As technology continues to revolutionize a variety of industries and commercial sectors, 2020 is soon set to be upon us.
It should be safe to say that business owners need to pay close attention to certain key trends. Among them, the rise of digital payments.
With complex payment gateways, cryptocurrency, electronic wallets (e-wallets), and more, some of the greatest innovations these days revolve around how we buy, sell and conduct other transactions. So, what’s next for digital payments?
Here are some possible developments that we might see become mainstream in 2020.1. The Rise of e-Wallets
E-wallets let buyers make payments via a single tap on a computer or smartphone. A number of things can be paid for using e-wallets, including clothes, tickets and even groceries.
With internet penetration at 80% and smartphone penetration at 63%, the outlook for digital payments for the year 2020 seems promising.
e-wallets have taken a place in the spotlight, especially since JP Morgan recently stated in a market report that “The use of cash is expected to be overtaken by digital wallets by 2021”.
Technology giants like Samsung, Apple, Google, Alibaba and Tencent are driving the growth of digital wallets, and consumers seem to be loving the convenience. It’s a pretty radical and revolutionary concept. Security and authentication features (not having to enter credit card info or give physical credit cards to cashiers) make e-wallets so much more appealing than carrying bulky wads of cash around.
Mobile wallet payments may have only come up to about $75 billion in 2016, however, the forecast is that they’re going to soar upwards by 2020 (an estimated 80% of growth over five years).2. Emerging Markets Within Asia
There’s also a huge jump in growth expected for emerging markets that’s greater than that of developed economies.
So far, digital payments in developing markets apparently grew about 21.6 per cent between the years 2014 and 2015. Now, non-cash payments in emerging markets throughout Asia are projected to leap by nearly a third (30.9 per cent), with powerhouses like China and India leading the way.
Trends like virtual payment cards, cloud-based accounting and digital invoicing are all becoming popular in a variety of emerging Asian economies. There’s also an increase in the adoption of mobile payments and e-wallets.3. Changing Regulations
With conventional finance being disrupted by the alternatives offered by Fintech, regulations have been put in place. These can help nations to accommodate new players while helping to protect banking infrastructure.
One such law was introduced by the European Union in order to allow third-party organizations to gain access to banking customers’ data (with their consent). The EU directive was meant to open up the payment ecosystem for smaller non-banking firms and lenders, establishing a fairer and more competitive playing field. These European rules were established in January 2018, as part of an initiative known as “open banking”.
We can expect to see further developments in open banking. This could lead to a more dynamic ecosystem where banks open up their application programming interfaces (APIs) to third-party payment providers. A more collaborative payment environment might come out of it. One in which banks, developers and providers of Fintech solutions work together to enhance their offerings (via instant payments and other breakthrough technologies).4. The Commoditization of Payments
Traditional payment institutions could experience slower growth in the next few years, as non-banks, big tech, Fintech and challenger banks begin to enter the digital landscape.
A majority of retail payments executives and banks are expecting to lose 11% to 15% of their total revenue pool in the next few years.
We should also see a jump in virtualized payment methods in the coming years. Virtualized card payments offer a number of benefits and 2020 could bring about a natural push towards the data-rich capabilities of virtual payments.
Virtual cards can also make a difference in the hands of business travellers who carry out transactions via their mobile. Corporations, agencies, suppliers and tech companies can also benefit from the power of virtual card payments.
The number of merchants accepting contactless payment methods (wearable payment devices) could increase 74% over the next couple of years. New technology such as facial recognition payment (seen mainly in China), QR code payments and payment solutions from tech giants, could all impact us in big ways in 2020.
RegTech such as e-KYC solution is also realizing real-time non-face-to-face registration process, pushing the outreach of digital payment products without constraint of having physical branch/agent. The maturity of digital ID verification is ultimately driving down the cost of user onboarding, and thus cheaper transaction cost too.
Expect the number of invisible/embedded payments to rise, particularly now that customers expect a seamless shopping experience that does away with components that ‘get in the way’ (such as enrollment, entry of payment data or other kinds of additional effort).
Digital payments and the opportunities that come with them appear set to make a big impact on the world in 2020. Expect to see even more focus on intriguing developments that revolve around how we conduct our transactions soon.