Payment technologies are changing—fast. A new generation of consumers with unique demands, a shift to mobile and online payments, and an ever-faster arms race between payment processors and cybercriminals means you’ve got to be prepared.

Here at Modo, we’re your personal payment trainers, ready to beef up your payments stack so you can  face the future with confidence. We’ll let you know what’s coming down the pipe and what you can expect as payment technology continues to evolve.

Future Payment Technologies Sees a Strong Shift Towards Mobile Payments

Mobile payments and wallets have taken a while to gain traction with consumers. Many of us still love using our physical credit cards, with fewer than half of us currently making use of mobile payment technologies. That’s going to change though. Generation Z has grown up with Android and Apple phones; Google Pay and Apply Pay are as familiar to them as plastic is to the older generation.

According to Accenture, we can expect almost two-thirds of consumers to start using mobile wallet payment technology in 2020. Almost a quarter of users say they would give up their mobile banking app to move to a mobile wallet solution where they can gather all their payment details in one place.

Which means you need to be ready. It’s time to optimize your payment stack so it’s as easy to receive and process mobile wallet payments as it is cards. Mobile payments will become a major differentiator over the next few years, and the time to get to pole position with this future payment technology is now.

Drive for More Secure Payment Systems

Cybercriminals and payment providers are in an ever-escalating arms race. Criminals discover new ways to exploit the system, while banks, card networks and third-party payment processors try to stay as many steps ahead as possible. Global card losses have increased by around 18 percent every year, and reached around $30 billion in 2018. Fortunately, anti-fraud technology is evolving too, and bringing some new weapons to the fight:

• Artificial intelligence that predicts user behavior, identifies variations to the norm, and flags problematic transitions if they’re outside what’s expected.
• Machine learning algorithms that analyze existing payment patterns and optimize security checks for speed and efficiency.
• Technology to reduce false positives and false negatives, allowing genuine consumers to make purchases while reducing the impact of fraudulent transactions.
• Biometric authentication allowing consumers to verify themselves in an accurate way using technology like fingerprint and voiceprint identification or face and iris recognition.

While there’s still a long way to go to significantly reduce card hacking, many startups are creating anti-fraud measures that can integrate with your payment stack to let you keep more of what you earn.

Need for Personalization and Treating Consumers as Individuals

As people make more purchases online, it’s easy to lose the personal touch of in-person transactions. Although many customers are happy to trade personalization for speed, value, and convenience, introducing some individuality into the purchasing process will help to build better relationships. Check out a few ways you can add the personal touch into online transactions:

• Automatically email receipt and payment details to customers.
• Offer specialized discounts and coupons, tied to the individual rather than a specific, separate incentive program.
• If you have a physical location for your eCommerce store, allow people to order/pay online and pick up their purchase in store.
• Collaborate with other eCom and local merchants to offer incentive networks that benefit all participants.

The need for customer loyalty is high, and consumers have never had more choice. A little personalization can go a long way in driving repeat purchases and building long-term trust.

Blockchain and Cryptocurrency as Payment Technology Enablers

The hype around cryptocurrency has died down, but don’t let the Bitcoin bubble of 2017-2018 turn you off from blockchain—the technology at the foundation of Bitcoin. Although cryptocurrencies like Bitcoin, Ripple, Litecoin, and others have yet to hit the mainstream, the blockchain technology behind them is actually very cool, and can make an impact on the way businesses operate.

Blockchain is a technology framework that allows businesses to exchange information, and, most importantly, bring costs down, radically. According to an infographic on Payments Journal, blockchain is expected to reduce the costs of accounting reconciliation by 70 percent, and payment compliance costs by 30 to 50 percent over the next five years. The ledgering that is done in the blockchain system ensures all funds are in sync throughout the entire payments lifecycle—which means integrating with third-party payment processors and other payments stakeholders can work with this new technology.

Greater Demands on the Payment Stack and Third-Party Payment Processors

All of these changes will place greater demands on your payments stack—the behind-the-scenes magic that keeps everything functioning smoothly. It used to be that having numerous, arcane integrations and configurations could keep the lights on, but certainly offered no payments optimization.  Adding these future trends will strain your backend processing systems:

• Accepting payments via multiple channels—credit and debit cards, mobile wallets, in person, and more.
• Greater security and verification requirements—a need to authorize payment options in record time, while maintaining good fraud protection and keeping false detections to a minimum.
• Requirement for much faster payments reconciliation—multi-day waits for funds clearance isn’t going to cut it any more. Consumers and merchants expect real-time payments.

These factors, and many others, will increase the pressure, and hoping for the best isn’t a wise business continuity plan. Simplification and consolidation are the cookies and cream here. Merchants, third-party payment processors, and banks need to start overhauling their systems to meet this digital disruption head on. Keep everything transparent for the consumer and you remove friction, encourage easier payments, and build trust in the whole payments system.

Of course, this is just a selection of future payment technologies. Consumers, merchants, banks, and payment processors can expect to new technologies across the payments ecosystem:

• Simplification of cross border payments.
• Significant increase in mobile Point-of-Sale devices.
• Greater focus on delivering an excellent user experience for payments.
• Fintechs and banks coming together to drive up consumer convenience and benefits.
• Emphasis on omnichannel payments, including integration with social media channels like Facebook and Twitter.
• Deep reporting on consumer payment behavior and trends for greater insight and upselling.
• Movement of payments to Internet of Things devices like Amazon Alexa, Google Assistant, wearables, and more.

You’re ready to face this brave new world of payments—and we’re here to support you.

Let’s do it!