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Growth in Digital Payments – A Cross-Industry View

by rahulpandey
Cross-Industry View

As the use of cash falls throughout the globe, digital payments via Flexcube implementation are becoming more prevalent. Cards continue to dominate in nations with a significant incumbent advantage. Still, digital goods such as payment applications, digital wallets, purchase now pay later, and account-to-account (A2A) payments are gaining ground. Changing consumer habits and reinvented customer experiences are supporting the shift to seamless, embedded financial journeys, which is driving this trend. The impact that these payment patterns will have on many businesses will be the subject of this series of blog posts. But first, let’s take a look at what’s going on right now across sectors in terms of the acceptance of digital payments and what we may expect in the next few years due to that adoption.

The current trends

  • Cash use is in rapid decline: As a more cashless society is becoming a reality in many economies, aided by the rise in popularity of contactless payments and e-commerce transactions during the COVID-19 epidemic, which has hastened the transition. Cash withdrawals from ATMs in the United States, for example, fell by 60% during COVID-19, according to the Financial Times. Merchants across all sectors are under increased pressure to guarantee that their payment solutions are seamless and safe due to the shift away from cash to e-commerce and digital payments.
  • Changing customer expectations: Customers today want seamless—even invisible and embedded—payment experiences that are both smooth and safe, and they have come to anticipate it. To retain clients, payment providers and merchants will need to keep up with technological advancements in Oracle Flexcube and ever-increasing demands as customers get more used to using digital transactions.
  • New payment methods: For new payment methods to be accepted, businesses need back-end systems that are adaptable and allow for the rapid deployment of technical changes. It will be necessary for merchants to analyze and, if necessary, update their present payment providers and continually reassess their payments strategy to guarantee that the payment experience continues to match evolving consumer expectations. In order to keep up with the rapidly changing nature of the payments sector, organizations must adopt an agile payment strategy.
  • Payments regulations: Various jurisdictions are establishing and updating rules in data security and privacy, Open Banking, and strong customer authentication (SCA), which is a requirement of the EU Revised Directive on Payment Services (PSD2). As the legislative environment evolves, it is expected that mobile technologies will become increasingly prevalent in payments. The simplicity with which biometrics may be integrated into mobile applications provides them an edge over card-based payment methods, especially for SCA needs.

The things to come

It seems doubtful that the acceleration of digital payments that started during the epidemic will be reversed in the near future. The current pace is being supported by various technological and regulatory developments that will continue to propel the digital economy ahead. Here are some of the most essential variables that will drive the expansion of digital payments across all sectors in the following years.

  • Simplified and embedded payments: Adapting payment methods will be required by merchants to make payment simple. While numerous digital payment providers have already implemented new payment methods such as pay by bank, purchase now pay later, and QR codes, the development of technologies that will continue to streamline customer journeys will be beneficial to both merchants and payment providers in the long run. To succeed, new solutions must be user-friendly and easy to implement while also supporting accessibility and diversity. They must also be compatible with existing systems. Once payment methods are integrated into applications and platforms, the client will no longer be able to see the payment method in question. Because it will not only enhance customer experiences and boost revenue but will also lower operational expenses, this form of integrated payment is becoming more widespread. It will likely continue to grow over the next few years.
  • Standardization and open data: The trend toward open data will create a favorable legislative climate for next-generation payments and standardized data, therefore encouraging interoperability and collaboration. Due to the elimination of the requirement for clients to send their data to each merchant or platform independently, the payment experience will be smoother for them moving forward.
  • Flexible payment options: As a result, customers are altering how they do business. Customers have come to anticipate a wide range of payment alternatives from the organizations with whom they do business, from subscription-based pricing to the growth of digital wallets. The tedious and time-consuming entering of credit card numbers and other personal information will eventually seem outdated and sluggish. The buying process must be simplified and really “no click.”

How to prepare

To ensure that your organization is ready for the future of digital payments, here are five things you can do right now. We expect the strongest digital payment companies will have the potential to go beyond payments and establish an all-encompassing platform in the future years.

  • Create partnerships: With the rise of electronic payments, the e-commerce sector will continue to increase. Merchants are looking for payment service providers to deliver a seamless, flexible, and high-quality payment experience to their consumers. As digital payment systems advance, businesses should search for partners that are dedicated to changing with them.
  • Revise payments strategies: Even a few years after they were first established, many of these strategies are likely to be obsolete. The pandemic’s acceleration of the migration to digital payments has touched almost every sort of organization, and any firm that has not reassessed its payment strategy since 2019 should do so immediately.
  • Embrace Open Banking: Take advantage of the increased interest in Open Banking by incorporating it into your business model and developing more customized payment solutions via the use of in-app integration.
  • Think biometrics: Voice-activation and facial-recognition or behavioral authentication are still in the experimental stages, but they might soon become the standard. Early investors and savvy fintech alliances will enjoy the benefits and avoid having to play catch-up in the future.
  • Scale through social: A successful “super app” can only be built on a foundation of widespread acceptance of digital payments that can be tapped into and leveraged by those who can tap into and use social networks.

Conclusion:

Some digital expenditure was held down by the COVID-19 outbreak, but generally, digital spending has increased. Digital payment innovations, such as BNPL, Flexcube, and bitcoin, are also gaining traction. They have the potential to develop in the future.

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