The COVID-19 disruption caused an accelerated evolution and digitalization of payment methods and technologies. While the evolution was spurred by the pandemic, the trends don’t appear to diminish and instead could potentially further evolve post-pandemic. We consulted the financial experts who share their predictions on payment technology trends in the post-pandemic era.
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Ecommerce currently accounts for 19% of all retail sales worldwide, up from 16% the previous year. Consumers are expecting their online transactions to be as frictionless as possible as a result of the increase in online activity.
Embedded finance refers to when internet companies, such as ride-hailing applications, social media platforms, and online merchants, provide extra financial services, such as payment processing or even wealth management, in addition to their core services.
For example, Uber's embedded finance feature eliminates the need to withdraw cash or a debit card at the end of a ride; the payment is automatically deducted from your account.
Uber also introduced its own bank, Uber Money, in 2019, which provides drivers and couriers with real-time access to their earnings as well as an Uber Visa debit and credit card. It's not only for tech behemoths like Uber; integrated finance also provides a regulatory infrastructure for non-financial enterprises, making it easier for organizations of all kinds to navigate the highly regulated market.
SMEs are also jumping on the embedded payments train, according to Yasamin Karimi, head of product at API provider Codat.
Bram Jansen; Chief Editor of vpnAlert
Payment companies deal with a lot of data, therefore AI models that can analyze customer behavior and automate operations better and faster than people are in demand. AI may be used to analyze real-time financial data and comprehend customer financial behavior in order to predict future needs. More automation decreases costs and lowers error rates, both of which are critical.
AI is critical for B2B payment companies and banks to reduce errors and detect fraud. Money laundering has also become more prevalent, causing some financial institutions to struggle with regulatory compliance. Artificial intelligence (AI) is increasingly being recognized as a tool that can help address this.
The major selling point for AI-driven payment technologies is ease for consumers. Consumers care about convenience, and it's evident that being able to pay with your face ID is highly convenient. AI will also play a major role in the post-Covid recovery for stores that are still struggling since it provides a fresh channel for growth.
Retailers are increasingly implementing BNPL schemes, which use consumer behavior data such as transaction history to determine whether or not to provide the financing Option.
Gerrid Smith, Founder of Corporate Investigation Consulting
Expect a growing number of firms to use new biometric payment and identification systems to combat the rising threat of transaction fraud. Voice authentication is used by banks, brokerages, and credit card issuers, for example, to verify identification and shorten service times.
Biometrics such as fingerprints, retinal scans, facial recognition, and voice recognition are key components of SCA requirements in open banking legislation such as PSD2. Biometrics will also take on new shapes in the post-pandemic era.
Face recognition technology is also being used to help authenticate the ages and identities of customers purchasing age-restricted commodities from vending machines, such as alcohol and cannabis.
While biometrics is becoming an increasingly important part of transaction security, they are not foolproof. After all, everything that can be scanned can be stolen. A cybercriminal can quickly acquire access to accounts or credit once they have a picture of someone's finger, face, eye, or anything else.
While it's unclear how much damage can be done with deepfake voices, fingerprints, or faces, we do know that even Apple's lauded biometrics protections haven't always been completely secure. These technologies, however, will have a significant impact on payment trends in the months and years ahead as part of layered authentication that combats both fraud and friction.
Neil Shaw, Founder & CEO Lottery Sambad
Card-not-present (CNP) fraud losses are expected to surpass $6.4 billion in 2020, and they could rise another 16.4% this year. Meanwhile, account takeover (ATO) attacks on websites and apps have cost more than $16 billion in the United States alone, and are expected to increase by 300 percent by 2020.
And are fraudsters taking advantage of gaps in newer payment methods like BOPIS and embedded finance, which have a 7 percent fraud attempt rate compared to 4.6 percent for traditional delivery models? There's a lot of money on the line, and the risk of losing it all might be devastating. Customers acquire things before paying a dollar with fast loans like BNPL, which is an alluring temptation for both consumers and scammers.
When you add it all up, you've got a dangerous balancing act on your hands. On the one side, there's a black web drowning in stolen credit card numbers, account login credentials, and other information that might cost your company millions of dollars.
Customers who have grown accustomed to digital transactions, on the other hand, are intolerant of even the tiniest amount of friction, let alone step-up obstacles. As of now, up to 88 percent of online purchases are abandoned, emphasizing the importance of smooth, flawless transactions.
Alex Claro VPN Analyst Credit Donkey
Florence Carpenter is passionate about ensuring that the process of opening merchant accounts is as straightforward as possible. She graduated from the University of Michigan with a bachelor’s degree in Marketing.
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