Most people are aware that cash is old news. We have all become more accustomed to contactless payment in recent years and there are now a whole host of payment methods available for online and offline transactions.
There are the old favorites like Visa and other debit or credit cards – but what can we expect in the coming years? Cryptocurrencies, E-wallets and other options have already made their own mark on the financial transaction market. We will no doubt have even more choice when it comes to paying for services – and the main reason to invent new methods will be to make everything even more convenient than it is now and use cutting-edge technology to improve our lives.
Digitization Changed Everything
We have experienced huge advances in the technology of payments in the last few decades. From using cash and physical money for centuries, most societies now have a much more digitized process that has almost eclipsed the old ways. Cash has not quite disappeared completely – but it is nowhere near as prevalent.
There have been concerns and issues raised about the way we have evolved into a digitized society. But much of the concern was from a place of ignorance, rather than legitimate problems. New forms of security have also developed alongside payment technology, making everyone happier about using newer and more convenient methods.
One of the main concerns with online payment systems and completing transactions without the traditional methods of payment is how secure they can be. There will always be scare stories about criminals being able to hack into supposedly secure sites – but there have been huge advances in payment security too.
One newer weapon in the security arsenal is the use of biometric authentication. This is an extra level of security that uses personal data, like face, fingerprint, or iris recognition to verify identity. These are already commonly used on mobile phones and more points of payment are beginning to use them too.
Mobile Points of Sale
Contactless points of sale are just about everywhere now. They make for quicker and more efficient transactions and the initial security concerns have all but disappeared. But there has been a trend in recent years for mobile points of sale. It means businesses that have relied on in-store payments can now do business anywhere.
This technology allows for even more freedom for customers and service providers. Not being tied to a particular place to make a payment allows for a more fluid workforce. We may also see more mobile points of sale introduced in actual stores, allowing customers to interact with employees, rather than all paying on one section of the building.
If there has been one technological advance that has enjoyed more attention than any other in the last year or so it is artificial intelligence, or AI. There has been a rush to implement AI in all kinds of business sectors, which has not come without its own barrage of media-led panics. But AI can also do a lot of good.
As far as payments, AI can be a very beneficial tool in increasing the security around transactions. There is so much data involved that it is inconceivable to expect humans to check it all. With machine learning, these huge chunks of data can be processed in real-time and fraud can be detected immediately.
Buy Now Pay Later
This may sound like a particularly old kind of payment system – and at its core, it is. But the use of Buy Now Pay Later (BNPL) has grown dramatically in the last few years – and is a method of payment that is particularly popular with younger generations, such as millennials and Gen Z.
BNPL is essentially the old-style credit system. Payments can be made in installments making it much easier for consumers to afford more expensive services. BNPL use can be integrated into apps, stimulating business and also acting as a way to combat the cost of living crisis. Expect to see many more opportunities for BNPL in the years ahead.
Figure 2 The digitization of payments will only continue and evolve
Blockchain Technology and Crypto
This is one payments trend that a lot of people think they know a lot about because of the media attention. Coupled with cryptocurrency use, this decentralization of payments is an attractive alternative to many looking to escape from the established way of doing things. But from an almost underground niche arena, it has become part of the mainstream.
Even with volatile exchange rates and suspected criminal affiliations, cryptocurrency has become the latest investment craze. Bitcoin ATMs and a multitude of businesses – online and offline – accepting digital currency has made this a major part of financial transactions around the world. More regulation is probably on the horizon, but the lure of decentralization will remain strong.
More Choice, More Efficient, and More Secure
When it comes to improving payment systems and models of financial transaction, these three targets are at the forefront of advances. Not even the earliest of early adopters are going to continue to use payment methods that are not efficient, convenient or secure.
But the key to all of these payment trends is digitization. There is no escaping from the fact that we will continue to move further away from a cash society to an online one. There will be payment options and systems that disappear as technology advances. That is only natural – and we may well see some of the trends profiled here disappear as quickly as they burst onto the scene.
Generally, anything new is usually greeted with suspicion – and when you are dealing with something as universal as payment for goods and services, it is not just the tech-savvy that need to be considered. As long as genuine concerns are investigated we will move towards a future where payments are more convenient and secure. It will mostly take place digitally and online – but then, isn’t everything these days?