As the rapid escalation of the modern technological era of digital payment rises, the traditional types of payment methods are slowly being shoved inside our memory boxes. Payment providers are now shifting their strategic focus to digital payment trends that can potentially shape the future of commerce.
Modern technology has left a great impact on the way payments are done. This is the reason why businesses are forced to grasp more efficient payment methods to maintain their pace on the ever-advancing demands of modern society.
Here are some digital payment trends that brands should watch out for this coming 2020:
1. THE RISE OF GENERATION Z
For those who are not familiar with what the term ‘Generation Z’ or ‘Gen Z’ is referring to, here’s a quick explanation:
Generation Z (also known as Gen Z or iGen Millennials), is the term used to categorize individuals born between the years 1999-2012. Gen Z is also known as the generation that followed the Next Gen Millennials (also known as Generation Y.) Individuals who belong to Gen Z are those who are approximately aged 7-20 years old at present. Basically, they are the generation of the digital world.
According to a recent research by Bloomberg, Gen Z will surpass the total population of Millennials by 2020. This dramatic shift in the population means that by the time the world reaches the year 2020, the younger, modern media and advanced tech-exposed generation will comprise the majority of the people living on earth.
The youngsters who belong to the Gen Z will have, in their hands, the power and weight of reshaping the future of digital trends. Payment methods is among those trends.
The rise in the population that hardly remembers a world without the internet and manual processes will be the ones fully immersed in a wider array of sophisticated technology and Artificial Intelligence.
They will also be more internet savvy, surpassing the knowledge and experience of the generation that they succeeded. With the higher dependency of the iGen Millennials on advanced technology, the demand for quicker, automated and more efficient services is inevitable.
An example of this is the rampant availability of mobile banking to accommodate the fast-changing trends in more convenient payment methods.
2. BIOMETRIC AUTHENTICATION
The next trend in digital payment that is said to take place in 2020 is the arrival of a system called Biometric Authentication. Biometric authentication is a method of identity verification that uses the distinct biological or structural characteristics of a person to authenticate their identity.
Although the reliability of a tangible system like ATM payment processing has already been proven, it does not stop the development of quicker and more advanced methods of processing payments and transferring money.
Digital wallet and mobile payment services such as Apple Pay for IOS users and Google Pay for Android users are both very good examples of applications that use biometric authentication. With biometric authentication, downloading and purchasing apps on digital payment platforms become more convenient and secure.
Fingerprint scanners and facial recognition are some of the most familiar forms of biometric authentication. On the other hand, heartbeat analysis, iris recognition and vein mapping are biometric authentication’s most recently developed forms. Presently, more and more businesses are upgrading their payment processing software by including a biometric authentication system.
Biometric authentication can be considered as a payment method that combines efficiency, accuracy, and security in one package. Since it relies on every individual’s unique physical characteristics, it effectively enhances customer security and thereby drives higher customer loyalty and trust.
3. CARDS TO CODES
In the past, bank accounts were recognized using a series of random combinations of unique digits on a card. However, with the rise of EMV (Europay, Mastercard, Visa) technology, customers were introduced to a more secure and computerized mechanism for payment.
EMV technology utilizes codes that change every time a transaction takes place, thus making higher rate of security for bank accounts possible. Using this as an example, it is evident that codes will reshape the bank account system that customers have come to recognize.
At the same time, the future of plastic cards will quite possibly be overshadowed by the development of more convenient and seamless methods for storing money and transferring payments
4. MOBILE PAYMENT DOMINATION
Through the years, people have become more reliant on mobile devices. This is true even for completing online payments or transactions. Customers are more likely to take advantage of the convenience that smartphones and mobile devices provide.
Since the introduction of API in the early 2000s, it has provided great potential development of mobile payment by introducing more relevant and helpful functionalities in mobile applications.
Although this trend was not immediately embraced by the majority of the different industries due to the lack of features that it can provide, continuous innovations in technology helped amplify the efficiency of mobile apps. Thanks to the higher level of accessibility made possible by smartphone, higher focus is being directed towards improving user experience and making every payment process accurate and seamless.
Banks are now starting to invest more in mobile technology, making it an additional medium for their marketing strategies. The newer generation makes this trend unignorable as they shape the majority of future end-users for digital services. Today’s customers likewise crave benefits in the form of different rewards and discounts that can only be provided through mobile banking.
Traditional banks should stay relevant by adapting to the ever-changing demands of the world’s consumer population.
5. AN UPGRADE FOR SECURITY
A rough estimation by Accenture states that due to card losses in the previous years, the banking industry has lost around $31.3 billion globally; with the amount steadily increasing by 18% on a yearly basis since 2013.
As technology develops, so do the methods that scammers use. Banks are now coming up with relevant and easy-to-use systems that help boost customer security. Security is a key consideration for any payment method’s viability.
Today’s consumers have exhibited higher precaution over who they transact with online. With several scammers and hackers lurking in every nook and cranny of the internet, it’s hard not to demand for more secure and more dependable payment methods.
In other words, this calls for an innovation on payment systems that is far more secure and complicated that fraudsters will have a tough time deciphering the technology behind it. Biometric authentication has already paved the way for that.
Investing in a more secure system in the upcoming years will pave the way for businesses to attract more consumers. Just keep in mind that technology is ever-developing and the industry is filled with tons of tough competition. As such, it is best to consistently add features that can exceed what competitors are offering.
The Future is Here.
The digital world is constantly growing in the sense that all demands and needs change rapidly. This is a fact that businesses and customers are slowly embracing. The banking industry should invest more in digital payment trends so that they can stay relevant by all means necessary.
With the newer generations demanding higher efficiency, immediacy and security in today’s options for payment methods, shifting the focus of banks’ innovations on their marketing strategies along with their security systems and payment transactions will help them stay afloat in this ever-changing industry.