6 Trends Shaping the Future of Payment Processing


6 Trends Shaping the Future of Payment Processing

Driven by advancements in financial technology, the way we purchase goods and services has changed markedly over the last ten years. Indeed, only 19% of purchases are currently made by traditional methods i.e. coins, notes and cheques in America.  Such is the manner of the shift towards digital payments, that many experts believe that most countries around the world may well be entirely cashless within the next 20 years. So, given how quickly things have changed, who knows what the future of payment processing holds? In this post, we will take a look at six small business trends that are likely to bear an influence on it.

1. Contactless Payments

The first contactless payment was made in South Korea back in 1995 when a prepaid travel card called the Upass card was launched. Today, around 51% of Americans use contactless payments to purchase goods or services in person. While there are comparable figures for pretty much every other country in the world.

What people tend to like about contactless payments is that they offer convenience, speed and safety. They also enable smoother and quicker transactions because shoppers now simply tap on the EFTPOS machine.

If you are a business who has not yet installed an EFTPOS machine, you can check out Smartpay and their range of contactless payment terminals. 

2. Digital Wallets and Mobile Payments

As cash payments are on the decline, so is the physical wallet, with up to 53% of Amercians preferring to use their digital wallets more. 

Instead, more people are relying on digital wallets or mobile payments to pay for their purchases.

This type of payment method is an attractive option for consumers as it provides them with the benefits of speed and convenience. For instance, with a digital wallet, your payment details are securely stored on your device via applications such as Google Wallet or Apple Wallet. This allows you to fund a payment just by placing your phone next to the payment terminal.

By contrast, with mobile payments, customers with a smartphone can make payments through a mobile browser or dedicated app such as PayPal or Zelle.

3. Biometric Authentication

Security is paramount with all types of payment processing, so given the trend towards digital payments, you can expect biometric authentication to become much more widely used.

This innovative technology embraces unique behavioural or physical characteristics including voice or facial recognition and fingerprints to verify the identity of a user.

What makes biometric authentication such an attractive proposition for payment facilitators is that it offers an exceptional level of security, which goes a long way towards reducing the risk of fraud.

4. Real-Time Payments

We live in a time where we want our money now, not in the 3 to 5 business days that was previously the norm with cheques.

Subsequently, due to popular demand, you can expect financial institutions to facilitate more real-time payments that are initiated, verified and cleared within seconds.

By doing this, businesses and individuals should see a significant improvement in their cash flow as they will receive or have money debited from their account instantaneously.

5. Artificial Intelligence

Many people aren’t aware that Artificial Intelligence has played a leading role in recent developments in payment processing.

Due to its capability for processing large volumes of data and analysing incredibly complex patterns, it has been able to formulate strategies to better conduct, personalise, manage and secure transactions within the FinTech industry. 

At the same time, it has also been able to prevent targeted attacks on major, worldwide payment ecosystems by identifying, analysing and intercepting threats.

In the years to come, artificial intelligence is set to have an even bigger influence on payment processing as it will identify further ways for it to improve.

6. Open Banking

Through Open Banking, financial institutions can share data via APIs with third-party providers. 

This means that new apps and services can more easily be developed to offer an even more integrated and seamless financial experience for end users.

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