We work with a broad range of clients across the Fintech space, all of whom are leading the way with innovations taking the market by storm, so we’ve got a unique perspective on how the landscape is evolving every year. With payment services expected to drive $207.11 billion of revenue by 2023, here are the trends we think you should be paying attention to over the next 12 months.
The rise of the invisible payments ecosystem
With the growth of Artificial Intelligence, the Internet of Things and the expanding ecosystem of interconnected devices, the way in which we interact with machines to buy things is changing.
For example, consumers are increasingly happy to order items and make purchases using voice commands on devices like the Amazon Echo. Many of you reading this will have used up the last of an ingredient while cooking and asked Alexa to add it to your shopping list without even touching a device. Generally, payments with voice are on the rise – Paypal was the first to introduce voice activated payments in 2016, with Santander, Barclays and the Royal Bank of Canada following suit in 2017.
In fact, we’re already seeing payment systems that require no human interaction whatsoever to make a purchase. Amazon Go Stores are already implementing “Just Walk Out” experiences, in which machine learning, facial recognition tech and shelf sensors track customers’ items and charge them directly to their Amazon account. There are no cashiers and there is no explicit payments moment.
We expect these “invisible” payments experiences to become more prominent in 2020, and things like voice payments will skyrocket over the next 12 months. This will be supported by the growing maturity of the frictionless payment ecosystem that maintains the security of transactions without compromising on the convenience for consumers.
Social Commerce will grow in influence
In 2019 we saw social commerce start to make an impact in the payments industry, ranking as one of the leading emerging ecommerce trends last year. Social referral to retail ecommerce sites has grown 110% in two years, with Facebook responsible for most of those referrals.
We’ve already seen brands like Burberry and ASOS use Facebook Messenger to great effect, and more brands will implement social commerce solutions in 2020. Of course, the issue of balancing a smooth customer experience with implementing the necessary authentication measures remains. Despite this challenge, 2020 will see social media payments become commonplace, and the brands that provide a secure, frictionless payment experience will experience the most growth in this area.
An increase in value added services to compliment POS transactions
As mobile transactions have risen, so have opportunities to implement value added services. Research shows that gift card redemptions can increase a merchant’s sales by up to 38%, so loyalty schemes and gift cards are clearly still relevant motivational factors for consumers.
According to MarketWatch, the global mobile value added services market is expected to increase by 18.5% before 2023. It seems, then, that 2020 will be a key year in seeing value added services supplement POS transactions as mobile payments increase in frequency. In particular, we will see more digital vouchers or gift cards implemented through mobile wallets at the physical point of sale.
The best of both worlds for retailers who embrace the omnichannel experience
High street retail is currently a challenging environment. As a result, both 2018 and 2019 saw more retailers merge their physical and online channels to create a seamless shopping experience.
For example, Apple has made big steps to create a seamless experience by integrating the mobile app into the act of visiting a physical store. These days, customers can use the app to schedule appointments with support reps and get their order information in app instantly when entering the store to collect the item.
As well as this, Starbucks customers can now use a prepaid gift card for purchases and to earn points towards free beverages, all of which can be done through the Starbucks App. The coffee giant has also implemented mobile ordering, giving customers the opportunity to order and pay before they arrive so they can skip the queue.
It goes to show that the retailers who successfully merge online and offline for a more satisfying customer experience will grow market share. 2020, therefore, looks set to be the year of the omnichannel retail experience.
Stronger together: Traditional Banks and Fintechs will collaborate even more
Both 2018 and 2019 saw increases in banks acquiring Fintechs, as both worlds realised the mutual benefits of working together. Fintechs have the agility to create disruptive, industry-changing innovations, whereas traditional banks have the scale and resources to take those services and products to the widest possible market. More collaboration is on the cards for 2020, building on partnership models like Visa’s FinTech resource portal, launched in 2019, which gives Fintechs “unprecedented” access to Visa’s technologies and network.
Overall, 2020 will be the year of the digital revolution
As connectivity increases over the next year, retail will enter every part of the home, with voice and social commerce providing new ways to make purchases, complemented by increasing transaction opportunities via everyday objects. We are also set to see greater collaboration between the physical and online retail worlds, as well as between Fintechs and traditional banks.
With so much change expected to take place, one thing is for certain – the world of Fintech and payments is not slowing down and is a truly exciting place to be in 2020. At SkyParlour, we’ll be in the middle of the action, ready to shout about the developments our clients are making throughout the year. So keep your eyes peeled and watch this space.