Emerging Payment Solutions Leave Cash Behind
Consumers are demanding streamlined, hassle-free payment solutions both online and in person. As consumers increasingly pay less with cash, businesses are turning to an increasing mix of emerging payment solutions to maintain growth.
For the most part, consumer preferences are shifting toward mobile and digital payment options. Businesses are responding by investing in ways to improve their payment solutions to accommodate mobile, online and point-of-sale channels.
The mix of emerging payments depends on the industry and local markets. But the general trends shown in the most recent survey by payments processor FIS holds across retail and e-commerce.
Leading Emerging Payment Solutions
Payment solutions have been evolving for years to keep up with technological advances and the busy world around us. The need to adapt, spurred on by the pandemic, won’t change anytime soon. Nor will the need to make sure that any new payment solutions comply with privacy regulations.
Over the next several years, businesses are likely to see even more substantial changes when it comes to payment solutions as the demand for electronic and mobile payments increases. Some of the leading payment solutions emerging at the forefront right now include the following:
Digital wallets are apps that can be installed on a consumer’s mobile device to store credit card information. Apple Pay, Samsung Pay and Android Pay are the most common examples of a digital wallet.
These apps communicate with POS systems compatible with digital wallets to process transactions. Digital wallets are secure, largely due to security measures like tokenization, a feature that replaces sensitive information like account numbers with random values generated by the app. Thanks to features like this, digital wallets are hard to hack.
Contactless Payment Technology
This method of payment is growing in popularity. Instead of swiping a card or inserting a card chip into a card reader, contactless devices allow consumers to simply hold their card, phone or smartwatch near a merchant terminal. The payment information is stored on a chip inside whatever device is used to make the payment.
Embedded payments streamline transactions by allowing consumers to pay for goods and services from an app linked with their bank account. Many ride-sharing companies, like Lyft and Uber, rely on embedded payments so customers don’t have to fuss with paying in cash or with a credit card. Other popular companies, like Starbucks, also have apps with embedded payment capabilities to help streamline their transaction process.
Personal Payment Apps
In addition to digital wallets, person-to-person payment apps like PayPal and Venmo are becoming more popular among consumers. Amazon, for instance, plans to add Venmo as a payment option, and Walmart recently added PayPal as a retail payment option. Other systems that combine mobile phones and personal computers to allow consumers to use their smartphones to make online payments are also becoming popular.
Customer Opportunities and Compliance
With new opportunities comes compliance concerns. Many business owners are rightfully concerned about complying with the security standards required for credit card payments.
Payment Card Industry (PCI) compliance data security standards are tools to aid in protecting against being electronically compromised. Completing annual PCI reviews and documenting operating standards will help protect your business against expanded liability from fraudulent acts. Utilizing PCI standards will adapt with the expansion of electronic payment methods and businesses need to be diligent in managing their electronic payment operations. Many emerging payment solutions comply with existing standards but it’s best to work with your banker and payments provider to assess any compliance risks before offering new services.
While it’s true that debit and credit cards will likely be around for some time, it’s clear that technological innovation is introducing other convenient and useful payment methods. Businesses seeking growth would be wise to pay attention to these emerging payment solutions and devise strategies on how to adapt them to best meet the needs and desires of customers.
Chart source: FIS Worldpay Global Payments Report
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