The future of payments will be frictionless

Being part of the human race, we often can’t help but have our eyes drawn to the next shiny object. But inherently, we often miss the most important innovation of the moment unfolding right in front of us. It’s like when we focused too much on 3D TVs and not enough on OTT streaming. While there’s a fundamental reason to be excited about the Metaverse, NFTs, Web3 and all the possibilities they provide, there’s something much more tangible happening right in front of us, and we’re already participating in it. Payment transformation is everywhere. Although our phones haven’t changed much in the past five years, the way we pay for things has. It’s been incremental, but if you look back even five years, you can see how dramatically our consumer payment habits have changed.

The most exciting thing about payment transformation isn’t the payment itself; this is how brands and enterprise solutions companies are using payment as the initial touchpoint in apps to drive loyalty programs, curate personalized experiences, and fair programs. In other words, being able to pay for something directly through an app isn’t even the purpose of the app; this is exactly what makes you a loyal brand customer.

In 2023 and beyond, concentrated convenience rather than commercial awareness will drive you to choose a brand. And the applications are endless. Starbucks is probably the universal example because the app lets you order ahead, pay contactlessly, and skip the lines. It also gives you personalized incentives to buy your favorite items more often. Payments and convenience are always inextricably linked, but the best way to explain payments transformation is the creation of complex backend solutions to make the consumer experience as smooth and simple as possible. Friction is the enemy of payments. As our attention inevitably becomes fragmented, we only notice things when they are not working; we only stop to question charges when they are not transparent or reliable.

What will payment transformation look like in the near future?

Global fintech Worldpay’s FIS’ Future Payments Predictions for 2025 answers one of these questions in the name. But the interactive guide looks at nine different industries, from travel and retail to groceries and gaming. FIS is a key player in all sectors in the introduction of new payment technologies. This month, Worldpay for Platforms also launched a tool that enables software companies to empower small and medium-sized enterprises (SMBs) to advance their user interactions by integrating more seamless payment and funding features. into their software or platform via a single integration.

While v-commerce (pay-in-car), the ability to pay via metaverse universes seamlessly, and a few other mentioned innovations catch your eye. There are also some very tangible things happening right now that make a lot of sense. Travel agencies are racing to become the most convenient and intertwined super app. We are already conditioned to use an app to search for multiple things. Yet the ability to take a trip (especially overseas) and find and pay for everything in one app without currency issues can easily create brand loyalty. Once there is brand loyalty, the ability to make recommendations during the trip or future trips opens up endless possibilities.

Large grocers have a real opportunity to use BaaS (banking as a service) to elevate the Starbucks app model. People often think about a completely contactless point of sale, but it always comes with hurdles and expense. The natural and current opportunity is to become a one-stop-shop for people in the grocery store and have the payment app double as a banking app. On the B2B side, all small sellers who work with a large grocery chain can also bank, apply for loans, and build B2B and B2C loyalty.

Despite rising interest rates, real estate has historically been a solid investment. But there are also innovations to help lower payments to keep shoppers motivated. MeridianLink has patented automation to help lenders and buyers manage high interest rates. Debt optimization is an automated process that a financial institution can use before closing a mortgage loan. This automation analyzes a consumer’s financial data to determine if there is any existing consumer debt that can be consolidated or refinanced within the financial institution, allowing for the possibility of a lower mortgage rate or qualify for a mortgage they would not otherwise qualify for.

The role of speed and security in payments transformation

Speed ​​is undoubtedly key to payment transformation. Dwolla VP Adam Steinhardt in a recent op-ed lays out their Real-Time Payments (RTP) network, what it means, and the possibilities that even minor practical modifications to our standard systems can provide. RTP is still an industry term, but he expects it will soon become a household name like SaaS or CRM. But sending and receiving money in seconds instead of 30 days has many advantages. That’s more buying power, more efficiency and, for example, more security for workers in the gig economy who, to some people’s surprise, are often paid weekly, not for each gig. .

However, speed only works with security. We all want speed, but people have to trust the process. Experian’s latest offering, Experian Link, creates more certainty for credit card transactions by verifying customers and reducing fraud. Experian is the first credit reporting agency to link consumer identity to a payment method to enable businesses to provide their customers with a seamless online experience. Integrating additional identity verification makes sense to add an extra layer of security for merchants and convenience for consumers.

Security can also be optimized by using multiple databases. “Use the right tool for what you’re doing” is a standard recommendation in the tech world. It is common to use various tools in conjunction to achieve a goal. Payments platform Regpack did just that when it used relational databases (specifically MySQL) and document-based databases (specifically MongoDB) to achieve a complex minimum constant development framework. An unexpected side effect was the improved security structure and privacy of PIDs (Personal Identification Data).

The biggest takeaway is that most of us don’t think about payments until they work, aren’t secure, or aren’t convenient. Over the past decade, we’ve quickly embraced Venmo, CashApp, Square, tap to pay, Amazon Go stores, and countless other innovations. But the enduring transformation of payment points is that this new wave will have loyalty as its constant theme. Payment is essential; it will innovate, become more secure and be more transparent. Like an iPhone, all of this change will happen without us really noticing it. But we’ll see that our convenient checkout habits will drive brand loyalty and personalization. Because if our traditions teach us anything, we will keep going back to what creates the least friction whether we notice it or not.

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