The future of Alternative Payment Methods
Global cashless payments are set to increase by more than 80% between 2020 to 2025. And while global card schemes currently remain the number one cashless payment method, a burgeoning ecosystem of alternative payment methods is also emerging. These range from domestic card schemes and cash-based vouchers to globally recognized digital wallets such as Apple Pay and Google Pay.
Ensuring they offer the right payment methods to the right customers through the right channels is fast becoming a key differentiator for businesses. Our research into consumer ecommerce behavior across Europe finds that 60% of ecommerce consumers will abandon their cart if not offered the right payment method.
But payments is anything but a static industry. Innovation is everywhere. And how people pay today isn't necessarily how they'll pay tomorrow. Just look at the recent growth in the buy now, pay later space. It's transformed from a niche payment method to become a $100 million-plus industry in just a few years that's boosting sales for businesses across multiple industries.
So the question every business must continue to ask is: what's next?
New ways to pay
The emergence of crypto is one of the biggest — if not the biggest — trend in financial services in recent years. Yet from a payments perspective, its usage has been limited to a few niche use cases.
However, that's changing, and fast. This is as emerging crypto players and established financial services firms leverage the technology to develop more use cases for consumers and businesses. This, in combination with the growing consumer adoption of crypto assets, may soon pave the way for crypto to become a mainstream payment method.
Of course, there are still big questions that remain. Particularly around industry regulation, which is currently the topic of governmental discussion. But crypto is a notoriously fast-moving space. Businesses should keep abreast of the rapid pace of change in this space.
Away from crypto, another exciting area of development in the payments space is around machine-to-machine (M2M) payments. These payments are automated between connected machines without the need for human intervention or confirmation. For example, connected vehicles paying for fuel, maintenance or insurance.
While this payment method may sound like something out of a science fiction movie, it may soon become commonplace. Especially when we consider that there are already over 12.9 billion connected internet of things (IoT) devices active around the world. And, as this payment method becomes more commonplace, it will create ample opportunity for businesses to innovate their offerings and capture more revenue.
New ways to authenticate a payment
The payment methods consumers use are evolving fast. But so too are the way they authenticate payments. And these methods of authentication are increasing security, while also allowing merchants to build more seamless checkout flows for their customers.
Biometrics— such as fingerprint analysis, face and eye scans, even gait and walk assessments — is one such example. Biometrics authentication is commonplace for anybody using a digital wallet like Apple Pay and Google Pay. And, for businesses it provides multiple benefits, notably meeting the latest Strong Customer Authentication requirements without causing additional friction in the checkout flow.
Voice recognition has also made its way into the payments arena. Voice-enabled home devices are assisting consumers with their payments and BBVA’s MIA (Mobile Interactive Assistant) leverages NLP (Natural Language Processing) to make sending payments even easier.
What this means for your business
Consumer payment preferences will continue to evolve. And offering the right payment method at the right time through the right channel will give businesses a competitive advantage.
Read our guide to learn more about alternative payment methods and how you can develop the best strategy for your business to offer the methods consumers want today and tomorrow.