Throughout 2017, the payments industry has undergone significant growth and evolution.
Nearly every week, another vendor or merchant seems to offer a new digital payment alternative, from Apple Pay’s peer-to-peer payments to Target’s mobile wallet. With so much innovation and change happening in the industry, 2018 is sure to be a turning point in the digital payments revolution.
From artificial intelligence to payment data streams, such noteworthy payments trends have emerged in 2017 and will continue to develop over the next year:
Payments data streams will become an asset for merchants to drive customer loyalty.
Today’s consumer expects a customized, curated experience from brands and retailers. As digital payment methods diversify, merchants have access to more data that can tell them when, where and how shoppers are paying for goods and services than ever before. In 2018, merchants will be adding even more data streams to their arsenal–this time from payments providers.
By using more diverse data streams, merchants will be able to create highly personalized experiences, which will help build trust and loyalty among consumers. This year, it was reported that loyalty program growth had slowed to 15 per cent from 26 per cent, sending a clear message to merchants that consumers need more individualized offers to guarantee their allegiance to a specific brand. With more payments data from various channels, retailers will be able to leverage a unified view of transactions and analytics from payments platforms and boost ailing loyalty programs.
Millennials’ need for convenience will drive digital wallet adoption.
Consumers have always gravitated toward convenience. Sixty years ago, it was convenient when milk was dropped at the front door. That changed when the majority of consumers purchased cars and could pick it up when they wanted, where they wanted. Now, technology advances have once again made it faster and more convenient to have items dropped at our front doors – and we can order and pay for them digitally. This new shopping culture will bring digital wallets to the forefront in 2018 as they help merchants meet the needs of a generation that expects ease and immediacy when paying for products that require consistent, repetitive refills.
Digital payments are an integral piece of millennials’ everyday shopping habits and will only continue to become more crucial over the next year, as more services convert to digital platforms. In fact, Paysafe’s Lost in Transaction research study found that more than 85 per cent of 18 to 34-year olds expect to use digital wallets in the next two years. While a completely cashless society may still be a few years out, merchants in 2018 need to recognize consumers’ demands for convenience and allow them to pay through whichever method they prefer.
Security measures will become closely coupled with technologies of convenience.
While convenience is a key factor driving adoption of digital payments, it’s also important to note the factors that will keep consumers using these technologies and help build trust between the merchant and customer throughout the payments process. For example, the implementation of Artificial Intelligence (AI) and biometric verifications in payments technology make the payment experience more convenient, but also creating new security concerns for consumers. The same Lost in Transaction report found that, in 2017, more than 60 per cent of consumers have concerns about security when it comes to biometrics; and, because of the growth of data collection, more sophisticated consumers are turning to bigger brands for their transactions to give themselves peace of mind.
As AI and bio-verification become core components of the customer experience and payments process, security becomes an even more critical component of the payments value chain. In 2018, these consumer worries will push merchants to add new security measures to their payment processes, even if that means reducing efficiency or adding an extra step to protect consumers against fraud. With 58 per cent of consumers willing to partake in any necessary security measure to eradicate fraud, businesses will find new, creative ways to balance technology innovations and consumer trust in 2018.
Putting predictions into action.
To achieve success and maintain a valuable, loyal customer base, businesses need to pay attention to consumers’ payments preferences, demands for convenience, and concerns about security. The merchants that are leading the way in the digital payments revolution are those who are already listening to consumers and are focused on offering a personalized, efficient, trustworthy customer experience.
In 2018, it’s time for merchants to start thinking one step ahead of the customer and take action, rather than retroactively responding to customer needs. By analyzing customer data from the past year to identify trends and new business opportunities, merchants can make improvements to their payments processes, and other workflows, to attract new customers and build loyalty among current customers. The payments landscape is changing rapidly and if businesses don’t act fast and make use of resources like additional data streams that they have at their fingertips, they will do so at the risk of being left behind by their competitors.
Daniel Kornitzer is the Chief Product Officer at Paysafe.