Increased mobile penetration and a growing level of consumer comfort with making payments via smartphones changed how consumers pay for goods and services. In most countries in the world, cashless payments are becoming the norm.
The acceptance of contactless payments and a decrease in the use of cash directly impacted consumers’ purchasing habits and buying behavior. In addition, the advent of supporting technologies and IOT based technologies has also directly impacted how consumers shop.
2020 was a turning-point in how consumer payments were made. Below are eight reasons why post 2020 payments will never be the same.
1. Less Use of Cash
Hands-down, the world is moving to being cashless. Statistics from all regions in the world indicate that the use of cash has declined in recent years. Most counties in the world are either adapting or are in the process of making cashless payments a significant part of their monetary process.
The outlook for wearable technology payments in 2020 looked very promising. There is no doubt that companies will continue to create new devices, improve old devices, and try to make traditional payment methods obsolete. According to Tractica the wearable payments was said to amount to about $500 billion by 2020, from $3 billion in 2015. Today, the it’s expected to reach $1.37 trillion by 2027, according to Allied Market Research. The majority of that growth will most likely come from smartwatches as they are the biggest driver in the growth of wearable payments.
3. More eWallets
eWallets saw important growth in 2020. More and more retailers started accept virtual payment via eWallets and more consumers started paying for their groceries, bills, transport, food, drinks using eWallets. According to an article in Payments Cards & Mobile “at the end of 2020, there were over 2.8 billion mobile wallets in use, and it is projected that this number will increase by nearly 74% over the next five years, to reach 4.8 billion by the end of 2025”.
4. Peer-to-peer Payments
In 2020 peer-to-peer payments became mainstream. Consumers need and expect a secure, convenient alternative to cash when making payments to friends, family, or peers. Nearly half (2 in 5) of U.S. consumers have sent or received money using P2P, and the service was expected to grow in the U.S. from 69 million users in 2015, to 126 million by 2020. According to Allied Market Research, “the global P2P payment market size was valued at $1,889.16 billion in 2020, and is projected to reach $9,097.06 billion by 2030”.
5. Layered Based Authentication Methodologies
Long-gone are the days of single form authentication. In 2020 acknowledgement of the value of multi-level or multi-layered authentication continued to expand. Static authentication, in the form of tokenization, password/username, SMS-based and biometrics will simply not cut it. Consumers will be unforgiving to “learning-curve tedious” profile creation approaches like behavioral biometrics.
The authentication methodology of the new decade will be layered based, combining different forms of fraud and authentication indicators. Identification indicators that weave data derived from the mobile device, the user’s behavior patterns, and transaction data.
6. More and More Regulations
2020 was a year of continued regulatory and compliance requirements across the payment ecosystem. Vendors will be required set data sharing standards and enhance data security to meet public and regulator concerns. Throughout the world payments will be more regulated and scrutinized by compliance watchdogs.
7. New Payment Verticals
Digital payments have been traditionally associated with financial, eCommerce and recently eWallet sectors. Digital payments will be joined by new and unique business sectors. For example, one of the fastest growing sectors to use digital payments will be oil and gas/pump companies (and adjacent convenience store). Paying using a mobile phone at the gas pump will become more familiar to consumers after 2020’s hit.
The use of mobile payments in the mobility sector boomed in 2020. Commuters will be using mobile apps to pay for transportation. Paying for a bus, train, renting city bikes, and using scooters will be done using a mobile app. And many instances paying for all your urban transportation needs will be done with one application.
Additional verticals that have been utilizing mobile payments are online cannabis orders, contactless vending machine payment and other.
Clearly, the payment ecosystem has undergone a massive change and 2020 was perceived to be a milestone year. A kind of before and after milestone. Mobile payment fraud prevention and authentication vendors that can foresee the challenges and opportunities that lie-ahead will thrive.
If “timing is everything” then Paygilant is exactly where it needs to be.
Paygilant functions as a hub for mobile payment providers, seeking for a fraud prevention & frictionless user experience in a single solution. Its secret sauce includes six intelligence sets – device DNA, User Space, Activity Map, Bio Markers, App Insights, Transaction View – effectively distinguishes between legitimate customers and fraudsters.
Without impacting and imposing on the user, Paygilant runs in the background to trigger a high-risk alert when fraud is identified and a low one when the customer is successfully identified. Utilizing its machine learning algorithms, Paygilant provides ongoing and continuous data analysis to ensure that transactions are approved only for legitimate users.
2020 may seem like a long time ago already, but the effects of mobile payment growth will be felt for years to come. If you want to learn more on how to protect users in the mobile payment industry, reach out to us today.