Payment Trends of 2018
With digitization in the world of payments progressing by
leaps and bounds, the following developments are expected to make waves in
2018.
Internet of Payments
The number of devices connected to the Internet of Things
(IoT) is set to increase from 6.4 billion in 2016 to 20.8 billion in 2020. Customers
are increasingly expecting their IoT devices to enable more than just carrying
out tasks automatically; they also expect them to facilitate payments. For
example, customers with connected fridges can expect to see depleted items
restocked and automatically paid for. Visa is also working with Honda to
develop technology that can detect when a car’s petrol is low and enables users
to pay for a refill using an app that is connected to the in-car display.
Context-Based Payments
Anyone heading to the checkout, whether with a real or
virtual shopping basket, often takes a moment to decide whether their purchase
is really worth it. Integrating payment into the context of the shopping
experience and transaction can help remove this barrier to sale. It renders the
POS almost invisible, while the payment process runs automatically in the
background of a shopping app being used.
Wireless payments – a concept already being implemented more
frequently online – will also be used in brick and mortar stores. Customers
will, in the future, no longer need to reach for their cash or a credit card;
instead, they can pay wirelessly in passing – whether from their smartphone via
Bluetooth, using the RFID chip in their debit card, or automatically by facial
or voice recognition. This will make the transaction seamless, and leave little
time for customers to rethink their purchase.
Peer-to-Peer Payments
In 2018 payment processes will be increasingly integrated
into peer-to-peer (P2P) systems. Apple is also implementing feature with Apple
Pay Cash. The new voice input technologies, such as Alexa, Siri and Cortana,
mean that P2P payments and banking transactions can also be carried out using
voice commands.
Real-Time Payments
The push pay model makes real-time payments possible. Thanks
to the SEPA Instant Credit Transfer (SCT Inst) scheme, the requisite European
infrastructure has been in place since 21st November 2017. In Germany, it is
already supported by the UniCredit Bank, the Deutsche Kredit Bank, and many
savings banks. But it will probably be some time before the majority of banks
are using the new system – perhaps not until participation becomes mandatory.
In 2018, however, additional German participants are
expected to join the scheme as market pressure increases. It will be
interesting to see the extent to which SCT Inst will open up new payment
methods and how much retailers, in particular, will take advantage of the speed
and reliability of real-time transfers to convert their processes to genuine
real-time transactions.
Decentralization through Blockchain Technologies
The technological basis for Bitcoin and other cryptocurrency
will allow the creation of more innovative financial solutions in 2018.
Institutions will use blockchain technology to establish direct connections,
thus eliminating the need for intermediary or correspondence banks.
Nasdaq has already created a platform which allows private
companies to issue and trade shares via blockchain. Here, the complete trading
process – from execution to clearing to settlement – takes place almost in
real-time, while the technology allows traceability. Blockchain can also be used
by regulators as a completely transparent and accessible recording system, thus
making auditing and financial reporting considerably more efficient. The number
of uses for blockchain is constantly increasing and, although the technology
has not yet actually achieved breakthrough status, like many radical
technological shifts, it needs time to establish itself.
Commercialization of MNO Wallets
More than two billion people globally currently do not have
access to financial services. In many countries with low financial inclusion,
peer-to peer-payments through mobile wallets or mobile network operator wallets
are the norm. With growing popularity of e-commerce in these countries comes
the commercialization of such wallets for B2C payment methods. There is a clear
shift from P2P payments to B2C payments seen in many Asian, African and Latin
American countries.
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