Digital Transformation and Card Payments

As advancing tech is released, consumer demand often shifts, and this is why innovation when it comes to payments is so critical. During the COVID-19 Pandemic, tap or scan-to-pay solutions became incredibly popular, and have continued to grow. Physical cash is slowly but surely becoming a ghost of the past. As it stands, contactless payments account for the large majority of payments.

Changes in consumer demand don’t go unnoticed, and FinTechs need to see it as sensible to acknowledge these changes in order to evolve as their consumers' needs evolve. Banks and payment processes are pushing to adapt and modernise legacy payment technology, through digital transformation. Some of these new payment technologies include:

Biometric Payments

The need for physical bank cards is being called into question. Do we really need physical bank cards to transact when the world is turning digital? Various companies and institutions are experimenting with biometrics-based payments. To facilitate these types of payments, customers would need to link their credit card details to fingerprints to create a bespoke biometric signature. This can be used to pay for goods and services. Customers could then pay in a store by holding their finger or palm over a biometric device.

Embedded Payments

Embedded payments enable consumers to skip traditional checkout processes and simply pay with a single click of a button. These payment options are embedded within non-payment apps or websites and allow non-banks to accept payments. With embedded payments, companies are essentially becoming their own payment facilitators. This can be done by incorporating payments directly into their own products rather than having to rely on third-party integrations to allow their customers to make payments. A recent report predicts that 74% of digital consumer payments globally will be conducted via platforms owned by non-financial institutions by 2030.

Blockchain and Crypto Payments

The cross-border payment industry was notoriously slow and expensive. Cryptocurrencies and blockchain technology enables low-cost, near instant cross-border payments, eliminating expensive and outdated legacy systems. There are various fintech start-ups enabling their customers to send and receive low-cost payments without even the need for a bank account.

There are various banks, including Shinhan Bank in Korea and Standard Bank in South Africa, who are testing the use of stablecoins for cross-border payments. While still under Proof of Concept, the banks essentially issue stablecoins pegged to their national currencies, enabling users to purchase stablecoins for various cross-border payments with users of other banks in different countries. Because these payments are processed using blockchain technology, transactions are low-cost and near-instant.

“While there are still many technological and regulatory hurdles to cross, we predict that cryptocurrencies will play a significant role in the future of payment systems,” says Traderoot CEO, Jan Ludik.

FinTechs need to understand that the payment industry is constantly evolving, and that we are working towards building better payment solutions. In order to explore or build payment solutions outside of the traditional payment ecosystem, a Fintech company with experience must be able to assist a business in adapting to the changing industry.