“There is no reason anyone would want a computer in their home,” said Ken Olsen, founder of Digital Equipment Corp., in 1977. A few decades later, every house had a computer. Today, even the thought of spending a day without your smart device is haunting.
The same is the case with digital payments. This cutting-edge technology appeared to be an add-on for businesses, but the pandemic catalyzed its growth, making it necessary. However, recession challenges the growth of digital payments.
Should businesses continue with traditional payment processing methods or adopt digital payment processing? Will the payments transformation increase or decline? Can you afford to delay reinventing your checkout process? Let’s see the future of digital payments in 2023 and how you can adopt modern technology to empower your clients and customers.
Top 9 Trends in Digital Payments
#1 Integration of Biometric Authentication for Protection Against Fraud
The expansion of digitization comes with the risk of increased fraud. Therefore, business owners must optimize their payment processes for identity verification and protection against fraud. With sensor-activated patterns, fingerprint scanners, facial recognition, and iris recognition, biometric authentication seems promising to make online transactions safer. Additionally, integrated Machine Learning features will track and analyze an individual’s history and buying patterns to identify suspicious accounts and minimize identity theft.
#2 Rapid Adoption of Contactless & Frictionless Payment Methods
A study by The Futurist Group reveals that 38% of U.S. consumers view contactless payments as an essential criterion for a successful business. Even entering the PIN or swiping credit cards has become a hassle for customers. Frictionless payments optimizes the buyer journey, allowing customers to pay through their preferred mode with fewer steps. Modern-day business owners use these technologies to reduce the wait time to less than a few minutes.
Utility, healthcare, insurance, and real estate businesses will partner with third-party gateways to optimize their existing payment models at affordable costs without disrupting their daily processes.
#3 Investment in Omnichannel Solutions for Payment Processing
“While the Clearing House, Nacha, SWIFT, and banks race to provide methods for instant payments, consumers and businesses are looking for a single, simple solution with high accuracy, low risk, and lower cost to transact,” said Keia Nouse, CRO with iCG. He added, “The banks and financial institutions that need a universal gateway to accomplish all their business goals will find that unifying these services under one umbrella is the fastest way for payment execution on commercial customer fronts.”
One thing that drives customers away is a complicated checkout process. Third-party payment processing platforms, like iCheckGateway.com, allow companies to accept ACH and credit card transactions in one place with no processing fees or extra costs. ACH-API integration further automates invoice generation, ensures timely payments, and facilitates a dashboard to overview everything in one place. So, merchants and owners optimize their revenue management cycle only using one solution.
#4 Emphasis on Regulating Framework for Digital Currency
The cryptocurrency crash in early 2022 posed concerns about its reliability; however, the current trends reaffirm that the digital currency will not hit the brakes anytime soon. Several merchants confirm that accepting digital currencies acts as a competitive advantage. Additionally, a BIS survey reveals that 60% of banks are considering Central Bank Digital Currencies (CBDCs), and 14% are actively conducting pilot tests.
So, we expect a more stable framework that will allow digital currencies to coexist with other payment methods.
#5 More Consumers Will Use Digital Wallets
NFC-powered contactless payments (near-field communication) projects an increase in the adoption of Apple Pay, Venmo, Samsung Pay, Google Pay, and other digital wallets. Juniper Research, a digital marketing firm, suggests that using QR codes for electronic payments in the United States will increase by 240% from 2020-2025. According to Fresh Relevance, 68.7% of shoppers globally add products to their online carts but abandon them before checking out, simply because they had to create an account or faced a long or complex process before checkout. Digital wallets enable customers and merchants to pay with a few clicks through their mobile phones.
QR codes and API-accessible wallet management systems help businesses to speed up the checkout process and safeguard customers’ card information through tokenization and encryption methods.
#6 Increase in NLP-Enabled Voice Technology
Presently, most consumers and businesses fear the reliability of voice technology; however, with advanced Artificial Intelligence (A.I.) and Machine Learning, it is likely to improve customer experience. For example, these technologies help chatbots and virtual assistants offer a more human-like chat experience without spending additional human resources. The instant query resolution further reduces the need for an extensive customer support team allowing employees to handle more growth-oriented tasks.
#7 More Consumers Prefer Independent Banking
Frictionless payments, real-time payments, chatbots, and virtual assistants will likely transform how we do banking. The change has already begun with neo-banks. Therefore, banks will need to integrate omnichannel into their payment system to initiate instant bank transfers that empower customers with an effortless experience without staff intervention.
#8 Industries Dealing with Time-Sensitive Transactions Will Shift to Real-Time Payments
Anytime, anywhere payments have proved to be a game changer for businesses across many industries.
Customers with time-sensitive transactions like auto mortgages, personal loans, insurance disbursements, and settlements can’t afford delays. Real-time payments allow merchants and businesses to conduct transactions between accounts and wallets seamlessly, eliminating fund delays and offering instant access to money within minutes. Moreover, merchants and business owners can accept ACH and credit cards without paying costly processing fees.
Research by PYMNTS.com shows that 40% of consumers who live paycheck-to-paycheck would switch financial institutions to access real-time payment services.
#9 Launch of FedNow
Set to launch in Q1 2023, the next-gen technology, FedNow, will completely transform how citizens make payments in the United States. This new technology will facilitate instant payment services 24/7 across the nation. In the initial stages, it will support account-to-account and consumer-to-business types of payments. Later, it will expand to person-to-person and consumer-to-government types. Learn more about FedNow here.
Major financial institutions have already started preparing for the launch and completed various pilot tests. However, smaller institutions must consider partnering with reliable third-party service providers for pilot testing.
Convenience is the Way Forward
Besides price and quality, user experience and service are key differentiators in customer retention and acquisition. Convenience will shape the future of FinTech driving consumers towards digital payment. Today’s consumers would rather abandon the cart than follow a 10-step checkout process. Therefore, businesses and merchants need to optimize their business model to enhance customer journey and interaction in the store using innovative payment solutions.
How Can You Get Started?
The new financial ecosystem is about becoming more relevant and customer-centric, requiring you to streamline your payment processes.
Here are a few things that you can consider to smoothen the customer checkout process:
- Identify room for automation and optimize.
- Offer multiple payment options like card payments, ACH payments, cash payments, mobile payments, etc.
- Partner with a service provider that can help you take your business online by setting up a hosted payments portal.
New business owners are often guilty of going overboard with solutions and spending a large portion of their budget on processes they don’t need. The silver lining for you is that you can connect with experts at iCG to get started with payments automation today. Download our catalog to explore the industry-leading solutions and determine the ones that help you process payments simply, securely, and reliably.