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What will happen in payments in 2020

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A regulatory deadline, new rules for contactless payments and the next generation of terminals. 2020 will be an eventful year in the world of payments and to get you prepared we have gathered the most important things you need to know.

For most people, December is a time for planning ahead for the year to come. But while you’ve been making plans for 2020 you probably haven’t had time to deep-dive into the topic of how payments will change in the coming year. Not to worry, to help you stay informed, prepared and ahead of the curve, we’ve put together a guide of the most important things you need to know about payments in 2020.

The new SCA deadline

On 14 September this year, Strong Customer Authentication (SCA) became mandatory for all electronic payments, a part of the EU’s new Payment Service Directive: PSD2. As we now know, many online merchants and payment providers weren’t quite ready for it and the European Banking Authority allowed for a grace period for SCA on online card transactions, to give the market more time to prepare. The EBA’s grace period will end on 31 December 2020 and the coming 12 months will therefore focus a lot on getting online payments ready for SCA.

In most cases, “getting ready” simply means implementing the security protocol 3DSecure for all online transactions. But the grace period has also given payment providers, issuers and acquirers more time to develop support for the new version of 3DSecure, known as EMV 3DS. This new version will make it a lot easier to utilize the exemptions from SCA that are allowed under PSD2. For many online merchants and customers, who are now getting used to the world of SCA, 2020 will be a transitional period. But the introduction of EMV 3DS should help make that transition smoother as the year goes on.

Contactless becomes mandatory

Most of us have already grown accustomed to the convenience of “tapping” our contactless cards, and we can find terminals that aren’t enabled for contactless a little annoying. Well, by next year that won’t be a problem. Visa and Mastercard have together decided to issue a “contactless mandate” which means that all card terminals that accept their cards have to be enabled for contactless by 1 January 2020.

As a Bambora merchant you don’t really have to worry about this since all our terminals already have contactless payments enabled. But if you have another terminal supplier and your terminal can’t accept contactless payments, you should make sure that they will be ready by New Year’s Day to avoid fines from Visa and Mastercard.

A new generation of terminals and POS systems

To keep up with new payment methods and new security requirements, card terminal technology is constantly being developed. In 2020, Bambora will start rolling out the next generation of our terminals. These new Ingenico terminals, commonly known as Telium Tetra, will offer better security, a sleeker design and a ton of new features.

Another trend that we think will impact payments in 2020 is the growth of mobile and cloud-based point-of-sale systems. We have already seen merchants moving their POS system to smartphones and tablets, and the next step in that evolution will be mobile devices that double as both POS and card terminal. This market is expected to grow a lot in the coming years and to help facilitate that growth Bambora has developed a payment solution specifically for mobile POS providers, called Bambora Connect, which we will continue rolling out to new markets in 2020.

Alternative payment methods are growing

While card payments are by far the most preferred payment method for consumers in the Nordics there is a strong trend towards a greater variety in payment methods. More and more stores are choosing to accept invoice payments and mobile payment methods like Swish, Mobile Pay and Vipps as an alternative to cards.

In 2020 we also expect mobile wallets and wearables to become more common payment methods. At their core, these payment methods still based on your credit or debit card, but thanks to contactless (NFC) technology those cards can now be put into everything from phones to watches and bracelets.

Open banking starts making waves

Another big trend that is expected to affect payments in 2020 is Open Banking. The concept of Open Banking is an essential part of the EU’s new payment service directive. The EU has outlined new regulations that effectively mean banks will lose their monopoly over their customer’s data. Banks now have to allow any company access your account through APIs, if you request it.

The idea of Open Banking is to increase competition and innovation in the banking sector, with new services springing up as companies get access to previously inaccessible data. While this wave of innovation has yet to materialize, the APIs will make it possible for new forms of direct payments from your bank account through what is called PISPs (payment initiation service providers) which will challenge services like Swish, Vipps or Moible Pay. Perhaps 2020 will be the year when we start seeing these services hitting the market.