Last week’s blog focused on some of the stand-out payments events from 2018. This time, we’re future gazing and looking at some of the payment trends which we might see this year.
The implementation of PSD2
Multi-factor authentication has hit the top of the payments industry agenda over the last year thanks to PSD2 and the drive to create a common standard for online payment security. The official deadline for complying with the Regulatory Technical Standard is 14th September 2019. As a result of the implementation, traditional banks are being forced to share customers’ data and will therefore no longer be considered a one-stop-shop for managing money.
By law, merchants will be required to provide multiple layers of verification so they can ensure that the purchase being processed has been approved by the genuine account holder. While the amendments may cause issues for some of the bigger financial services, it creates ample opportunities for innovative alternate payment methods.
Generation Z will transform banking
Payment technology companies will also need to start shifting their focus towards appealing to Generation Z. Unlike millennials, consumers born between 1996 to 2010 are the first to enter an era that is always connected, and by 2020 will make up to 40% of all consumers. This demographic has never really known life without technology and their lives are often dominated by mobile devices.
As such, financial companies need to be wary of their demands. It is likely that when it comes to payments, Gen Z-ers will have expectations of seamless, secure banking cross-platforms. Therefore, merchants who do not offer frictionless payment transactions may run the risk of losing the custom of this fast-growing consumer sector.
The resurgence of physical stores
High street stores have taken a hit since the introduce of eCommerce, in fact, the proportion of online retail spending made for a record-breaking 18.2% of sales last year. But this decline in spending in bricks and mortar stores is making retailers re-think their in-store experience.
In the trendy SoHo neighbourhood of New York, Amazon recently opened their 4-star shop. Taking inspiration from the website, customers can buy some of its most popular or best-rated merchandise, such as popular books, board games, laptops and Alexa-enabled devices. Another example is the Nike store in London which puts on DJs and events to attract people into the store. Perhaps 2019 will mark the beginning of the physical store renaissance as consumers start to crave the hands-on shopping experience again.
Merchants will adopt alternative payment methods
In order for merchants to stay on top of their game and avoid losing custom they need to consider adding Alternative Payment Methods (APMs) to their portfolios. With myriad APMs worldwide, transactions using these new methods will only keep growing in 2019.
As such, merchants and payment services providers need to be nimble enough to capitalise on these changes by moving away from traditional point of sale (POS) systems to more versatile solutions. It makes sense too, as the cost and functionality of POS systems are costly and impractical, particularly for smaller merchants.
Adding to this issue is the diversification of payment methods, with the rise of a whole new array of eWallets, as well as cryptocurrencies and other alternative payments. All of this has implications for the payment technology used by merchants – the terminal needs to be compatible, and the software needs to be able to process the payment securely.
Keep an eye on our blog section throughout 2019 to keep up to date with our latest innovative developments.