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.
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.
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:
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.
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:
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.
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.
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:
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:
You’re ready to face this brave new world of payments—and we’re here to support you.
Let’s do it!