8 Trends Reshaping The Payments Industry In 2018
As a result of advances in technology, the banking and payments industries are always changing and always evolving. The rise of new technology not only offers consumers more ways to pay, but also alters their shopping habits and demands as customers. To meet these needs, payments providers are seeking to embrace new technologies. Here are 8 key trends that are reshaping the payments industry in 2018:
- Rise of the New Generation
There are some new kids on the block, and their needs and wants are helping to change payments and banking trends everywhere. Though still just teens and young adults, Generation Z (born between 1995 and 2012) will make up to 40 percent of all US consumers by 2020. They are mobile (nearly 70 percent of Gen Z use mobile banking apps daily) and demand immediate, highly personalized experiences (68 percent are interested in instant person-to-person payments) that they can share with friend and family across multiple channels (33 percent want to share their payments on social media while only three percent of Baby Boomers would).
- What’s In Your (Digital) Wallet?
Currently, 46 percent of consumers use a mobile wallet. By 2020, this number is expected to jump up to 64 percent–a 39 percent increase in usership. 23 percent of consumers would give up their mobile banking app for a digital wallet with all their payments information in one place.
Technology advances such as API (Application Program Interface), open banking, and biometrics will allow payments companies to deliver personalized payments experiences and benefits such as instant rewards, live balance updates/alerts, individualized media content, and more. Combining the power of mobile and data sharing will allow companies to engage with customers in more and more ways and offer them value outside of transactions. Following in the footsteps of industry giants like Walmart and Starbucks, many large and small retailers will begin offering their own digital wallets for both online and instore shopping.
- The Rewards Revolution Is Here
Consumers want more and more rewards, and if a company doesn’t deliver, they have no qualms about leaving to get it from somewhere else. Nearly half of all consumers would be willing to switch their primary card in order to get bigger rewards, and 42 percent would switch in order to receive an up-front sign-up bonus. 66 percent of consumers want to be able to instantly redeem rewards at the point of sale (POS) or point of purchase (POP). Data collection and instant processing offers payment companies the ability to know and deliver exactly what their customers need, in real-time.
- Bank On The Underbanked
It might come as a surprise, but there are more than two billion people in the world who currently do not have access to financial services. More and more countries in Asia, Africa, and Latin America that have low financial inclusion are turning towards non-traditional forms of payments, such as peer-to-peer mobile wallets and electronic payments cards.
- New Ways To Pay
According to Gartner, the number of devices connected to the Internet of Things (IoT) is set to increase from 6.4 billion in 2016 to 20.8 billion in 2020, and with that, comes new e-Commerce and m-Commerce methods. New form factors, such as wristband payments, “hug and pay” from Interac, and contactless payments are becoming the go-to way for consumers to purchase. IoT devices will also be able to carry out tasks automatically, as car companies are introducing payments technology into vehicles. Expect your fridge to soon be buying food for you!
- Cryptocurrency And Blockchain
Despite the rocky start to 2018, cryptocurrency and the technology it is based on, blockchain, aren’t going anywhere. The financial world and traditional banks may have once been skeptical, but they are now aware of its benefits–such as payment processing and security–and are moving toward adopting blockchain technology and cryptocurrency. Expect this technology to lead to even more financial innovations in 2018.
- Fraudsters Keep Frauding
Businesses, tech gurus, and financial companies aren’t the only ones innovating–criminals are also working on new ways to get at your hard-earned money. Data security is now considered one of the top challenges in the payments industry, with experts projecting $31.3 billion in global card losses in 2018. A prepaid card decreases the chances of fraud, theft, and loss. Click here to read about the privacy benefits of using prepaid, and make sure to read our tips on how to protect your privacy and avoid financial fraud.
- Biometric Security
Thanks to advances in machine learning, biometrics, the measurement and analysis of unique physical or behavioural characteristics, is now being used by banks and fintechs to improve the security of mobile payment systems. Card payment processing can now be authorized with fingerprint scanning or facial recognition instead of a PIN or password, and digital assistants such as Google Home, Alexa, and Siri offer voice-activated payments.
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