Payments: Innovations in Transactions
The rate at which innovations are being developed is higher than ever before. There is always something new popping up, for example, the Neo Banking niche. This constant change produces a lot of competition. The way payments are made has completely changed from the simple point of sale to more convenient methods.
This change is driven by the customers’ growing need for innovative technology that is not only convenient but also transparent. As there is a shift towards the latest trends in payments, companies are expected to catch up. This offers a great way to remain competitive in a tech-conscious world. So let’s take a good look at some of the emerging payment methods that any business should adopt!
Contents:
- BNPL: Quick intro
- Cryptocurrency
- Contactless payment
- Peer-to-peer
- Mobile wallets
- Biometric payments
- Core advancements
- Final thoughts
BNPL: Quick intro
The Buy Now, Pay Later financial service or option works by using a middleman between the customer and the business. The middleman is responsible for making payments to the retailer and receives money from customers.
One of the main reasons why many use BNPL is because it is easy to use. It is also cheaper to set up when compared with other methods. For customers, purchasing a product and paying later offers an advantage. They can start using a product that they may fail to afford currently. An additional advantage is that it doesn't come with more interest. Some companies that provide this service include:
- Afterpay
- Klarna
- Zip Pay
- Affirm
- Sezzle
Cryptocurrency
Cryptocurrency provides decentralization. This means it is not affected by governments or financial institutions. Things have changed significantly since Bitcoin made waves (the live price on Feb/2024 of Bitcoin is $61,079.79 per (BTC / USD) with a current market cap of $ 1,199.61B USD). Just 6 months ago it was around $19 (BTC / USD). Many people didn't understand how it worked.
However financial organizations were quiet to study cryptocurrency and look for ways to apply it. This has made it easier for business owners to adopt it as a mode of paying. While cryptocurrency is not yet mainstream, it is a promising tool to look out for.
Contactless payment
The digital payment market is projected to reach 11.55 trillion US dollars by the end of 2024. This will increase by nearly 10% in the next 5 years. It provides a better idea of how innovations are changing trading. One area that is growing is contactless payments.
These are similar to ordinary credit or debit cards. What sets contactless payment apart is the design. It has a radio frequency identification chip that enables you to pay by simply tapping on the card. The best part is that it doesn't need a PIN.
This has extended to mobile phones. Now customers can simply wave their mobile devices and pay for a service. Visa and Mastercard offer contactless payments through cards.
Peer-to-peer
As opposed to the other methods mentioned above, peer-to-peer payments are made between two individuals. They do not require the recipient to be a merchant. This solution offers an easier way for people to send money to each other.
An example is PayPal. It eliminates the need to send money through a bank transaction. All that you need to do is link the account to your bank and start transferring money. It is not only limited to two individuals. Small businesses can also use this method as it is cost-effective.
Mobile wallets
Mobile Wallets have taken the world by storm ever since being introduced. Statista shows that nearly 49% of e-commerce payments are made through mobile Wallets. Popular providers of this service include Google Android Pay and Apple Pay. All that you need to do is download the app on a mobile device.
For many businesses it is convenient. It is also a favorite for many because it promotes customer loyalty. Customers know that it won't take long to process payments. It makes the purchasing process more enjoyable and encourages people to continue buying from merchants.
Biometric payments
The rate of payment fraud is at an all-time high. This saw an increase in losses amounting to nearly 48 million US dollars in 2023. So businesses should be looking for more secure ways for customers to pay. A method that will see more usage is biometric payments.
Biometrics relies on various individual traits to promote transparency. It promotes legibility while also providing security during transactions. This method uses various features to recognize an individual making payments. These include:
- Fingerprint
- Iris scans
- Facial recognition
Core advancements
Quickly summarizing the dynamics, we can see changes in Decentralization and Cryptocurrencies. Here, the rise of decentralized finance brings challenges to traditional payment systems, urging collaboration and regulation. Moreover, we can see changes in:
- Quantum-Secure Encryption
- Personalized Payment Experiences (including AI and data analytics advancements)
- Green Finance (sustainability and eco-friendly practices)
- Biometric Authentication
- Programmable Money and Smart Contracts adoption
- Social Commerce Integration and Payments integration into social media platforms (speaking here of digital ecosystems)
- Connected Car Payments: starting from payments for fuel to charging and more
Final thoughts
Staying in business in 2024 will mean investing in evolving payment methods. For e-commerce businesses, secure online payments are necessary. The goal of innovations centers around customers. It aims to create a more secure and personalized way of making payments. Using biometrics ensures that only the legible person makes a payment. Now customers don't have to rely on cash or credit cards when shopping online.
There exists a plethora of options to pick from. When making a decision, it is important to find a solution that works best for your customers. Stakeholders can expect major transformations as other technologies such as AI become a part of making and processing payments.
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