Can you remember the last time you had bills in your wallet? Coins rattling in your car’s drink holder? Paper coupons in your purse? One thing’s certain about the future of payments – they’re increasingly cashless. In fact, research shows that 2020 was the first year that digital payments finally overtook cash for in-store payments. eCommerce sales exploded over the past few years and are expected to reach $5.4 trillion USD in 2022.
The switchover to digital payment methods means buying is getting faster, easier and more secure – both online and in-store. Businesses in Canada and around the world are introducing portable debit and credit card machines, mobile payment terminals and POS (Point of Sale) systems and expanding their online payment offerings to bring ease and convenience to shopping experiences and boost their bottom lines. We’ve been keeping our eye on the trends – here’s what’s causing the most excitement.
Online shopping has grown ever popular over the course of the pandemic and the number of online transactions happening every day continues to soar. The advantage of electronic payments is that money moves digitally from one account to another – seamlessly and instantly. Businesses can expect exponential growth in online payments in 2022 and beyond as more customers shift from in-store shopping to online purchasing. Customers will still visit brick-and-mortar shops – but many like the added flexibility of making that final purchasing decision from the office, the car, or from the comfort of their own home.
And online transactions aren’t on the rise just for consumer goods, but for all kinds of transactions, including bank transfers, bill payments and more, paid digitally by eChecks. Expect online payments to bypass legacy payment methods and become the new normal for all kinds of transactions.
Mobile Payments and QR Codes
Contactless payments became the norm during the pandemic for public health reasons, but consumers love the speed and convenience of the simple scan and tap of their mobile devices at the point of sale. Building on that popularity, expect mobile and QR Code payments to become more widespread in 2022.
How does it work? Customers set up one (or several) payment methods – credit card, debit card or other account – in the digital wallets on their smartphones or smartwatches. Then they hold their phones near a terminal or scan QR codes in-store for seamless payment. Shoppers can also download store-specific apps to their eWallets and use those to select payment methods, as well as apply coupons and collect loyalty rewards, directly from their smartphones. Mobile payments are quick and secure, making it simple to shop and pay for products and services – from the restaurant booth, in a taxi, or anywhere in the store. Better yet, there’s no need to rummage through those cards – and card numbers and purchases stay private.
Buy Now Pay Later
You’re used to the concept of “Buy Now Pay Later” from credit cards, but a similar option is showing up at the point of sale. Customers are seeing more and more offers from payment services or individual retailers to pay for the item over a number of fixed payments, often with 0% interest. Buy Now Pay Later, or BNPL, lets shoppers get products and services today and stretch the expenditure over a longer period. These point-of-sale installment loans are attractive for consumers who have an easy time managing their finances, while those with budgeting challenges could have repayment issues. Online shoppers should expect to see more BNPL offers pop up this year – and should check the terms, as every offer is different.
Biometric Payment Verification
Alongside the rise of online shopping is concern about identity and security. Businesses and consumers want to know that the payer is who they say they are. This explains the excitement around biometric verification as a payment authentication option. A technology that used to be exclusive to airports and police stations is being recognized for its beneficial and consumer-friendly applications. When customers set up biometric verification with a fingerprint or facial scan, a payment transaction can require a match in order to go through. As part of two-factor payment authentication, biometric verified payments reduce the risk of fraud. We expect to the see more biometrics verification opportunities in 2022, especially for luxury and designer goods, electronics and gemstones and gold.
Everyone’s talking about blockchain technology – the decentralized and encrypted ledger technology that records, stores, secures and validates cryptocurrency exchanges and NFTs purchases and trades. Blockchain is making waves in the payment technology sphere as well, the advantage being that the technology can secure real-time payment without involving third party intermediaries. Blockchains are a boon to for international and domestic transfers, since they dramatically reduce costs and payment timeframes. Organizations appreciate the enhanced security and transparency of the distributed system, which structures data in connected chains to prevent tampering. Look for blockchain-supported fintech companies and banks to offer more options supporting both crypto and fiat currency transactions.
Excited yet? With so many new, easy and secure payment options already here and on the horizon, businesses are rushing to keep up with customer expectations. No matter your payment preference, the future of payments looks to be quick, easy, reliable and hassle-free.