Technology is unfolding rapidly, which has brought a meaningful change in the landscape of payments. 2021 is finally here, and the world saw a huge shift in the payment trends, primarily due to the pandemic that hit the world. To outshine and cater to the customers’ needs, becoming familiar with the payment world’s upcoming trends is vital. This article is a comprehensive take on the subject. Keep reading to know more about the trends in 2021.
- Cash Payments Are Slowly Phasing Out:
Covid-19 has dramatically remodeled the world and affected payment processing too. The notion of Cash is King is slowly becoming weak. The unshakeable status is trembling due to the fear of spreading the virus. There is still no end date to the pandemic as the vaccine is only accessible to a limited fraction of the world population. This fact has made cash an unfavorable payment form in current times. People are now relying more on non-cash payments. The decline in cash payments is also majorly due to the change in consumer behavior during the pandemic. People prefer online shopping, contactless deliveries, and curbside pickups.
According to Statista.com, the number of non-cash transactions in 2021 will be the highest in the Asia Pacific region. The estimated figure is 318.9 billion. In the European region, it will be 247.3 billion, and North America will be 192.2 billion. However, a significant portion of the world population and 6% of Americans are under-banked. The advocates of cash declare cashless payments as discriminatory against them. Still, Fintech organizations are offering inclusive solutions that might overcome this problem more in 2021.
- The Collaboration Of Fintechs and Traditional Banks
Banks hold a central position in the arsenal of payment choices, which has enabled them to build a massive customer base. They possess extensive information about the financial market and modern trends. Despite being a preferred option for payment processing, banks cannot meet contemporary customers’ demands. The needs of fast-paced market conditions are evolving too. These days, customers demand hyper-personalized solutions and high-speed transactions, which most traditional banks are still unable to deliver. This is primarily due to the lack of technological solutions or the absence of knowledge on integrating them into their operations.
Banks can leverage the robust tech understanding of fintech organizations. Their ability to create fast and convenient financial services can help banks more. Partnering with the right one will help traditional banks become better at digital services, functions, and features which the customer demands. Banks will no longer see Fintech Organizations as outsiders. Partnering with them to cut costs and revolutionize the banking industry will be the most rational approach for payments, empowering consumers to pay from anywhere, anytime. These partnerships will benefit both in multiple ways. For example, increase the consumer base, build the credibility of the organizations, cost reductions, and quick scalability of collaboration.
- Frictionless Payments Are Favored:
Long gone are the days when secure and fast payment processing wasn’t a big deal. Efficient and seamless payments are a dominant determining factor momentarily. Customers will always prefer a business with frictionless payments if two firms are offering the same products and the other advantages are similar. Customers see frictionless payments as a vital part of customer service. Merchants must pay attention to this segment and map out plans to make buying from them a seamless experience to thrive in the current fiercely competitive environment.
This equally applies to in-store and online platforms, and any merchant with a streamlined approach to reduce the purchase time will have an edge. Business owners must expand their credit card acceptance and become compatible with diverse payment options like digital wallets, cash on delivery, installment options, and contactless payments in the current covid-19 scenario. Another great way to attract customers and drive traffic is to offer incentives like loyalty programs, gift cards, etc. If any barriers discourage customers from buying from you becomes less, it will give customers a comprehensive buying experience.
- The World Adopts Real-Time Payments:
Millennial and Gen-Z preferred everything happening in real-time and instant payments for sure. Worldwide merchants are increasingly drawn towards real-time payments (RTP). RTP is becoming a trend due to amplified convenience, and it enables customers and merchants to send and receive payments in the blink of an eye. More than 2.71 billion people worldwide are smartphone users, and the prevalence of RTP is also due to this apparent accessibility of smartphones, P2P application, digital currencies, etc.
The benefits of using RTP are widespread, including comfort and security. With RTP, customers receive instant fund transfer confirmation messages, invoices, current account statements, and so much more. RTP promotes security and transparency in payments and is very suitable for merchants as well as customers. RTP is power-packed with smart features for finance management, payment of bills, and P2P payments. Merchants’ desire to become better than competitors by offering enhanced facilities will also be a core reason for RTP trending in 2021.
- Mobile Payments Gets Real:
The global pandemic boosted the popularity of cashless payments, and there will be a hike in the adoption of mobile payment methods in 2021. Such payments are incredibly beneficial for businesses that are in search of recurring customers. Mobile payments started when in 2015, the tech giant Apple released its first digital wallet service, and later every big company followed the way. Samsung Pay, Google Pay came into existence later, and in 2017, 37% of US consumers were using these online payment systems. By 2024 half of the world populating will be using mobile wallets, according to the report by Juniper Research.
- AI, NFC & EMV Paves Their Way:
Financial service providers invested a lot in AI technologies in 2020, and this inclination will continue in 2021. Artificial Intelligence and machine learning technologies can significantly improve payment processes. These intelligent technologies come in handy in fraud detection, enhanced, and cost-effective customer service. Streamlining data management and assisting in the digital shift are other additional benefits of AI.
On the other hand, Near Field Communication (NFC) technology embedded in mobile devices is becoming a popular payment method in this digital world. This is due to the more convenience and security it offers. NFC and EMV both work by tap or wave contactless format for making payments. There is a lot of similarity between them both. EMV is especially for contactless credit card payments and is deemed cheaper than the traditional swipe method.