What to Expect from Payment Processing Services in 2020
By Scott Paape, Vice President – Sales & Operations, Talus Payments
We’ve already experienced a rapid period of change in the industry over the last few years. And technology continues to evolve at a fast pace.
Contactless payments, crypto-currencies, and in-app payments have moved out of the beta stage. These technologies are now a normal way of making everyday payments for many people.
So what can we expect as we look forward to 2020? We’ve compiled a list of some of the major trends to watch out for over the coming months.
Peer to Peer (P2P) Payments
P2P payments are not new – PayPal has been around since 1999. Since then, it has spawned a whole industry of similar services.
The P2P industry has been booming in 2019, and we can expect even more consumers opting to use P2P payments as we move into 2020.
Bank of America’s P2P payments company, Zelle, has seen a dramatic increase in its usage recently. Customers completed more transactions in the first half of 2019 than the whole of 2018.
Digital payment apps have become more popular as mobile devices usage has grown. American consumers have also become more trusting of apps to handle their payments. Due to this, they’re gaining ground over standard banking methods.
The teenagers and 20-somethings of Generation Z are the biggest adopters of P2P payments. They’ve grown up with the technology and are more distrustful of major banks and corporations than previous generations. It’s important for businesses to keep their eyes on this generation as they hold the buying power of the future.
So how can business owners capitalize on this trend? Make sure to keep up with the latest news on P2P technology so you can spot the most promising up-and-coming-apps. Ensure your payment processing solution integrates with the most popular apps. This means you can offer them as a payment option for those customers who choose to use them.
As a society, we’re moving away from the idea that passwords and codes are necessary to keep our data secure. It may have seemed like science fiction 10 years ago, but biometric authentication is now a reality.
Apple led the way with Touch ID on the iPhone5S in 2013. Face ID is now an option for unlocking devices and making payments on all modern iPhone and iPad models.
The iPhone 11, launched in September, offers an updated version of Face ID. This technology has improved the ability to recognize faces from a greater distance and wider range of angles.
Manufacturers of other mobile devices have followed suit, and the latest Google Pixel 4 has its own version of face unlock. The latest versions of the Samsung Galaxy phones also offer iris scanning. This, together with fingerprint scanning and facial recognition, offers a secure and easy way to unlock your phone.
This authentication technology is clearly not going away any time soon. So, it’s likely to become an increasingly popular way of approving payments due to ease and convenience. This is despite security and privacy concerns. Some advancements to watch out for over the coming months include vein mapping and heartbeat analysis.
More customers will expect the option to pay using biometric authentication in the future. So it’s wise to think about upgrading your payment processing technology now if you haven’t already done so.
New Innovations in Data Security
Along with the rise in digital payments, a new and more concerning trend has arrived – increased fraud and cybercrime.
Financial cybercrime is still at high levels. 14.4 million consumers were victims of identity fraud in 2018. High-profile data breaches continue to be a major issue for US businesses.
As technology grows more advanced and complex, it is not proving to be a barrier for cybercriminals. These individuals and groups are becoming ever more sophisticated and ambitious in their attacks.
So it’s vital for businesses in all industries to take responsibility for the safety of their data. Investment in digital security over the coming years is a must.
For technology and payment processing companies, the goal is to stay one step ahead of the cybercriminals. They can do this by continually making new innovations and advancements in cybersecurity.
In 2020 we can expect to see new innovations in financial data security becoming more common. These include biometric EMV cards and Digital ID technology.
Businesses should ensure they’re using the most up-to-date and secure payment processing technology. One way they can do this is by choosing to work with companies that guarantee PCI compliance. Aiming to support payments from the latest EMV cards for enhanced security is also recommended.
It’s also essential for business owners and leaders to stay informed of the latest cybersecurity news and advice. Be sure to follow the most up-to-date best practices for keeping data secure and take extra precautions when needed.
The Internet of Payments
The Internet of Things (IoT) is the term used to describe the increasing use of “smart” devices.
More and more consumers are buying and using smart cars, smart fridges, and smart speakers. The “smart home,” where lighting and heating systems and appliances are all connected to each other and the internet, is now a reality.
Today you can ask your fridge to order more milk and turn on the lights in your home. You can do this from the other side of the world if you wish. But this convenience means that payment systems have had to evolve to keep up too.
IoT devices make our lives easier. But they can’t do this unless payment systems are smooth, secure and non-intrusive. There’s no point in asking your smart speaker to order your groceries if you then have to go and type in your credit card details.
Some in the industry have dubbed this new world of payments “The Internet of Payments.” Any business owner who processes payments would be wise to keep an eye on this trend. It offers many opportunities for streamlining the customer experience. Businesses can also use it to collect valuable customer data at the same time.
In early 2018, the UK Competition and Markets Authority (CMA) introduced new regulations. These regulations required the UK’s nine biggest banks to ensure their systems are compatible with Open Banking.
Open Banking is a secure method of data transfer between banks and third-parties. This technology falls under the European Payments Services Directive.
The banks had two years to put these changes in place. So, it’s only been in the last few months that customers have really noticed any differences with their banking.
Open Banking enables customers to share their data with personal finance apps and services securely. But it also means that they have access to new and faster payment options.
These new payment options are definitely an improvement for customers. But businesses can also take advantage by avoiding credit card payment processing costs.
For now, Open Banking is in the UK only, but Australia is following hot on its heels. The Australian government has already passed customer data legislation. This provides a legal framework for Open Banking. We can expect the rest of the world to follow suit.
The USA has not embraced Open Banking yet. But US businesses should certainly be keeping an eye on the technology. By staying informed, you can take advantage of any opportunities that open up over the next year and beyond. As a business owner or leader, it’s vital to keep abreast of these trends. If you stay informed, you can make adjustments to your business processes as required. This means that your business policies and procedures will evolve along with them.