Best Payment Trends That Tend to Change The Game

Have you ever thought that we have witnessed another global evolution of the financial system associated with the most important aspect of our life - money? As the experts note, there are four types of currencies that now rule the world: cash (fiat), non-cash, electronic, and crypto.

According to the World Bank, two-thirds of adults all over the world now make and receive digital payments. This way, we can confidently

Recent years have been a time of big changes in the payment sector due to innovations and increased customer acceptance. More and more businesses are now rethinking their policies and bringing consumer preferences and innovation to the forefront. Thanks to this, we can observe more and more technologies and software that burst into our daily life and make it even more convenient.

Let's take a look at 5 major trends that clearly show how dramatically the payments sector is changing, along with our opportunities.

Blockchain

Changes are in the air. Many experts believe that blockchain can turn around the payment sector as we're used to knowing it. Although we're now at a starting point, the potential is really great.

Traditional database technologies come with a number of problems associated with the accounting of financial transactions. However, blockchain anticipates them. Blockchain technology is an advanced database mechanism that provides the open exchange of information within a business network. This technology creates a decentralized and tamper-proof system for recording transactions. No person or business owns the system of records. This creates new opportunities in many areas and is already widely used in real estate, banking and finance, legal, and payments.

Blockchain can bring several new opportunities to the payment sector. The most significant of them include:

  • Speed of payments. Blockchain technology increases the pace of payment processing due to its agility, real-time authentication, and no middlemen involved in the process;

  • Peer-to-peer payments. P2P payments allow you to get and send money from or to other individuals. As blockchain has global coverage and decentralized nature, peer-to-peer payments can be fast and affordable;

  • Digital currencies. Blockchain technology, which is used by many digital currencies, uses a decentralized system rather than a central authority to verify and manage transactions and data.

Because of blockchain's versatility, transparency, and easily accessible capabilities, its global market is expected to grow by more than 85% by 2030.

Real-Time Payments

Real-time payments can change the game for businesses and individuals at all levels. Migrant workers, freelancers, small businesses, and multi-millionaire companies can benefit from them as they process and often settle instantly.

Traditional transaction processing includes batching, sending to a merchant's bank, and processing at scheduled intervals, making it longer. As more and more institutions strive to speed up the process, we can expect that most payments and settlements will evolve from batch to real-time processing to meet customer demand.

Open Banking

Open banking is a form of real-time payment that allows financial institutions and other service providers to access consumer banking information, such as payment history and history of transactions. Thanks to this, banks can operate faster and take into account customers' financial behavior.

How can open banking affect the payment sector? For example, a business that uses open banking can display all of a customer's bank account balances on one screen and enable money transfers between them, even across different banks.

Cross-Border Payments and Remittances

Cross-border payments are now in high demand. Digital currencies are commonly used for cross-border payments because they have a decentralized nature, are not backed by central banks, and represent a fast, cost-effective, transparent, and frictionless option for such transactions.

A project called the Dunbar Project is being developed now. It provides for creating a single international platform that will make cross-border payments and settlements cheap and fast. The project will develop two prototypes of a common platform that allows international settlements using digital currencies issued by several central banks.

Biometric Authentication

Customers are already used to accessing their cellphones through biometrics or physical indicators like a fingerprint, face, or iris. They are now ready to use them as a new way to make payments. 86% of individuals are interested in expanding the usage of biometrics for identity verification and payment purposes.

Public acceptability of biometric authentication is high since it is widely used in daily life, from unlocking smartphones to passing through airport security. Nearly 75% of consumers all around the world treat biometric technology positively.

For consumers, the advantages of biometric authentication are speed and simplicity. In fact, most consumers believe biometrics are easy and more secure than passwords or PINs.

What's Next?

As technology continues to drive the use of digital payments, businesses need to be more proactive and predictive in the payment services they offer. This will help them meet growing customer needs. Organizations need to better evaluate their operating model and how they will support the new digital infrastructure.

Also, increased collaboration between regulators and pioneers in the payments business will accelerate the further digitization of payments and is likely to spur greater innovation.