allow for payments to be made quickly without having to go to another site or application.  A popular API for fintech companies is from Plaid, who provides an infrastructure for customers to allow banks to share real-time data of their personal accounts in order to fulfill a transaction (such as setting up a recurring transfer to an online brokerage account).

Future Outlook of Payments

The wave of change in the payments sector will only get faster as consumers and businesses choose the most convenient and secure option to meet their needs quickly.  As a result, payments have become a driver of engagement between customers and companies.   

From a company standpoint, it’s critical to evaluate what type of payment technology works best for your specific business and customer.  There shouldn’t be a one size fits all approach — instead incorporate client feedback into the product development process early to verify the best experience possible.  Also, a major emphasis should be on security and maintaining the necessary controls to protect private data and avoid cybercrime attacks.   

As a consumer, convenience and experience are core benefits that should be balanced with security and privacy.  The debate of protecting data and privacy will continue to intensify until appropriate controls are in place to safeguard the volumes of personal information that companies maintain.

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