A disruptive mix of consumer-behavioural changes and emerging technologies creates huge opportunities in the payment industry
A hot topic for 2017: digitisation means that both shopping habits and payment preferences are changing. Current trends show that internet technology is being used more and more across all shopping channels. Below we look at five payment trends everyone should know about.
Trend 1: Cross-channel payments
The boundaries between the online world and the offline world are blurring; cross-channel payments are a clear trend in 2017 and this is backed up by the evolution of mPOS terminals into SmartPOS terminals. At the same time, mobile payments are also becoming ever more popular. Merchants such as Starbucks, Walmart and Kohl in the USA or suppliers including Payback and Orange Cash have already realised that mobile payments are of strategic importance in bridging the gap between the real world and the digital world.
There is a clear trend towards a smooth shopping experience with an uncomplicated and seamless payment process
Trend 2: Seamless checkout
Payment evolution is still going strong in the online area too. Payment processes must become quicker or fade into the background completely – and they must be done with the user’s mobile device. Card-on-file solutions like Amazon and Uber or Masterpass solutions are being used more and more by end customers, enabling them to complete the payment process with very few clicks, or even none at all. The focus is on a smooth shopping experience with an uncomplicated and seamlessly integrated payment process.
Progress in real-time payments: money transfers take just seconds with instant payments
Trend 3: The PSD2 and SEPA Instant Payments (SCTinst)
With the adoption of the PSD2 (Second Payment Service Directive) and the standardisation of real-time SEPA transfers, we will now begin to see progress in the area of real-time payment transfers in Europe. This European standardisation will create competition for solutions already on the market such as iDEAL, SOFORT and other payment methods, but it will also open up new markets within Europe. Even if consumers only begin to notice this in 2018 due to the time it will take to implement the new regulations, all banks, payment service providers and merchants will have to confront themselves with this new development and draw up plans in 2017.
Trend 4: Internationalisation
The trend towards internationalisation in online retail will continue unabated. While digital goods suppliers have been focusing on internationalisation for a long time already, the trend has only just begun to be felt strongly in physical goods retail. However, for both areas it is important not just to offer international payment processes such as credit cards or PayPal, but to also take into account local features; payment processes which have been established within a certain region and are popular there should be supported. Risk management and fraud detection must also be adapted according to regional circumstances.
Technical approaches such as voice and fingerprint recognition will set new security standards
Trend 5: Security
While we have already written about the PSD2 in connection with real-time payment transfers (SEPA Instant Payment) and the developments to be expected, the payment market will also need to closely observe the regulatory technical standards when it comes to strict customer authentication, which will be defined within the framework of the PSD2. The guidelines on this published by the EBA (Electronic Banking Authority) by order of the EU call for strong two-factor authentication for all payment transactions. Only a few exceptions are allowed. If this framework is adhered to, it will have a huge impact on internet payments and will require every transaction to be authorised by the customer in two ways. Payment security is always a factor. Regardless of regulatory standards, what is needed most is for everyone involved to work on improving security, while also keeping in mind user friendliness. It is fundamentally to be expected that new technical approaches such as voice, fingerprint or facial recognition, which combine security with user friendliness, will be increasingly introduced.