When online payment became popular, it brought about revolutionary change both for consumers and for businesses. But it looks like this disruptive technology is about to be disrupted itself, as e-commerce moves from desktops to tablets and mobiles. New payment models and forms of payment (such as Bitcoin) which replace traditional cash are being developed as well.
The latest trends in payment demonstrate that as payments via phone and tablet increase, the payment process will evolve and provide seamless, one-click solutions for e-commerce. In 2012, the Euro Banking Association combined research and a brainstorming session to develop a long-term vision for payment. They based their vision on 10 assumptions of how online payments would evolve in the next five to seven years:
- Payment systems will be driven by the customer’s journey. Mobile and tablet users will be even less willing than desktop users to jump through hoops in order to make a purchase. Easy and quick checkout will become a necessity and not just a luxury.
- Methods of payment will be less important than ease of payment. Customers will prefer one-click solutions even if they are more limited in terms of payment options.
- The difference between credit card payment and online payment will gradually narrow, and in the next decade it is likely that online payments will become the primary payment method.
- Although online payment will continue to be dominated by payment gateway companies like PayPal, banks will partner with them in order to take advantage of their innovation and combine it with the more traditional methods of payment. Banks are likely to offer businesses integrated solutions so they don’t have to keep their online and offline funds separate.
- Businesses will start demanding that their financial interfaces be as simple as the ones the consumers have access to. They need to be able to authorize payments and create e-invoices easily and quickly. The ability to accomplish these tasks on mobile devices and tablets will make businesses more efficient.
- Financial institutions will turn to Big Data to give them an edge over their competitors. Those that evolve with the new technologies and offer powerful analytics and clear visual reports will stay in the game, while other banks won’t survive the changes.
- Banks will also seek to own the entire customer experience and not just the final payment. As non-bank payments become more popular, traditional payments such as checks and credit cards will decline and banks will have to find alternative revenues.
- As customers become more sophisticated, they will expect integrated solutions which combine elements such as choice of selection and price comparisons with easy payment gateways. The challenge facing today’s banks is to take over this process from A-Z and provide a stellar customer journey.
- Convergence of retail and wholesale payments will allow banks to establish in-house gateway programs and eliminate the need for third-party partners.
- Financial institutions wishing to capitalize on integrated solutions will have to focus on customer retention. One method of ensuring consumer loyalty will be through customer support. Back office processes will have to be streamlined and automated in order to provide this service to customers.
The Euro Banking Association recommends that banks begin preparing for these changes before they happen. They should learn about the latest trends and how they will affect financial institutions. Then they should create payment services which are easy to use and address the entire customer journey. Banks should partner with other institutions to build holistic solutions and enter the new phase of online payment fully prepared.