TMCnet Feature
June 30, 2020

The Future of Electronic Payments 2020

Electronic payment solutions have proliferated in the past couple of years, as consumers increasingly demand quicker and more seamless transactions. Online or offline, retailers must be careful to accommodate this demand, or risk losing out to the competition. The events of 2020 so far have also given another push to contactless and digital payments, due to fears that physical cash could harbour and spread contaminants.

We may not be looking at the end of cash just yet, but it’s certain that electronic payment is the way of the future. Older providers will need to keep up with the trends and improvements if they want to stay relevant. You can find out more about how PayPal (News - Alert) has secured its place as one of the world’s largest payment gateways at Meanwhile, let’s take a look at some of the key trends driving the e-payment sector in 2020.

Generational pressure

Almost a third of consumers now come from tech-savvy generations, and many never experienced a time before online shopping. These younger consumers have high demands from payment providers, expecting a seamless, efficient and immediate service. Online retailers that fail to integrate payments with mobile banking, or provide a less than optimal checkout process, stand to lose the custom of both these and the generations following behind.

Biometric security measures

Already starting to gain a more widespread presence in the market, identity authentication using biometric data is likely to be the primary payment security measure before too long. A recent study suggested that a large majority of respondents are in support of replacing traditional PIN codes with fingerprint recognition. 2020 will see an evolution of this, as facial and iris scanning, as well as voice recognition, become more accurate and commonplace. While this method of authentication is by far the most secure yet, there are some implications for companies holding any biometric data from their customers.

Contactless and wearables

Contactless payments in retail outlets have been such a success that this trend is set to continue far beyond cards. Retailers will need to extend the types of contactless that they accept, which will include mobile and, increasingly, wearables. These may be in the form of smart watches, keyring fobs and more.

AI and machine learning

Another security aspect in development is the use of artificial intelligence and machine learning. When customers receive a bank communication enquiring about a transaction, this is an automated process. AI will increasingly be used to detect fraudulent activity.

Temporary codes

Unique codes are still the primary way that accounts are identified and tied to the user, but these are fixed. Temporary codes are often used when logging into an online financial account, and now Visa, MasterCard (News - Alert) and Europay are all utilising randomly generated codes for each transaction. This is another way that banks increase security.

Mobile developments

By 2021, it is estimated that there will be almost four billion smartphone users globally – around half of the world’s population. The majority of online traffic comes from mobile users. Mobile wallets, banking apps and mobile point of sale (MPOS) will all continue to be extremely significant trends in the coming years. MPOS allows vendors to accept payments from their customers from any location, such as trade shows or concerts. Retailers adopting the tech will certainly have the advantage. Mobile wallets are also on the rise, with more than two billion users already. The current big providers are Google and Apple (News - Alert), but we can expect to see market diversification in the future as more consumers take up the service. The increase in the use of mobile wallets means that banks are at risk of losing a large portion of their app users unless they stay competitive.

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