In today’s technology-driven world, the evolution of the payments industry is in full swing. And, this evolution is only going to be faster in the future. To adapt to this change, the landscape of merchant services is also changing.
Whether they customer demands, regulatory requirements, or digital innovation, the merchant service providers are putting all efforts to keep themselves updated.
However, the pressure never comes down. Leading companies that provide merchant services must anticipate what lies next in the future. They must adapt and consistently flex in the ever-changing payments industry.
Today, with that in mind, we explore 4 mega-trends that will undoubtedly drive the future of merchant services in 2021.
Trend 1: The Rise of Mobile Payments
Do you know? 23% of the customers will start using digital mobile wallets instead of mobile banking in 2021. And, 64% of the world’s consumer base is already planning to switch to a mobile wallet.
All thanks to open banking and APIs, the use of mobile payments is continuously rising. This is a big opportunity for leading merchant service providers who are looking to deliver a consumer-focused and valuable payment experience to their customers.
Mobile payments come with interactive features such as real-time balance alerts, immediate rewards, and more. Payment processing companies are offering engaging and valuable ways to fulfill a transaction.
There are many reasons behind the traction of mobile payments:
- They are safe and secure.
- Customers can transfer their money from any remote place.
- Mobile payment app allows checking credit/debit card balance.
- It allows seamless transactions without a data breach.
What if the comparison between traditional mobile bank wallets and other independent mobile payment apps is done? Obviously, the traditional mobile bank wallets are behind in the race. Here’s the consumer distribution between leading mobile payment wallet (in percentage):
- Traditional Bank Mobile Wallets – 28 %
- Android Pay, Samsung Pay, and Apple Pay – 49 %
- Merchant Wallets – 39 %
It is quite clear from the above stats that traditional players must come up with new strategies to engage customers to use their mobile payment applications. Leading companies such as Apple, Amazon, and Google are already applying new strategies.
Trend 2: Countless Ways to Accept Payments
A few years ago, there were a very limited amount of options to accept payments from the consumers. Fast forward in today’s world, merchants can now accept payments online, at POS, and more.
Payments are no longer location-bound and can be transferred from any remote location. It evidently points towards a universal acceptance of a variety of payment options by merchants, MSPs, and customers.
People are not only using Venmo, PayPal, Square, and Stripe for making payments but countless other ways to make payments. On the other hand, merchant service providers provide safe and reliable payment solutions such as:
- Contactless Payments
- Mobile Payments
- Credit/Debit Card Terminals
- eCommerce
- Virtual Terminals
- Point-of-Sales System (POS)
- Payment Gateways
Whether the business is big or small – all business sizes are using a variety of payment solutions. All you need is internet connectivity and payment terminals.
Technology and innovation will continue to develop. And, with that, new payments will also emerge in the coming future. As a result, all these new payment methods will be universally accepted in the future.
Trend 3: The Revolution of Rewards
The current scenario of the payments industry is that the customers are willing to change their credit card companies to get reward offers. 48 % of customers switch their payment cards to get more valuable reward purchases.
Reward cards are older. Consumers have been spending on them since the last global recession hit. In 2020, consumers won over $15 billion worth of rewards in the form of points, miles, and cash backs.
In simple words, consumers are only willing to purchase goods or services when there is a chance for them to win rewards. In search of rewards, they even switch their cards for big bonuses and cash backs.
Customers are not only able to win rewards through online purchasing, but also, through the point of sales purchase. One such example is the Smart Tap technology introduced by Google. It makes possible for the customer to make a payment, win the loyalty card, and redeem it at the same time.
Well, competition is already intense, and it will become fierce in the future. Merchant service providers have an incredible opportunity to deliver a whole new level of reward offers. Innovation is what will pave way for the revolution of payment rewards. And, to put the cherry on the cake, digital ecosystems will broaden the reach and relevancy of reward offers.
The rewards system of the future will go beyond payments. It will focus more on providing a seamless payment experience to the customers. With reward offers, payment processing companies and card associations will look to expand their consumer base.
Trend 4: Real-Time Payment Transaction Will Change the Game
Real-Time Payment or RTP is the new buzzword among the payment industry. It is gaining popularity because of its ability to provide secure, convenient, and speedy payment transactions. Today, consumers around the globe are widely adorning and implementing the RTP.
RTP makes sure that the beneficiaries immediately get the funds after completion of the transaction. It works in the principles and requirements set by Consumer Financial Protection Bureau (CFPB). These principles and requirements are necessary to fulfill faster payments.
Here are some of the innovative features of RTP:
- It offers real-time payment notifications to the customers during each transaction. It includes payment invoices, confirmation messages, payment requests, account statements, and more.
- RTP maintains the security and transparency of the payment transactions between the customers and merchants.
- It has fast and smart in-built features such as seamless operations in the background.
- RTP supports all types of financial services such as in-app shopping, utility payments, cash management, P2P payments, and split bills.
- It offers bill pay, e-invoicing, insurance services, claim settlement, and more.
Final Thoughts
For the past few years, the customers have been demanding a secure, fast, feasible, and reliable payment ecosystem. And 2021 is no different in that case.
The leading merchant services organizations have to focus on new strategies for high customer engagement.
2021 is going to be a promising year in terms of the payment ecosystem. To keep up with the rising trends, businesses must act fast by offering agile, secure, seamless, and global payment systems.
