Digital payments have evolved hugely in recent years, with contactless payment cards technology and the emergence of new services from financial and technology players changing the way individuals and businesses conduct financial transactions.
There is much more to come, though. Continuing and fierce competition in the financial services sector, demographic changes and the adoption of emerging technology, are all playing a role.
As we enter a new year, we’ve come up with the three trends that we think are most likely to impact digital payments in 2019 and beyond.
1. Mobile banking reaches another level
While the uptake of mobile payments has been slower than expected , this is likely to change as open banking and the greater availability of APIs lay the way for improved customer experiences beyond the functional elements offered by most mobile payments apps.
These developments will enable payments players to bring together the power of mobile technology, the wider technology ecosystem and data sharing to deliver better payments experiences. Services such as immediate rewards and proactive balance alerts will provide value beyond the transactions.
One value-added service likely to gain traction, according to Accenture, is a single view of account information. Third-party providers can provide this thanks to the greater sharing of bank customer data via APIs facilitated by PSD2.
The use of mobile wallets will also help retailers, enhancing transactions and improving the overall shopping experience. For example, Burger King and Starbucks already offer a quick order function, allowing consumers to place and pay for an order without having to queue and speak to counter staff. Other retailers will likely follow suit.
2. The influence of Gen Z continues to grow
Generation Z, the age group following the Millennials, is making its presence felt in the workplace and wider global economy. This generation have never known a world without Google, Apple, Facebook and Amazon and are comfortable with digital technology.
These young adults and older teens will soon represent a significant proportion of the payments industry customer base.
This age group is also interested in digital tools to manage payments, bills, expenses and personal finance. More Gen Z consumers (69 per cent) use mobile banking apps daily or weekly than any other generation. They are likely to be the first generation to forego a physical wallet in favour of a digital one.
As an example of their thirst for faster payment methods, as well as personal control, 68 per cent of Generation Z consumers surveyed by Accenture said they were interested in instant person-to-person payments – more than any other group.
3. Greater industry collaboration
Fintech companies are now more willing to work with traditional financial services providers and retailers, while banks are starting to innovate like fintech players.
Banks are embracing connected networks to multiply impact, and to collaborate in new and disruptive ways. According to Accenture, these ecosystems will result in new payment routes, bank networks and alternative forms of payment.
In the US for example, banks have launched Zelle, an API-enabled network of more than 30 partners to deliver real-time payments across thousands of banks. Likewise, Ethereum, a blockchain-based platform like Bitcoin, is supported by technology giants, major financial and payments organisations, startups and governments.
Mastercard and Visa are also making use of partnerships around the world to boost the uptake of digital payments.
Other trends to keep an eye on
While the above trends may be the most prominent, the field continues to evolve. Innovations such as voice-activated payments via services such as Amazon’s Alexa, Google Home and Apple’s Siri, and the increasing use of biometrics to secure payments, will also change the face of payments in the coming year.