5 Trends Influencing the Future of Consumer Payments
Consumers once reached for their wallets or pulled out their checkbooks when buying anything. Today, a purchase is as easy a facial scan or a few taps on your smartphone screen.
The combination of technological advancements, digital commerce infiltration and consumer buying trends is shaping what tomorrow’s payment methods will look like, based on the five trends below.
- The Movement to Mobile Isn’t Slowing Down
Mobile payment revenue is expected to surpass $1 trillion by the beginning of next year, and it’s not hard to see why. Consumers like the flexibility and ease of online payments, as well as the different payment options that online vendors accept. In fact, mobile shopping apps alone have experienced 6 percent year-over-year growth, and in-store mobile payments are expected to reach $503 billion by 2020.
- Peer-to-Peer Transactions Are Fueling Expectations of Ultra-Convenient Services
The use of mobile peer-to-peer (P2P) payment apps, such as Venmo in the U.S., will continue to grow by double digits through 2021. P2P saves users time and is fueling reliance on convenient and better-value services. Customers can have an account on file rather than needing to have the appropriate cash on hand or to pay bills via checks.
BI Intelligence expects P2P to rise to $336 billion in 2021. More credible interactions, constant streams of new products, and seamless selling and buying are the driving forces and expectations behind this consumer payment form.
- Artificial Intelligence Is Going to Transform Industries
Artificial intelligence (AI) is making a profound impact on shopping and customer service. Over 25 percent of consumers are interacting with AI-powered virtual assistants like Siri and Google Home, and 15 percent have used a company’s chatbot in the past 12 months.
AI streamlines the consumer payment experience, whether consumers are making a purchase or checking their account balance. With a simple voice command or message, customers can self-serve and get answers quickly. Brands like Capital One have already deployed chatbots on their website for consumers to conduct basic account inquiries.
- APIs Will Shape the Customer Experience
Application programming interfaces (APIs) are becoming an essential part of consumer payments, even if just behind the scenes. APIs enable customers to pay directly from their bank accounts without going through a credit card network, and is a much more secure and safe form of payment (i.e. PayPal). With APIs, developers can add more payment options to the checkout process based on customer preferences to make the experience quicker, more transparent, and more intuitive.
- Generation Z is the Payment Industry’s Future Customer Base
Accenture states that by 2020, Gen Z (today’s teen and young adults) will make up 40 percent of the consumers in the United States. Their purchasing habits are markedly different from previous generations—according to the 2017 PayPal Mcommerce Index, Gen Z are more likely than older generations to abandon a purchase or payment on mobile if the payment takes too long. When it comes to payments, they will shift away from brands that don’t meet their need for an instant, highly personalized experience.
These five payment trends are the driving force behind the future of the payments industry. Organizations that integrate and adapt to these trends along their journey of digital transformation will position themselves as powerful industry leaders who value their customers’ expectations most.