Payments is a very complex industry in the financial services world. The traditional payment processing workflow has unfolded itself through new technologies to reveal a variety of opportunities on the digital horizon. Here are some recent emerging trends in the payments industry.
Often change is turbulent, and the change in the payments industry is no exception. The exponential acceleration of the digital environment’s ability to transfer information safely has grown even in the last five years and has impacted the payments industry. This increase in ability in addition to a favorable regulatory environment for competitors of traditional banks has brought entrepreneurial startups to sit at the table with the established banks as well as gain some of their market share.
Paying for everything by checks or cash is for many people a distant memory. In fact, the advent of using the smartphone for formal and informal transactions is well underway. Financial services companies are looking to support innovative ways to facilitate accessible transactions.
Retailers and customers alike are benefiting from the advances in financial front end applications. Mobile points of sale, contactless technologies such as mobile wallets, wearables, and P2P apps have led to a proliferation in payment routes for consumers. So far, money transfers and retail sales have benefited the most from these innovations. Corporate financial services are poised to join in on this trend soon. Many traditionally non-payment technology firms like Google and Apple have entered into the payment services sector through their front end technological capabilities. This prowess has enabled innovations like Android Pay, CurrentC, and Square.
The advent of increased data collection and analysis on the back end benefits from the growing abundance of front end applications. This gives data analysis more numbers to crunch and an increased insight into the purchasing habits of the consumer. Retailers and banks can benefit from the analysis and forecasting of this information to proactively provide services to the consumer.
Major retailers such as Nordstrom’s and Macy’s have integrated their social media presence with integrated payment options. This may forecast the decrease in credit card use as other more convenient payment options become more available. Payment integration is forecasted to be adopted by the business to business sector in the near future. Payment services companies need to keep not only maintaining but improving their back end operations a priority to keep up with their competition.
Not only can a smartphone pay the bills, smartwatches and refrigerators are getting in on the act too. Alternative technologies will continue to push the tenuous boundaries of the payments industry parameters and continue to define new consumer behaviors. New protocols will make cutting edge technology such as the Bitcoin transaction protocol called Blockchain, a new standard for payment verification.
The explosion of technological advancements in the payments industry will bring about both improvements in services and reveal whole new areas of development. Mobile applications will increase, digital security will continue to be improved, and digital retail commerce options will entice more customers to buy online. The payments industry is a dynamic part of the financial services sector.