Technology Trends Transforming the Payments Ecosystem
Heightened customer expectation for value-added services allowed the emergence of payment enabling technologies and an open and collaborative payments ecosystem. With this new ecosystem, the traditional payment processing is anticipated to fade. Payment infrastructure requires next-generation tools to enhance customer experience. As a part of the technological transformation, varied trends are emerging and reshaping the payments value chain.
Peer-to-peer(P2P) transactions, the electronic money transfer made from one person to another through an intermediary service is used by millions of smartphone users. in P2P payment application, an individual's account is linked to one or more of the user's bank accounts. The most appealing benefit of P2P transfer is the cost because all transactions happen electronically. P2P network users can also enjoy transparent pricing. These networks are secure because very little personally identifiable information is attached to transactions.
Mobile commerce (mCommerce) encompasses all transactions that take place on mobile devices- including mobile-optimized websites and applications. Payment wearables are expected to be the successors of mobile devices. Through mCommerce, users can pay bills, buy and sell goods and services, and many others.
Artificial intelligence also is transforming payment ecosystem by enabling an improved customer experience and adding a layer of security to transactions. AI understands consumer behavior, with which financial institutions can accurately validate an individual's identity and prevent account take over and other forms of frauds.
Innovative payment technologies have been made through payment network advances and collaborations. The traditional method of identifying payment accounts by account numbers is now replaced by EMV (Europay, Mastercard, Visa) technology with unique single-use codes. This change has created more secure payments for in-person digital transactions.
Analyzing these emerging trends promise a seamless improvement in financial transactions with improved transparency, flexibility, customer experience, and security measures. Lagged adoption of these trends weighs adversely on both the financial institution and customers. They may miss out rich user experiences and opportunities offered by digital payments technologies. Ensuring digital adoption will help overcome these challenges to empower the entire banking process aided with comprehensive security offerings.