In the fast-moving space of digital payments, it’s always good to regularly pause for breath in order to take a look at where we’re heading. Over the past few weeks, we informally polled selected in-house thinkers to find out what they see as the trends we should be watching right now going into the later half of 2017. Here’s a consolidated view of what they told us.
The first trend is perhaps the easiest to extrapolate from existing data, though that doesn’t make it any less important: the increasing volume and reach of digital payment flows. The rest of 2017 will see continuing decline in the usage of paper-based payment mechanisms like cheques and cash, in favour of payments made through online banking and mobile apps provided by financial institutions and newer fintech players. Financial institutions will extend the geographic reach of digital payments even further, launching international payment services intended to be as easy to understand and use as existing domestic payment networks have become.
Meanwhile, digital payments will increasingly spread to business transactions, becoming more common in business-to-business payments – whether for paying vendors or for invoicing and collecting payments from clients – and in business-to-person situations including employee payroll, customer refunds, claims payments, and bulk disbursements.
As digital payments increase in volume and reach, they’ll continue to increase in scope as well, with an ever-widening breadth of mobile-centric offerings. Person-to-person digital payment functionality are becoming more ubiquitous, convenient, and friction free as “In-App” payment APIs are adopted by a widening range of retailers and service providers, and as social media platforms incorporate user payments functionality as easy-to-use options in their already familiar interfaces. We’re seeing an increased diversity of mobile experiences, as financial institutions, third-party payment platforms, retailers, and other consumer-focused organizations innovate aggressively to find the most effective blend of services and features to maximize usage and engagement. This trend has taken shape in some exciting ways, most recently RBC launching Interac e-Transfer via Siri. One innovation to watch, for example, is the use of geolocation data to provide context-specific offers – along with in-app payment functionality to make those offers easy to act on.
Added to factors like the mobile wallets that all major phone manufacturers are building into their devices and the high rate of mobile payment adoption by millennials, the developments above indicate that 2017 could well be a year we look back on as a time when long-building trends came together to reach critical mass.
With ever-increasing breadth and depth, of course, comes ever-deepening reliance on digital payments – and with that, a growing realization of the importance of trust and security in regard to the hardware, software, networks, and processes that all of this depends on. While great strides have been made in securing devices like smartphones and the mobile wallets they contain, as well as in using tokenization to hide personal account numbers in transactions made with mobile devices, the burgeoning “Internet of Things” poses brand new challenges – as can already be seen in the distributed denial of service attacks launched against ISPs this past year from “botnets” made up of hacked thermostats, wireless routers, and other weakly-secured IoT devices. The continued growth of digital payments – and the many efficiencies and other benefits that derive from them – is completely dependent on the trust placed in it by customers and businesses alike. We hope to see important progress on this front.
Person-to-person digital payment functionality are becoming more ubiquitous, convenient, and friction free as “In-App” payment APIs are adopted by a widening range of retailers and service providers, and as social media platforms incorporate user payments functionality as easy-to-use options in their already familiar interfaces.
Trust is also critical to a final – and longer-term – trend we think will continue to mature: the growing role played by customer knowledge and insight in the enhancement of payment-related offerings. Data about how and when and where customers use their devices (mobile or otherwise) to make payments and purchase goods and services are already invaluable in improving experiences, increasing emotional engagement, and informing the development of natural language and needs-predicting offerings based on technologies like artificial intelligence. Customer knowledge will play a similarly-critical role in the extension of services from straightforward transaction-based payments to integrated offerings addressing a range of related financial or purchasing needs and the user workflows associated with them.
Just how all of these trends will play out in detail, of course, will be fascinating to watch – and to participate in.