The future of digital payments in a constantly evolving landscape
The digital revolution has forever changed the way we make and receive payments, borrow and save money. While the pandemic certainly accelerated the shift towards digital payments, the fintech sector is by no means ready to hit the brakes.
Now convenience, rather than COVID, is driving innovation, and in the coming years we will see more alternative payment methods grow in popularity and existing digital payment technologies continue to evolve.
The rise of cryptocurrency
The first half of 2022 has been bad for the crypto market to say the least, with Bitcoin and Ethereum plunging more than 50% from their all-time highs at the end of 2021. Despite this, mainstream adoption of cryptocurrencies is on the rise.
About 15,174 businesses worldwide accept Bitcoin, and every day over $1 million is spent on goods and services with Bitcoin in the United States alone.
Merchants across sectors have looked beyond the negative headlines and largely agree that accepting digital currencies means gaining a competitive edge in the marketplace. In fact, the majority of those who currently accept cryptocurrency as a payment method see a positive impact on customer metrics, such as customer base growth and brand perception.
It is incredibly difficult to predict where crypto is headed in the long term, but in the coming months changes in regulation and institutional use of crypto payments will give us an idea of what the future holds.
There’s only one thing we can be pretty sure about when it comes to digital currencies: they’re here to stay, and cryptocurrencies are already playing a central role in the development of digital wallets.
What’s next for digital wallets?
Digital wallets are becoming increasingly central to the way we pay for goods, transfer money and store everything from boarding passes and cinema tickets to loyalty vouchers.
By providing a way to record, store and transfer alternative digital assets, smart ledgers – or blockchain – will transform the way both consumers and businesses manage digital wallets. By combining this with easily adaptable, API-accessible wallet management systems, customers will benefit from a better integrated digital payment model.
Meanwhile, many buyers have also installed a QR code wallet app on their phone. This is linked to their bank account so that personal payments can be made with the phone.
QR codes have been in use since the mid-’90s, but have seen a resurgence because they’re contactless, touchless, and easy to use—appealing qualities in a post-pandemic world.
Digital marketing firm Juniper Research has predicted that the use of QR codes for electronic payments in the US will increase by 240% from 2020-2025. In fact, the combined total of mobile payments exceeded $13tn last year, with most of that figure coming from QR code payments on the WeChat and Alipay apps in China.
Outside of China, QR code payments may still be something of an emerging concept, but as more retailers encourage the adoption of app-enabled loyalty programs and promotions, more consumers will wake up to the convenience of using QR payments.
E-commerce sellers will also see the benefits of using QR codes. They’re less obvious than the ways they can streamline and speed up in-store transactions, but the security and cost benefits of scanning QR codes for payment could mean the days of e-commerce companies storing credit card data for future purchases are numbered.
This can only be a good thing, as stored card data is what digital thieves look for when they hack into e-commerce servers. When a customer’s card information never leaves their own device, there is nothing to steal.
Time to rebrand one-click payments?
When it comes to convenience, what could be better than paying with a single click? “Two-click payments” may not have quite the same ring, but most consumers understand that one click actually takes them to a page where they can select a card from those they’ve pre-stored through Click to Pay.
Whether people feel misled by the name or not, it has been a game-changer in reducing cart abandonment. About 70% of customers globally add products to their online shopping carts and abandon them before checking out, simply because they had to create an account or faced a long or complicated process before checkout.
Furthermore, almost a fifth of users do not trust websites with their payment information. With Click to Pay, they have the option to select pre-stored cards of their choice. After that, Click to Pay provides the online retailer with the information necessary to complete the purchase.
The next step is to remove the “pay” button entirely for truly invisible payments. The most famous example is Uber. When you take an Uber ride, you don’t even notice the time of actual payment.
Similarly, the idea behind the Amazon Fresh store in London is that when customers arrive for their weekly grocery shop, they can simply scan their phone, fill their bag and leave without any interaction.
In a digital world, payments must keep up
We all know that the consumer demands convenience, but too many businesses focus on the journey to the point of payment.
By embracing digital and invisible payments, and keeping up with the pace of change in this space, you recognize that convenience matters just as much – if not more – when it’s time to take payment.
