In just the last few years, we have witnessed a number of changes that have completely revolutionized the world of banking. It’s easier than ever to handle practically every aspect of our banking online, including making online payments. Moving forward, we will likely see numerous other trends that will continue to shape the future of online payments and banking.
Fintech solutions continue to evolve in a quest to meet the needs of both online retailers and customers. Innovative strategies have resulted in a number of enormous changes transforming the future of both online payments and banking. Below, we cover just a few of the trends and transitions we are seeing within the online banking and payments industry, as well as what we can expect moving forward in the very near future.
Expansion of Mobile Payments
Mobile payments are among the innovations changing the landscape of online banking and payments. MasterCard has recently launched a program that allows consumers to use selfies rather than passwords. This biometric authentication app requests customers to scan their faces in order to pay. The credit card company has also announced it is testing a number of other authentication methods, including voice recognition, facial identification, and cardiac rhythm. Ultimately, the goal of mobile payments is to make the flow of payments as quick and simple as possible while also maintaining the highest degree of security for both merchants and consumers.
A variety of options is now available with mobile payments, including the ability to make payments on a consumer’s device to purchase services or goods from a specific retailer using a mobile app. In this type of mobile payment, data are stored on the consumer’s device. No data are stored on the merchant’s device.
Mobile Wallets Take Off
Perhaps one of the biggest transformations we will see in the future of online payments and banking is that mobile wallets will finally take off. Retailers have expressed excitement about the idea of mobile payments because such payment methods provide retailers with valuable insight regarding customer behavior that can be used to enhance consumer shopping experiences. In addition, the speed offered by mobile payments could increase traffic in physical stores, thus generating more sales.
Apple became the only major mobile wallet to enter the market in 2014. The following year, however, both Samsung and Google launched their own mobile wallets, shortly followed by Chase, Amazon, Walmart, and several other major players. A number of social media platforms, including Facebook, have also now added payment options that make it possible for users to make purchases online and even send money online to friends and family. Estimates indicate that in-store mobile payment volume is expected to increase from $75 billion in 2015 to more than $500 billion by 2020.
The growth potential for online payments, particularly from mobile devices, is certainly massive. Predictions indicate that 75 percent of all transactions will be made without the use of cash by 2025. Clearly, consumers are growing increasingly willing to use cards and smart devices to pay rather than carrying physical currency around with them.
Digital Remittances Continue to Grow and Ease Global Payments
Thanks to the introduction of digital remittance, it is now easier than ever to send money around the world. Growth among digital startups specializing in this form of payments has been enormous. Xoom, a San Francisco-based company founded in 2001, has experienced phenomenal growth in the area of digital remittances. In fact, the startup now brings in more revenue from digital remittances than does MoneyGram.
Growth of Peer-to-Peer Lending
Over the last few years, peer-to-peer lending has experienced significant growth, effectively cutting out the middleman. Using technology, it has become possible to power transactions, thus giving consumers the opportunity to bypass traditional lenders while simultaneously taking advantage of better interest rates. Lending Club is just one of the many pioneers in this rapidly expanding industry. Since its founding, Lending Club has originated more than $20 billion in peer-to-peer loans.
Incorporation of Blockchain Technology
There are increasing indications that the growth of blockchain technology and cryptocurrency could soon disrupt the world of online payments and banking. Specifically, tokenization is anticipated to shake up the entire financial industry. Startups such as Movile are already harnessing the potential to incorporate bitcoin for in-game purchases and serving as an alternative mobile payment currency in Brazil and other developing economies.
In the near future, blockchain could prove to be one of the biggest disruptors of online payments. Advocates of the technology point out that transactions based on blockchain offer greater transparency and trust while streamlining the payment process.
Big Data, Beacons, and Sensors
Big data, beacons, and sensors are also creating waves in the retail world by assisting merchants in reaching consumers with customized offers. For instance, big data is helping retailers and merchants to send targeted promotions, coupons, and flash sales. There is even the opportunity to complete purchases in advance with the use of this technology.
When it comes to mobile payments, there are many options available, including mobile P2P transfers. In these types of transfers, the consumer’s device is used to make bank transfers.
For many years now, PayPal has practically dominated the online payments industry. However, that could soon change, as a number of startup firms are positioning themselves to become serious PayPal competitors. Among them is Ozan.com, which offers a variety of online banking products that serve as an alternative to banks. The benefits offered by Ozan, including no transaction fees, could very well poise this company to become a major player in the near future. Venmo is yet another company offering P2P mobile payment capabilities.
With so much innovation taking place, there is room for almost unlimited expansion in the online payments and banking space. Although some issues, such as security concerns, still need to be addressed, the overall speed in which transactions can be conducted shows undeniable movement within the online banking evolution.