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Payment trends for autumn 2020

TRENDS & ANALYSIS

Hero payment trends 2020 Hero payment trends 2020 Placehoder
20 JULY 2020

The world of Fintech and payments is everchanging. New trends arise quickly and spread around the world. We have collected some of the payment trends for autumn 2020 that merchants should be aware of and keep an eye on. Recognizing upcoming trends and being one step ahead can be key to success for merchants.

AI and Machine learning

Definition of trend: Artificial Intelligence (AI) and machine learning in the payments industry involves technologies utilized to analyze transaction data, learn consumer behavior, predict purchases, predict consumer patterns, provide hyper personalized offers, and detect payment fraud.

An example of a company that uses AI is Bambora’s parent company Ingenico who has developed an AI messaging chatbot that helps merchants in the retail, hotel and hospitality industries to conduct payment transactions with customers. The chatbot is able to interact with customers more personally using natural language processing to find out what the customer is interested in and allows customers to make payments through the app’s secure payment API.

By using AI and machine learning merchants can both increase sales as well as strengthen customer loyalty. This technology helps merchants to identify consumer behavior and abnormal activities, which can be used by merchants to improve the customer experience and customer service. By offering personalized offers based on machine learning of consumer preferences, behavior and payment patterns, merchants give the customers incentives to make more recurring purchases. It is also possible for merchants to create deeper customer loyalty by using AI in order to tailor the customer experience on an individual level.

Biometric payments

Definition of trend: Biometric payments use biometric authentication technology to authorize payments, e.g. through fingerprint sensing, eye scanning, and facial recognition instead of a password, pattern or PIN.

A new study by Fingerprints found that 56% of consumers would prefer to use a biometric sensor on their payment card instead of a PIN, signaling a market appetite for embedding biometric solutions into the payment process. Biometric sensors, especially fingerprint sensing, are something that PSPs and retailers already have started to implement. Fingerprint sensing will become more and more common together with facial recognition which is on the rise. Facial recognition is at the forefront in China where among others the company Tencent, who owns WeChat, has developed a facial recognition system.

The biometric authentication trend is expected to continue growing as a result of growing numbers of IoT devices, vehicles and buildings. Goode Intelligence has estimated that over 1.1 billion people will use biometrics in 2020 for mobile financial services, such as payments, accessing banking apps or customer identify verification. According to industry data, by the year 2021 there will be more than 18 billion biometric transactions taking place every year.

Biometric payments enable a faster and more convenient payment process as well as increased security for the customers since they do not have to use a PIN code or password. Biometric technologies are rapidly becoming industry standards in all kinds of smart devices meaning that merchants must adapt to this trend and be able to accept payments coming from this type of devices. Adopting this modern technology can also lead to enhanced brand perception, customer engagement, and heightened competition by making it easier and faster for consumers to pay.

Internet of Things payments

Definition of trend: Internet of Things (IoT) payments are physical devices, vehicles and buildings connected via the internet with the ability to conduct payment transactions.

There are a crazy variety of about 21 billion connected “things” at the moment collecting data and performing all sorts of tasks. The majority are consumer devices, from smart speakers to watches to door locks. IoT payments simplify the payment process by using smart devices that either can generate proposals for purchases or initiate a purchase wherever the customer is located. IoT enables easier and more frictionless payments on-the-go, for example via wearables such as smart watches, or from the comfort of the consumer’s own home, e.g. through a smart fridge. IoT can also make the customer experience more personalized by offering relevant interactions through a variety of channels in real time and create a strong connection with consumers.

For merchants, IoT makes it possible to establish new revenue streams and strengthen customer loyalty by connecting smart devices to payments and utilizing deeper knowledge of consumer behavior. IoT payments open plenty of doors for merchants and consumers as it facilitates more frictionless shopping experiences as consumers can pay in practically any form and anywhere.

Real-time payments

Definition of trend: Real-time payments (RTP) are payment systems designed to transfer funds instantly between the payer and the payee’s bank accounts.

Real-time payments have been successful between individuals on a national basis for quite some time. In the near future, real-time payments are expected to be possible even cross -borders and between businesses. A great example of this is P27 which is a joint Nordic initiative by Danske Bank, Handelsbanken, Nordea, OP Financial Group, SEB and Swedbank with the purpose of establishing a pan-Nordic payment infrastructure for domestic and cross-border payments for the Nordic currencies as well as the Euro. The goal is to go live in 2021. According to a report from Accenture, 78% believe that payments must be instant right now or that they will become instant in the next year, indicating that this trend will pace up.

For consumers, real-time payments are very helpful and gives them the ability to use the same payment solution across countries which generates a convenient and frictionless customer experience. Real-time payments simplify and accelerate the payment process, which lead to better cash flows for the merchants. Instantly transactions improve lead times for cross-border payments which allows instant settlement for merchants as well as lower cross-border fee. If merchants manage to handle real-time payments, they will meet customer needs as well as lowering costs, resulting in business growth.

What do these four trends have in common? They are all focused on the customer experience, customer loyalty and security. These factors are extremely important in a world where new businesses pop up around every corner as well as security basically being the most vital part of payments. For merchants to succeed in this world, they must be aware of these trends and what needs they stem from. Recognizing upcoming trends and being one step ahead can be key to success.

Sources: Centigo, Network World, Accenture, Fingerprint

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