Digital Payment Services in 2022
These days, to some extent, doing business is easier than ever before. Several barriers to making fast, secure, safe, and convenient payments have been overcome. The kudos for this level of success go to various FinTech companies, neobanks, and online payment service providers that introduced many innovative digital products into the market. Right now, we can bet that there are a lot more breathtaking products soon to be released for our consumption.
Today’s article is a sequel to our previous write-ups on the fundamentals of financial technology (FinTech), contemporary banking trends, and digital transformation in banking. It will inform you about the trends in digital payments in 2022.
What are Digital Payments?
Digital payments, also called electronic payments, refer to money transfers from one account to another via electronic devices or online platforms. They do not involve the use of physical cash. The most popular devices used for making digital payments today are smartphones, personal computers, and wearable devices such as smartwatches.
What are Digital Payment Services?
The term “digital payment services” is used to refer to digital systems, application software, and other entities that use electronic modes to make financial transactions possible. They are also known as digital payment solutions or service providers. They are powered by modern technologies and exist in various forms, which include desktop apps, browser-based apps (web applications), mobile apps, e-wallets, and blockchain platforms.
Top Trends in Digital Payments
In 2022, there are popular trends in the application of modern technology for digital payments which we must let you know about. Let us take a look at them.
Smarter international payments
Neobanks are creating easier, faster, cheaper, and more flexible ways to send money to people in many countries in Europe, Asia, Africa, America, and other parts of the world. In addition, they are offering personalised banking as well as attractive payment services to niche markets. Who are these markets? They include children, digital nomads, long-term crypto investors, enthusiastic crypto savers, new or beginner investors, individuals learning to manage their expenses, businesses seeking better ways to manage their payments, and freelancers.
For your best international payment experience, try these options:
Artificial intelligence and machine learning
Today, customer (or user) experience is being revamped by the creation of digital payment systems and apps that are powered by artificial intelligence (AI) and machine learning (ML). In addition, digital payment services use AI and ML products to improve efficiency, reduce costs, prevent cyber fraud, create high-level security, and increase return on investment (ROI).
What is more, individuals and businesses rely on AI and ML products to make automated payments for bills, subscriptions, and other recurring expenditures as well as communicate quickly and conveniently with each other. An example is the use of chatbots for personalised customer support in payment apps.
The tokenization of credit/debit cards is another trendy technology for user safety. Tokenization helps to keep the sensitive information you have on your card from being shared with a third party. How? When you use your card for payments, it converts your original data into a string of meaningless numbers or letters and numbers called a token. Tokens are generated randomly. In that way, your bank or financial details are kept safe in case of any unfortunate exposure like a data breach.
Contactless and wearable payments
Contactless payments are made using electronic devices that do not require you to swipe them or type a personal identification number (PIN). To make payments, you simply need to bring them close to the point-of-sale (POS) terminal or any other contactless payment reader offered by the merchant.
The technologies that are used to create contactless payments include near-field communication (NFC), radio frequency identification (RFID), and magnetic secure transmission (MST). Smartphones, contactless cards (like those issued by Visa and Mastercard), and wearable smart devices that work with this kind of technology have embedded chips and antennae through which they communicate with other devices that have secure contactless readers.
Examples of contactless payment service providers are:
Note: Additional examples of popular contactless payment apps on smartphones are Google Pay (on Android phones) and Apple Pay (on iPhones).
QR code payments
Another form of contactless payment is the use of QR codes, that is, quick response codes. It is a less expensive technology than NFC. It gained popularity due to social distancing measures implemented to control the spread of a novel coronavirus, COVID-19. This payment system involves using your mobile phone to scan a QR code provided by a merchant to make payment for items bought online or offline. Now, both small and large stores are finding it easy, cheap, and reliable to use this method.
Find below some examples of QR code payment service providers
Instalment payments (Buy Now, Pay Later or BNPL)
In online and in-store shopping, the way consumers can pay for goods and services has been transformed by some trendy instalment payment service providers. An example of them is PayPal. For instance, in Germany, with the “Pay after 30 days” offer from PayPal, buyers can pay (automatically from their bank accounts) 30 days later for goods purchased for no more than 1,000 EUR. However, this BNPL offer is subject to PayPal’s approval, which may be granted after it has done a credit check on the user.
BNPL payment services include the following:
PayPal (Pay in 4 / Pay after 30 days)
Loyalty schemes and expansive payment options
Many retailers are creating loyal customers by offering them discounts and free products/services under certain loyalty programmes. At the same time, they are expanding their payment methods to include those that their customers are conversant with or find cheaper to use. The highly competitive retailers have different loyalty schemes attached to various payment methods to encourage their use and make the customers buy more often from them. The programmes also help to improve customer experience.
The following are examples of payment systems with loyalty schemes and cash rewards:
Smart speaker payments
In 2014, Amazon introduced its smart speaker device called Amazon Echo, with Alexa as the name of the virtual assistant. Since then, some digital giants have created theirs. For instance, Google created Google Home in 2016, a smart speaker built around Google Assistant, to compete with Echo.
Smart speaker devices were originally for home entertainment (listening to music), information provision (such as news and weather updates), and virtual domestic assistance via the use of voice commands and automated responses. However, today, new capabilities are being added to these AI-powered devices. Some smart speakers can now be used for placing orders, booking a taxi, paying bills, buying tickets, managing recurring expenditures, topping up e-wallets, buying groceries, and so on.
Payments through biometric authentication and biometric cards are getting popular in 2022. Instead of a PIN code, when making a payment, this method involves the use of a person’s biological and structural features that have been stored in a system (usually cloud-based) or their card in advance. For example, you can make payments using your face, iris, heartbeat, or fingerprint as long as the device to receive the payment can recognise any of these parts of your body. This method is very effective in preventing fraud.
Due to its interoperability, accessibility, affordability, and efficiency, blockchain technology is now trendy for decentralised digital payments. Blockchain refers to a type of technology that helps to maintain a record of cryptocurrency transactions across several peer-to-peer interconnected computers. Hence, cryptocurrency payments are getting popular. There are now many mobile apps for making crypto payments or trading on crypto exchanges.
Now, here are the best blockchain and crypto trading service providers:
Since the COVID-19 pandemic, more and more individuals and businesses are searching for cheaper, faster, secure, efficient, transparent, and rewarding ways to make payments locally and internationally. Fortunately, in this post, we have shown you an authentic variety of the best digital services that can meet your payment needs. You can even benefit from their profitable loyalty programmes. So, we encourage you to go ahead and try some of them today. You would be glad you did!