Conservatism is as strong in the world of finance as nowhere else. But human habits are still gradually changing, so today you will not surprise anyone with cashless and contactless payments. In the era of the pandemic, even distrustful older consumers began to join it little by little.
In 2021, the volume of contactless payments increased by 5-10% in most countries of the world. According to PwC estimates, by 2025 the global volume of non-cash transactions will grow by 80%.
The very nature of the economy and the psychological perception of money is changing. This is no longer “green paper”, and not even the value of a plastic card. The economy is moving away from the old financial infrastructure. New forms of doing business and areas of the digital economy are emerging. Data is beginning to be valued even more than banknotes. In 10 years, the sphere of payments will change. Under the influence of tech trends, not only cash but also payments through the terminal may go down in history.
Technological trends in payments
Of course, the payment industry is developing under the influence of many factors, from the policies of individual countries to sudden super crises like the coronavirus. But technology has a very profound impact on this area because it offers solutions to problems, cost savings, and new sources of income.
●Online payments instead of cash
According to PwC, today 60% of the world's central banks are studying digital currencies, and 14% are already taking the first practical steps in this area. China has been testing its digital yuan for several years, and other countries are also talking about the creation of their electronic money.
At the same time, state regulators will have to finally decide what to do with cryptocurrencies, say, ban, study, or regulate this new financial phenomenon.
●Electronic wallets
The popularity of mobile payments will only grow. Strategy Analytics estimates that 4 billion people use smartphones today, which is more than half of the world's population. The growth potential is huge, especially in developing countries where the traditional payment infrastructure is underdeveloped.
Not so long ago, mobile payments most often required a phone with an NFC module, but now QR-code payment tools based on open banking are rapidly spreading around.
In the world of the digital economy, it will be difficult to live without an electronic wallet for obvious reasons. Tools like Google Pay and Apple Pay will only get stronger. There’s a possibility that they will have new analogs, as well as competitors. In the end, electronic wallets will be widely used in the B2B segment.
●Integration of international systems
Technology will allow making cross-border payments instantly, securely, and with a minimum of costs, which will enable businesses to look more boldly at new markets and more actively export their services far abroad. Standardization will allow the integration of local payment systems.
Money will increasingly bypass traditional banks. A variety of international payment solutions based on electronic wallets and blockchain will emerge.
●Focus on safety
Open banking is not only new opportunities but also new threats. Today, fraud is one of the main problems of fintech. According to a report by Sift, the average number of attempts to make a fraudulent purchase increased by 70% in 2021.
In the new conditions, businesses will have to address the issue of comprehensive protection of their digital ecosystem. AI algorithms, data analysis tools, and complex risk assessment models will be involved in solving cybersecurity problems.
What will happen to payment terminals?
It seems that we only managed to get used to this technology, but it’s already losing its relevance. POS terminals made it possible to defeat cash settlement and still remain to be a very resource-intensive payment model.
The use of terminals has given rise to a whole branch of the economy. We’re talking about the production of the devices themselves and software for them, the certification of terminals in special laboratories, service from banks, and so on. This complex support model imposes additional costs on market participants, so the search for an alternative is well under way.
For several years, payment systems have been promoting the idea of a digital terminal SoftPOS. This mechanism allows you to accept card payments without a physical POS terminal. It’s expected that in a few years those fmiliar machines will disappear from shops and supermarkets. Enterprises can turn to fintech solutions that combine classic acquiring and QR payments. All you need to make a payment is a smartphone.
The Future of the Payments Industry
Of course, it will take years to change people's financial habits. There’s no need to talk about a complete rejection of POS terminals or even cash payments today. Psychology also plays a role here. It’s important for many people to feel the weight of money in their hands, to physically allocate them, even if by means of a plastic card.
Nevertheless, the general movement of the economy into digital is inevitable, and the coronavirus has only accelerated this migration. E-wallets, fintech, open banking are what will shape the economy in the coming years. This means that businesses and banks need to digitalize at an accelerated pace, switching to unified databases, and forming modern ecosystems.
Wondering how to switch from Finance to FinTech? Get in touch with us today to take advantage of high-powered FinTech technologies for your financial business!