The future of payment processing is knocking on the door, and your business can take advantage of these innovations. Is it hard to keep up with all these changes? Yes, especially for business owners with limited free time, but this article will give you the key points so you don’t miss the most important changes that will affect all businesses.
Here’s a taste of what we’ll cover:
- Future trends in payment processing for businesses
- E-commerce growth
- Digital wallet technology expansion
- Innovations in payment processing technology
- Payment speeds
- Big Tech players entering payment processing
- What’s next in payment processing for SMBs
We will also dig deeply into the rise of “super apps” and how they could affect merchants (and even tilt the payment world on its head!).
FUTURE TRENDS IN PAYMENT PROCESSING FOR BUSINESSES
Three of the biggest trends we see are digital wallets, cashless societies, and data battles.
We’ve discussed digital wallets many times – with good reason.
New options are constantly being rolled out.
Any technology or platform that makes seamless payments even more efficient is being researched and implemented as soon as it’s viable. Why?
The world is moving at its fastest pace in history. So, anything that slows us down is going to be replaced with something smoother and faster – this includes payment processing.
On that note, it’s no shock that going cashless is getting more popular. Paying with cash just isn’t efficient enough in modern times, not to mention you can’t use cash in e-commerce. Cash is simply an antiquated way of doing business.
That said, it would be a mistake to ignore customers who still like using cash (especially if you can save on credit card fees when cash is used).
Now, what are the data battles about?
The World Runs on Data
We will look closer at data when we get to the super apps. But the main point is that personal data is a huge issue in America.
It comes into play with our banking, social media use, business dealings, health records, and we could go on and on. The battle is about privacy and who gets to handle our data.
On one hand, you have regulators trying to be the arbiter of new data protections. Then you have Big Tech (i.e., Meta and Google), which has been collecting data on internet users since the web went mainstream. Lastly, you have individuals who are coming around to the idea that they should own their own data.
After all, if the data contains details of every aspect of your life, why shouldn’t you own that data? Not everyone thinks about data being so vital to everyday life, but it is a key aspect of our modern world.
It will only become more ingrained in the future and will impact businesses and their payment processing.
Digital Wallets Move Payment Processing Forward
The rise of Open Banking is set to increase options and financial products connected to digital wallets.
Open Banking is the concept of consumers consenting to share their banking data with third parties through APIs – the goal is faster payments with increased security.
Many experts feel Open Banking will improve fintech products and provide an enhanced banking experience due to the personalization possible. This will allow digital wallets to become even more convenient. That is great news for merchants because they can take advantage of digital wallet features such as:
- Membership cards
- Loyalty cards
- Coupons
- Event tickets
- Reservations
- Identification
- Car keys
Yes, (digital) car keys! And many business owners see digital wallets as just a way to process payments. But as you can see, the possibilities are exciting because you can use these innovations to improve customer experience. Plus, this technology adds another layer of security via encryption and tokenization.
What about other trending opportunities?
INNOVATIONS IN PAYMENT PROCESSING TECHNOLOGY
Physical credit cards and debit cards could one day vanish. No, not altogether. Like cash, cards will still be preferred by many people, but they won’t be the majority at some point. Remember, not everyone will embrace all new tech that comes along.
That’s vital to remember for a portion of your customer base. Need proof?
AM radio still exists today. Netflix only stopped delivering physical DVDs in the mail last year!
Still, the masses are predicted to lean away from traditional credit/debit cards and will prefer mobile wallets. Some predictions show 2024 as the year mobile wallets will be the most popular online payment method as it surpasses card usage.
What about payment innovations in the realm of financing purchases?
We have talked about BNPL (Buy Now, Pay Later) in other articles, with good reason. This payment processing trend was hot and then cooled a bit as the economy slowed. However, it would appear this type of installment payment option is here to stay, but guess what…
Despite BNPL being a recent innovation, it could simply be a stepping stone to an even better payment option for merchants and customers alike. This could happen quickly or could take a decade to evolve.
Speed will always play a role regardless of the service, though.
SPEEDY PAYMENT PROCESSING TAKES OFF
Faster payments and automation make checking out a breeze for customers in brick-and-mortar businesses as well as online. Again, modern people expect all transactions to be quick and frictionless because we live in an on-demand society (think of the ease of Uber and DoorDash).
Payment speeds will keep increasing as 5G service expands. And don’t forget mobile connections that blow past 5G could soon be possible despite 5G being a new technology. Possibilities are endless, plus change happens fast!
Then you have to consider the opportunities and speed that automations are bringing to light.
- Seamless retargeting and remarketing
- Loyalty points tracked with point-of-sale systems
- Automated SMS discounts or alerts
- Sales reports generated via triggered events (i.e., 10% rise in sales)
Automation and efficiency go hand-in-hand. Why do you think AI (artificial intelligence) keeps dominating the news? It’s because there is so much potential to offload mundane tasks that take up much of people’s time – especially running a business.
Keep your eye on automation innovations that help your business run on autopilot. These automations make implementing systems much easier.
The next section proves the book correct.
BIG TECH ENTERS THE PAYMENT PROCESSING FRAY
Can you imagine the world without PayPal? It seems like the company has been around as long as IBM or Ford. However, there was no such thing as PayPal before 1998, and the company didn’t become mainstream right away, of course.
Once PayPal became mainstream, it opened the gates for more Big Tech companies to get into the payment processing world. Google Pay and Apple Pay are examples. They didn’t begin as merchant services companies and still aren’t focused solely on payments, obviously.
The future of payments will see a cascade of gigantic companies that want to profit from offering merchant services. There is one key idea behind this that we’re getting to in the next section – the idea that payments should be available inside apps/platforms consumers already spend time on…
Below are companies you’ll be hearing more about in the future (globally, if not in the US):
- Adyen
- Rapyd
- iZettle
- Grab
Can you believe Grab began as a taxi-type service? It then expanded into other fields and eventually added several payment options. The idea was to keep their users in a “walled garden” where the company could provide for their everyday needs (commutes, purchases, receiving payments, etc.).
Those four companies may not be as well-known, but everyone knows Facebook aka Meta. Even this social media powerhouse has attempted to get into the payment processing arena. Though the highly profitable company has yet to figure out how to get users on board with payments. What stopped Meta?
One pitfall could be the data issue we talked about earlier. Trust in Big Tech has been shown to be plummeting more and more as they show little regard for user privacy. There was even a recent report of Americans’ income tax data leaking to Meta via their ad network.
Prefer to work with a processor that treats your data responsibly? Sign up with National Processing.
This Big Tech idea leads us into the super app discussion.
ARE SUPER APPS WHAT’S NEXT IN PAYMENT PROCESSING FOR SMBs
Super apps are a tough concept to grasp in America. But it’s the opposite in other countries because they have truly taken off – one of these apps has over 1.3 billion users!
The best explanation of a super app is in this short Wall Street Journal video.
Our simple breakdown is this: A super app is an all-encompassing mobile app that allows consumers to do almost all everyday activities on one app. Similar to how a single smartphone took the place of multiple devices (clock, alarm, calendar, GPS, gaming system, camera).
One app that you solely depend on for everything is pretty enticing, right? Well, one reason a successful super app has yet to take off in the US is due to lack of trust in Big Tech. This, according to financial reporters and experts in the banking world.
Yet, overseas, super apps are incredibly popular and have flipped the payment industry on its head. A few more super app companies are listed below:
- Alipay
- GoTo
- PayTM
- Tata Neu
How popular are these multi-use apps?
China has seen about 83% penetration from super apps, meaning they are nearly as mainstream as smartphones!
Advantages businesses could see from powerful apps like these?
The core idea of a super app is seamless usage. An idea that we often discuss on the National Processing Blog because businesses that use seamless technologies save time and money and avoid hassles.
Some experts in the space think of these apps as a “loop” that more closely connects your business with your customers.
And here are five ways they do so:
#1 Reduces transaction steps
#2 Customer controls their data
#3 One-tap customer support
#4 Reward programs for multiple shops in one app
#5 Consolidates data
And even though this is a fresh idea for many business owners, some business thought-leaders believe this type of platform can actually bring back a “shop local” vibe.
The reason? It simplifies the shopping experience by reducing steps in everyday activities, including making payments offline and online.
Gartner forecasts more than half the world’s population will use multiple super apps daily by 2027 – wow!
Let’s do a quick recap, then provide a bonus Q&A section.
RECAP: PAYMENT PROCESSING INNOVATIONS OF THE NEXT DECADE
You don’t have to understand all the intricacies of the newest payment trends. It is critical to be aware of how innovations will change the landscape of all small, medium, and large businesses, though.
Not evolving with the times is a sure way for businesses to be left behind.
So we recommend focusing on the key changes we mentioned: digital wallets, cashless societies, and data battles. Also, we hope you take advantage of technologies we listed that can help you create efficient systems for your business so you can scale operations without working 84 hours a week!
Of course, be sure the tech fits your business before investing time and money into it.
Look to National Processing for guidance. Stay updated with our popular newsletter and blog.
Payment Processing Innovation Q&A
What are two hot trends in payment processing for online businesses?
1) Large on-screen buttons for mobile shopping ease. 2) One-click checkout removes friction from the last step of a purchase.
Which innovations in payment processing technology are helpful to marketers?
Payment data that informs segmentation for marketing lists (i.e., email lists). Also, omni-channel marketing success can increase with rich data derived from broad purchase patterns and individual buying habits.
What’s next in payment processing for SMBs in the US?
Super apps could gain a foothold in America via the health industry, according to a WSJ report. There is major potential since, as a country, the US spends more on healthcare than other prosperous nations yet has the poorest health outcomes. A super app that combines all aspects of healthy living (physical and mental) could be a highly profitable and widely used platform in a space that desperately needs innovation. Possibilities are endless for gyms, spas, meditation centers, chiropractors, general practitioners, parks and recreation departments, and companies that want to encourage employees to live healthy lifestyles.
