The payment processing industry is rapidly evolving due to digital advancements, with over 85% of retailers in the U.S. and Canada presently accepting Apple Pay.
Cryptocurrencies, blockchain and biometric payments, mobile wallets, contactless payments, AI-based fraud detection, and e-commerce features like the recent introduction of TikTok Shop are reshaping consumer purchasing habits and the business transaction experience – and understanding these trends is crucial for businesses looking to deliver a seamless and secure transaction interface for customers.
Here’s a look at some of the emerging trends that will have the biggest impact on payment processing in 2024.
The benefit of real-time payments
The move towards instant digital and mobile payments has become commonplace, offering unparalleled convenience for consumers through a frictionless process that initiates, clears, and settles payments within seconds of a purchase.
Now, businesses are seeing the benefits that real-time payments (RTP) can bring, as evidenced by their rising adoption across various sectors globally. For instance, restaurants can provide immediate payment of tips for service staff. Consumers, employees, and businesses alike want to get paid more quickly, and with RTP, that is possible.
Embedded financial systems
Embedded finance is the integration of financial services into non-financial platforms. We’re seeing a shift where companies are increasingly incorporating financial services (such as payments) directly into their point-of-sale (POS) systems. Using the same restaurant example as above, restaurants can utilize embedded finance to facilitate quicker tip-outs for staff, but it can also simplify the customer experience. Most restaurants have online or mobile menus, but the payment process remains largely manual.
By integrating payment and tipping choices directly into the ordering interface, customers can easily complete transactions without the need to switch between multiple services or apps. This seamless process brings convenience and choice to customers while expanding the reach of payment processors.
The impact of artificial intelligence
Artificial intelligence (AI) is revolutionizing the payments industry, with its continuous growth and transformative impact on fraud detection and risk management in payments. While fraud detection has always been an important part of payment processing, AI is helping to enhance the security of payment processes. Striking the right balance in fraud controls is crucial – being overly stringent may lead to rejecting legitimate transactions and a poor customer experience, but being too lenient increases the risk of fraud.
This is where AI comes into play, with its ability to analyze significant amounts of data, identify fraudulent activity, and flag suspicious transactions. This technology holds significant potential to enhance the accuracy of detecting fraudulent transactions while minimizing friction for customers.
In addition, by introducing automated payment processes and personalized experiences, AI is paving the way for a seamless and tailored experience for users, bolstering customer service in payments.
Focusing on the customer experience
Payment processors are increasingly emphasizing customer experience amidst mounting competition, with the prioritization of user-friendly interfaces, an efficient working environment, and personalized experiences tailored to individual payment histories and methods. These efforts aim to attract and retain customers and ensure their long-term loyalty and satisfaction.
As e-commerce evolves, there’s a shift towards integrated consumer experiences through social media platforms. With the recent rollout of TikTok Shop, users can purchase products and make payments without ever leaving the app. Allowing consumers to engage with content while making instant purchases renders an interactive and fluid experience. Enriching payment systems to enhance efficiency and the user experience holds the potential for faster, safer, and more convenient payment methods for consumers and merchants alike.
The use of digital currencies (like gift cards and loyalty points) is also on the rise, offering flexibility and engagement by creating a more engaging way for customers to shop, which ultimately helps to enhance customer loyalty and encourage spending.
The power of emerging technologies
Financial transactions are rapidly evolving, pointing towards a future with greatly reduced settlement times, improved cash flow management, and an overall smoother interaction for the customer. Businesses need to be adept at capitalizing on emerging trends, such as the rapid growth of real-time payments. The challenge lies in knowing how to integrate these advancements seamlessly, ensuring the experience stays user-friendly and intuitive. As payment processes continue to progress, the businesses that are able to strike this balance will find themselves ahead of the curve, creating transactions that are more secure and efficient.