While almost everyone uses some form of technology for their daily spending through QR code payments, click-to-pay, card-on-file, biometrics, tap-to-pay or mobile payments, we are rarely aware of the tremendous efforts that are accomplished by the regulator, financial institutions and innovators in this field. We tried to answer the questions: Where are we heading with this, who are the game changers that are worth following, and what will the future of payments look like?
According to the latest FinTech report by Statista, the average transaction value per user in the Digital Payments segment is projected to amount to US$1,400 in 2020, and this is expected to increase by nearly 30% to reach US$1,800 in 2024(!) Subsequently, there is no wonder why these questions have caught the attention of many major banking institutions for the past several years, along with the GAFA giants. Some answers were swift with the launch of Apple Pay & Google Pay. Facebook (NASDAQ: FB) is in the midst of refining the Libra cryptocurrency, and Amazon (NASDAQ: AMZN) recently announced its palm payment technology, which lets shoppers at physical stores pay for their purchases by scanning the palm of their hand.
We base our entire civilization on the exchange of goods and services for consideration, usually in the form of government-backed fiat currencies. Though, in the past cash and handwritten checks were the only widely struggle to remember the last time we used cash to buy something, especially the Millennial and Gen Z populous.
This is being furthered by the FinTech pioneers that have drastically changed our payments ecosystem over the last 20 years and globalized trade. Notably, it is much more than just PayPal (NASDAQ: PYPL), which is currently holding more than 100 million active accounts in 25 currencies, and with a payment volume amounted to US$221.7 Billion that has just been announced today on the launch of their crypto abilities when they plan to allow buying, selling and shopping with crypto currencies on their network. Debit cards, credit cards, wire transfers, and digital wallets accessible through smartphone apps and digital banking platforms have made transacting convenient, secure and commonly used by all of us.
A super innovative FinTech that enables this is PayKey, which has created a platform for financial institutions to provide its end clients with the ability to pay by using their smartphone’s keyboard and to access digital banking services at the moment of need, without even having to leave the current app.
PSD2 (Payment Services Directive), an EU regulation that aims to align payment regulation with the everchanging payment technologies, provides an opportunity for FinTechs to enjoy open Application Programming Interfaces (APIs). Further, there is no doubt that the fastest FinTech players were leveraging this to their benefit. This was done by transforming our public transportation, food delivery and shopping experience into a game of identity instead of a game of money, by creating a seamless payment process.
For example, Paygilant, which enables a safe payment experience, is a FinTech startup dedicated to making secure payments without the friction, currently associated with banking, credit cards and eCommerce transactions. It does this by analyzing various unique characteristics of your smartphone and your biometric behavior to accurately distinguish between a legitimate and a fraudulent transaction. Paygilant’s CEO, Ziv Cohen, clearly says that its vision is to enable the rapid growth of digital banking and payments by bridging the gap between preventing fraud and ensuring a seamless user experience. In this new instant payments era, a ‘customer first’ approach is required more than ever before and hence, a new anti-fraud approach is vital.
The ‘buy now pay later’ approach is already having a significant impact on the way we shop and the amounts we spend. One of the most interesting FinTech start-ups that enable this is Jifiti, which partners include Citizens Bank and furniture giant, IKEA. The Jifiti white-labelled platform enables traditional banks and lenders to deploy its consumer loan programs at any merchant’s point-of-sale without the need for integration. It does this by including a seamless mobile payment for in-store and online payment for e-commerce directly within the ‘buy-now-pay-later experience’.