Examining payment trends for 2019

As is evident by the successes achieved during Black Friday 2018, alternative digital payment solutions, such as automated EFT, are set to continue driving innovation and change in the global marketplace.

Deloitte anticipates that trends-driven product commoditisation and convergence will encourage payment organisations and fintechs to reassess their current market positions. The firm argues that six payment trends will not only result in new business models but also organisations adopting advanced capabilities to integrate digital solutions more effectively.

1. Shifting from a product to service focus

This is already something many merchants can vouch for. Customers in a digitally-driven environment have grown accustomed to the availability of alternative payment solutions that meet their needs. E-tailers that do not evolve will lose out to more forward-thinking competitors.

2. The value of data

Deloitte also believes that payment providers must bring together disparate data from multiple sources to not only create new services, but also to improve the customer experience.

3. Modernising infrastructure

As with many other digital interventions, the underlying payment architecture needs to be improved in order to better cater for alternative solutions. Now is the time to start fresh and become more agile in product roll out.

4. Collaboration between incumbents and fintechs

As can be seen in the insurance sector, the importance of collaboration between different role players will become even more critical in an environment driven by data, security, consumer-centricity, and product differentiation.

5. Targeted mergers and acquisitions

Deloitte says incumbents in the payment sector will identify M&A transactions based on specific ‘friction’ areas, such as cross-border payments, multi-payment integration, and business-to-business payments.

6. The next-generation business

With job functions changing and many roles becoming obsolete due to machine-learning, artificial intelligence, and other influences, organisations must be open to the transition happening in the workforce today. Payment providers will be no different with innovations changing how they engage with merchants and customers alike.

Multiple forces

Beyond this, some experts anticipate that the evolution of the payment ecosystem will result in a more seamless customer experience when it comes to payment acceptance. The expectation is that there will be a greater demand for not only devices that will accept credit and debit cards, but also QR codes, digital wallets, and other payment services in a more seamless manner.

Accenture has found that digital payment solutions and the resultant impact on business models could impact up to 80% of existing banking revenue pools by 2020. They argue that because of this, banks have become more aware of the potential that alternative solutions provide. This allows those that seize these digitisation opportunities to grow revenue by up to 30% by 2022.

Another interesting trend to be mindful of is how the use of open application programming interfaces (APIs) will become standard practice as banks move to compete with more agile fintechs. Instead of relying on partner-driven APIs, these open equivalents will result in greater collaboration between multiple stakeholders in the sector.

All told, 2019 will be a fascinating year to be involved in the payments industry. Providers who are willing to think outside the box and embrace change more rapidly than their competitors will surely be the ones growing their market share considerably before the end of the year.

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