This year was a pivotal year for the landscape of digital payments. Payment systems have evolved a lot over the years to respond to customer demand and meet the evolving threats from the virus COVID-19.
Customers of all ages quickly adjusted to digital payment options that were not relying on cash due to social distancing guidelines being implemented to ensure security reasons.
Most of the consumers said they are using digital banking services more now than ever due to the current outbreak. The demand and expectation for instant payments were also evident as financially stressed people needed access to their accounts more urgently.
Here are nine of the most popular trends in payments that we will see in 2021 and are poised to develop into the norm in the coming years:
- Wearable payments devices :
More and more customers are using wearable payment devices like smartwatches, wristbands, and smart rings to buy products or services. The tap-and-go payment method offers sellers and retailers with more safe and secure payment options. According to a study, the market for wearable payment is predicted to grow to $1.37 Trillion by 2027 at 21.7 percent CAGR.
- An increase in online transactions:
Due to the restriction on movement during the lockdown, shoppers heavily relied on online shopping for food items, health products, and other necessities. Even as the lockdown is less severe, customers prefer shopping on the internet due to the advantages of having multiple options, including online commerce and electronic payments.
- QR code payment:
Payments via QR code will continue to demonstrate their adaptability, particularly for emerging economies, mainly because they are simple to make use of and cost-effective to implement. This kind of payment is likely to be more convenient to use since it requires only an application that permits it to be utilized in one place.
- The shift towards cryptocurrency:
Cryptocurrency is stated to be the new gold standard for the millennial investor. An increase in the seriousness of cryptocurrency’s alternative payment and investment class was observed in the past year. In 2022, we are expected to see an increase in investment banks that are adopting the crypto-based ecosystem.
- Purchase-Now-Pay-Later or deferred payments:
Digitally deferred payment has been getting more popular with consumers since 2019. Due to the tight financial conditions in 2020, consumers had to turn to the buy-now-pay-later (BNPL) payment method. These services have gained momentum since prior to the outbreak, but the rise in the use of e-commerce in the last year has accelerated customer acceptance toward installment payment.
- Digital Payments:
The consumer has embraced electronic payment options like tap-to-pay and e-commerce as well as digital wallets to avoid contact when they make a payment. Digital wallets and mobile payments were among the most used payment methods since they surpassed cash transactions in 2020, as per a report by FIS. There are numerous benefits for issuers of credit cards to offer digital wallets and cards. More security means higher utilization, which increases the chance the cardholder will have the balance of a credit card.
- Cross-border payments:
In an increasingly globalized world, the need for speedier, efficient, less expensive, and cheaper cross-border transactions is gradually becoming an essential requirement. Payments across borders were steadily growing due to the increasing globalization of commerce and shopping from abroad prior to the outbreak. There is a lot of innovation occurring in the cross-border payment environment because traditional payment channels for correspondents are cumbersome and take days to complete transactions that can be expensive.
Payments-as-a-Service (PaaS) is another payment trend that has miles to go in the coming years. It still is the choice for cost-effectiveness and go-to-market speed in payment technologies. PaaS will cost-effectively and efficiently assist with upgrading legacy payment infrastructure and improving customers’ satisfaction (CX). This trend is growing and is especially popular in the small and mid-sized segments of banks and financial institutions with limited capital flow.
- Development of P2P payment methods:
P2P payments initially gained traction following the 2008 financial meltdown, but the 2020 pandemic has really propelled it much further into development. The idea of a quick, rapid, and easy method of transferring funds and dividing pizza bills between friends has evolved into a multi-facet system that functions as the equivalent of a bank.
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