The Future of Payments

Plastic is passé, mobile and crypto wallets are in.

Payment evolution

Up until the early 2000s, we saw little in the way of payment innovations aside from Paypal and online payment gateways. With the onset of e-commerce as the preferred way of shopping for younger generations from millennials onward, it comes as no surprise that alternative, internet- and mobile-friendly ways of payment have been emerging. A pioneer at the time of its inception, Paypal was the first commercial peer-to-peer payment app in the post-wire transfer world. It’s time that we got more options, nevertheless.  

Payment revolution

Generation Z, or the cohort born between the mid-1990s and the early 2000s, is growing up fully digital, tethered to their smartphones at all times. Nearly 70% of these true digital natives use mobile banking apps daily, with 68% preferring instant P2P payments. Being mobile-first, this generation also uses social media and messaging apps at a rate higher than previous generations. They don’t think of mobiles, apps and banking as separate entities – instead, they are seeking a seamless experience, allowing them to quickly get things done with just a few finger taps.

This trend has clearly reflected the need for instant P2P payments, where transfer and withdrawal fees are minimized, while speed and ease of use are optimized. Meeting this need has prompted the creation of mobile wallet services like Apple Pay / Google Pay, P2P apps like Transferwise, online-only banks, cryptocurrency-powered payment cards, and other cardless alternatives.

Brick-and-mortar banks which don’t offer digital methods of payment beyond standard online banking will gradually give way to more innovative solutions that put the needs of the mobile customer first.

The payment ways of tomorrow

What if you never had to worry about losing your card, forgetting your card’s PIN number, or replacing it when it expires? Credit and debit cards have been the norm when it comes to paying for products and services for decades, though they are on their way to becoming obsolete. How will we pay when this happens? Enter integrated digital wallets – the future of plastic-free payments.

Keeping up with customer demand

Like with many other technologies, Asia is making waves in digital payment innovations. WeChat – a popular messaging app similar to Viber and Whatsapp – dominates most Asian markets. Over the past few years, WeChat has seen extensive functionality packed into it, including a digital wallet (called WeChat Pay, naturally), which allows bill splitting, P2P payments, e- shopping, paying for utilities, and even accessing custom wealth management products.

More than 90% of Chinese consumers are already using WeChat to buy products offline too, as opposed to only a third using debit or credit cards. WeChat’s wallets are also revolutionizing another all-time Chinese tradition: the gifting of cash-filled red envelopes (‘’hongbao’’) for special occasions, such as weddings, graduations and new births. The number of digital red envelopes has increased from 16 MLN to 14 BLN in a mere three years.

Known as ‘’scan and pay,’’ mobile wallets are more intuitive to shoppers used to performing a wider range of transactions on their mobiles than their counterparts from the Old Continent. Although they’ve been slower to adopt in Europe, mobile wallets are slated to replace plastic in more traditional markets over time.

Digital wallet privacy and security

New developments in the field of payments raise a number of security and privacy considerations which need to be addressed by device manufacturers, data providers, app developers and legislators alike. Do wallets need to be protected by anti-virus software? Would using them compromise our privacy in any way? Smartphones are often lost or stolen and when they contain sensitive financial data, they should be protected by extra layers of encryption to avoid identity and monetary theft. In addition, adopting stringent monitoring and fraud protection practices can help ease the mind of users reluctant to place their full trust in this type of technology.

Copywriter: Ina Danova

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