2019 is shaping up to be a big year for payment processors and business owners alike. The more retailers and other consumer-facing businesses know about the year to come, the better positioned they are to take advantage of new innovations.
The technology that helps facilitate payment processing is evolving at a remarkable rate. Part of this push comes from necessity, as hackers come up with new tactics for defrauding businesses and banks. An equal amount of pressure comes from consumer demand — people expect payments to be fast, easy, secure, and convenient.
Here are some top payment processing trends to keep an eye on:
Mainstreaming of Mobile-based Payment
Apple Pay, Android Pay, and other mobile payment methods have been floating around the payment processing ecosystem for several years with very minimal consumer penetration. This year, finally, they appear to be on their way to more mainstream adoption – and don’t expect this trend to slow down. According to BI Intelligence, Business Insider’s premium research service, in-store mobile payment volume is expected to grow from $75 billion in 2015 to $503 billion in 2020.
The concept of a digital wallet isn’t new. But as more consumers use their mobile devices for everything from everyday purchases to financial management and banking, more people are also becoming familiarized with mobile wallet features. Accenture found that 23 percent of consumers would already give up their mobile banking app for a mobile wallet that stored all payment information in one place.
The big leap between using mobile payment storage for digital purchases and using it IRL isn’t far off. Already, companies from big box retailers to trendy farm-to-table restaurants are using touchless mobile payment.
What does this mean for small to midsize retailers? Finding a payment processor who will help you keep up with consumer trends will be critical in the years to come.
2018 was a big year for cybersecurity launches designed to protect consumers from attacks.
Among the most noteworthy is the widespread adoption of EMV chip cards at nearly all retailers. Chances are good that your small business already switched to the new payment terminals that use the chip.
Instead of sending your account information to a payment processor during a purchase, EMV payment systems generate a code that is unique to each individual transaction. This helps to obscure any personal information that hackers could steal. Once gas stations meet EMV card requirements by 2020, payment processing will be much more secure.
EMV is only the tip of the iceberg. As payments continue to shift towards mobile, biometrics will play an ever increasing role in securing transactions. According to Juniper Research, biometrics will be used for more than 18 billion transactions by 2021, growing at a compound annual growth rate of 83.7% from 2016 levels. How will payment processors adapt to this shift?
Fintech is Here To Stay
Underscoring a lot of this innovation is the fact that Fintech startups aren’t just scrappy underdogs in the finance world — they are now running with the big players in the industry.
Much of the innovation backbone of the payment processing industry comes from startup fintech companies. Small, agile firms can innovate and meet consumer expectations faster and more efficiently. While large, highly visible organizations may put their name on the payment processing platform, it’s likely that patented code from any number of smaller startups may be licensed and baked in.
Leaders in the market are collaborating with big financial firms, rather than competing for market share. For example, Chase Pay expansion relies on a scanner startup named LevelUp to expedite adoption at quick service restaurants.
Robotic Process Automation in Fraud Detection
Card fraud cases have been increasing in frequency at a rate that tracks with the popularity of non-cash payment use. To combat this trend, machine learning technology is being adopted to identify fraudulent trends in near real time using data from user purchasing histories.
AI machine learning is being used to review patterns of likely fraud to prevent large scale attacks reduce individual instances of credit card fraud, and improve risk management.
According to Capgemini, machine learning, when combined with RPA, can save PSPs on costs associated with fraudulent transactions and streamline efforts to catch a fraud in progress.
The Importance of UX
User experience is becoming more important as customers trend away from cash payment.
The way your payment terminal works will affect the customer experience. You will need point-of-sale systems and payment terminals that are not only technologically up to date, but work in a way that is intuitive — even enjoyable — for the customer.
On the consumer-facing side, cash-back rewards credit cards will increase in popularity in the year to come.
48 percent of consumers surveyed by Accenture would change their primary rewards card for one with bigger incentives. 42 percent would switch for a big up-front bonus. People love to shop and they love deals – competitive cash-back credit cards make sense.
Small business owners usually don’t have the clout to get their own rewards credit card. However, a lot of rewards cards offer partnership programs with local restaurants, retailers, and other businesses. Finding your own way to manage a rewards program can be equally beneficial — and often much easier, too.
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