Innovative digital payment options are upsetting the current system. This post will go over some of those disruptive innovations in payments.
Closed vs Open Payment Platforms
Closed platforms require buyers to move through the complete payment process on a single platform. In contrast, open platforms relyon an open network that allows buyers to choose their preferred payment method. There will likely be greater competition between these two types of platforms in 2020.
Alternative Revenue Sources
Offering quick transactions and other common perks no longer stands out from competitors because consumers have come to expect these benefits. This could force payment processors to find new revenue-generating strategies.
One possibility would be to increase the use of data analytics to predict consumer demand, allowing companies to provide the services and products their customers desire. Additionally, payment processors may team up with SaaS companies in order to boost profits.
New Globalized Standards for a Global Payment System
With the payment system going global, we can expect to see new regulatory and data protection standards being established.
As of now, companies that offer credit card transactions must adhere to the Payment Card Industry Data Security Standard (PCI DSS). However, due to differences between countries, the payment process becomes more complex when making inter-regional transactions.
Companies must be prepared for the introduction of global industry standards which will bring about more inter-regional transactions in 2020.
Noncommercial Organizations Getting More Involved
We may see institutions such as banks and public payment authorities getting more involved in the payment system in 2020. Here’s why:
- Federal Reserve Banks are going to develop a new service called FedNow℠ Service which will accelerate the payment process in the US.
- The central bank in China is intending to produce a state-backed cryptocurrency that will be issued by seven different institutions.
These future plans reveal that noncommercial entities want to be part of the new payment system.
New Way of Business for Payment Companies
Payment processors are being challenged to evolve with disruptive innovations in payments. Such companies are competing against each other to find and hire specialists with the right skills that benefit their operations.
According to Deltec Bank, Bahamas – “Innovative payment companies are also restructuring their businesses in order to provide customers with a smoother experience. These companies are looking to redesign their operations, systems, and technology in order to improve customer service and increase consumer satisfaction.”
This intensified focus on simplifying the payment process for consum0ers will require hiring employees who are skilled in technology.
Furthermore, payment processing companies will be developing and offering new products and services that satiate consumer demand for innovative payment options.
Based on the upcoming trends mentioned above, the payment system is undergoing radical changes. While following these advancements, it will be vital for payment companies to maintain compliance with applicable regulations.
The evolution of the payment system is pushing many financial institutions to keep up with disruptive innovations in payments. Payment processors are going to keep fighting in order to survive these disruptions and are expected to physically and digitally expand their businesses.
Disclaimer: The author of this text, Robin Trehan, has an Undergraduate degree in economics, Masters in international business and finance and MBA in electronic business. Trehan is Senior VP at Deltec International www.deltecbank.com. The views, thoughts, and opinions expressed in this text are solely the views of the author, and not necessarily reflecting the views of Deltec International Group, its subsidiaries and/or employees.
About Deltec Bank
Headquartered in The Bahamas, Deltec is an independent financial services group that delivers bespoke solutions to meet clients’ unique needs. The Deltec group of companies includes Deltec Bank & Trust Limited, Deltec Fund Services Limited, and Deltec Investment Advisers Limited, Deltec Securities Ltd. and Long Cay Captive Management.