The world is changing rapidly; digitalization is progressing and altering our society. As tech-savvy generations become the biggest buying groups worldwide, they require seamless, all-inclusive shopping experience - and that includes top-level payment solutions.
Driven by the customers’ expectations of simplicity and convenience, the whole payments sector is undergoing big changes. Digital wallets, smart assistants and biometric authentication methods are ushering us into a new era in the payments market.
The consumer shift to digital wallets
The expansion of e-commerce and mobile shopping, backed by the development of contactless payment technologies, have a definite impact on the popularity of digital wallets. In particular, the growing adoption of these wallets among young people reinforces the indication that it is more than a trend – it’s the next logical step in payments. Digital wallets give users greater flexibility, offer better security, and are easy to use – which makes them the preferred form of payment for Millennials and Generation Z.
Big companies like Apple, Google and Samsung already have their brand-specific mobile wallets. The possibility to connect a digital wallet with a brand makes digital wallets more than just a payment method – it turns them into great marketing tools.
By creating digital wallets, companies all over the world have an opportunity to add value beyond payments: contextualize their offerings, deliver great services to their customers and facilitate the shopping experience. Smartly designed digital wallets are likely to become rich marketing platforms with the capability to drive in-store traffic and sales, as well as result in higher conversion rates for retailers.
Voice payments – the new revolution in fintech
Alongside digital wallets, the popularity of virtual digital assistants is growing at a rapid pace, and the number of people using digital assistants worldwide increases every year. AI-powered smart assistants are already commonplace in many parts of the world, which gives retailers a chance to build skills or connected applications for smart home speakers to enable voice-based shopping.
According to data from OC&C Strategy Consultants, voice shopping is expected to jump to $40 billion in 2022, suggesting that this payment channel might be the next major disruptive force both in fintech and in retail.
Voice payments have already been leveraged by some companies to create a frictionless user experience for their customers. For example, the British Virgin Trains became the first travel operator to collaborate with the Amazon Echo, allowing its clients to find and purchase tickets with voice commands.
The voice payment adds simplicity and convenience to the shopping process, yet it still has some security lapses that affect consumer confidence in this solution. Nevertheless, with the further development of voice-recognition technology and its increasing sophistication, we can expect that more and more people will choose to make payments over their smart speakers.
The rise of biometric authentication
While new payment methods appear, fraudsters keep innovating too. The security aspect, including cases of identity theft, is the most common thing that makes people skeptical about digital payments. So biometric authentication technology has emerged as a potential solution to this issue.
Biometric authentication is a unique payment method that provides accuracy, efficiency and security in one package. As it involves an individual’s unique characteristics, such as fingerprint scanners, facial recognition or iris recognition, it’s the most reliable option for payment processes.
Since the advent of the iPhone’s Touch ID verification, which leverages fingerprints to login and conduct transactions using Apple Pay and other services, biometrics gain its followers. Now companies all around the globe try to integrate some form of biometrics to keep their solutions secure. According to Juniper’s study, biometrics will authenticate in-store and remote payments worth $2 trillion by the year 2023. Juniper also highlights that biometrically verified mobile commerce transactions will constitute a massive 57% of total biometric transactions in 2023.
A multi-factor authentication (MFA), which combines two or more types of authentication, is also gaining popularity. MFA is highly secure and makes it difficult for hackers to compromise the customer account. As such, it’s something that can quite easily be used by businesses to enhance security and deliver extraordinary digital customer experiences.
The bottom line
The needs of modern consumers are shaping the future of every industry, including payments. In current times, a company’s success very much depends on its flexibility, new approaches, introduction of cutting-edge solutions and quick adaptation to the market that never stands still.