The way we are accepting and making payments is the most rapidly changing area of the financial services industry. With the increase of digital technology, it is important to keep up with the demands of consumers.
But what is impacting the future of payments?
1. Mobile Payment Acceptance
Mobile payments options are growing with the implementation of open banking and APIs. These are providing customers with instant alerts to their devices, as well as rewards for using the interface. With young consumers in control of what is ‘current,’ millennials and Gen X’ers are demanding faster service – right at their fingertips.
With the majority of the customer base in the young consumer category, we are seeing rapid growth in payment options such as Apple Pay, Venmo, PayPal, and Square. More brands will begin to implement mobile payment as a way to stay ahead.
2. Cash is King?
According to a recent survey, 40% of millennials would give up cash entirely if given the option. There are some negatives to not using plastic (or mobile) payment including:
- not receiving a receipt (digital receipt, anyone? Save the trees!)
- lack of security (physically losing the cash)
- inability to earn rewards (which our credit cards can do!)
- inability to track spending or account history
Replacing cash with technology? A paperless future? It certainly could happen sooner than we think! Companies are looking to please the young consumers with the creation of digital money markets.
3. NFC – Near Field Technology
Near field technology is used within the most popular mobile wallet applications. NFC permits a user to hold out their mobile device in front of a credit card reader. For example, Apple Pay has made customer checkout far easier and more efficient.
Smartwatches have even integrated NFC options. These devices (and other future wearable technology) will only continue to evolve as the future of payments evolve.
4. Mobile Retail Apps
One of the best example of this is the Starbucks app. Starbucks does over 30% of its business transactions through its mobile app. And why not? Customers can order their drinks ahead of time. One can load more money onto their account after quickly entering a password.
The app also properly secures payment options and has the ability to easily add new payment options. Not only that, but the rewards aren’t too shabby. After earning a certain number of stars (based off of how often they order/pay through the app), a customer can earn free drinks and food.
More retailers have expanded their market to include easy-to-use applications. Walmart has implemented a retail app that makes it quick and easy for customers to pay via Walmart or any other major credit card.
Companies such as Chipotle, Dunkin’ Donuts, Domino’s, and even 7-Eleven have incorporated mobile deals and coupons into their applications.
5. Let Me Take a Selfie
With fingerprint security almost second nature on iPhones, it seems like the big banks want to follow suit.
It seems that selfies may one day replace passwords altogether. Mastercard has discovered that while customers enjoy password protection, they much rather biometrics such as fingerprint verification and facial recognition tools. These verification tools help enhance security measures, and consumers will not have to remember specific passwords for each account. All you need is a selfie.