The same changes that impact our daily lives influence payments systems and cause them to naturally evolve over time. In 2016, most of these changes showed a tendency to what finance experts call a cashless economy. From politics to technology and the concern for speed and security in transactions, last year had some big shoes to fill in terms of expectations. And it did quite the job.
1. Geopolitical changes – Former monopolistic markets can now surface closer to the open market, enabling merchants to access better and more cost-effective solutions. Such an example is Cyprus and its monopolistic acquirer JCC, owned by all the major banks in the country. It is generally acknowledged by the world’s economists that monopolistic markets fail to sustain productive efficiency, limiting the range of options that local merchants have had available.
2. Cashless payments focus – Faced with an economy so focused on what finance experts predict to be a cash-retreat phenomenon, cashless payments became the subject of most innovation and investments plans in 2016. The great change occurring in the sector at the moment is partly due to the new mega players brining a new sense of confidence through the new opportunities they sought to create throughout the year.
3. The expansion of technology - Technology evolving at a rapid pace, especially in the direction of electronic payments, fueled the growth of alternative methods, such as mobile payments and e-wallets. Recent years have shown a significant shift in what constituted traditional consumer behavior. People now manifest more and more ease in taking their payment experience outside the cash-only comfort zone, which makes alternative payments the IT thing to follow in 2017.
Apple, Google, Amazon, Facebook, to name a few, have shown remarkable interest to take over the online payments market with incredible zest. These B2C retailers and innovators relied on both their customer base and their brand reputation to outline a new fingertip shopping experience. Amazon introduced Pay with Amazon. And the world was happy. E-wallets such as ApplePay and AndroidPay are bringing new meaning to the integration of the mobile experience into convenient cashless payments. Alternative technologies are set to cause shifts in consumer pattern behaviors. And with mobile payments, real time payments, blockchain technology, NFC and APM on the rise, there has never been a better time for gaming merchants to diversify their payment options and gain more market equity.
On the flip side, while the biggest names in technology are determined to challenge the payment experience, some areas remain slow or stagnant. Let’s look for instance at traditional credit card processing, where real usability remains a trick question for most providers. In fact, little has changed in 2016, while most shortcomings have stayed the same: the huge backlog of customer complaints, the lengthy process of onboarding/underwriting, the outdated legacy systems that fail to deliver usability and convenience to the merchant. The big banks and APM providers operate still on robust systems, which most of the times have not even been built for the online acquiring industry, but grandfathered in from the banking sector. Thus, some existing technologies not only look like 1995, but have limited performance and usability as well.
Merchants generally look for 2 things – extend their footprint on the market and capitalize on their marketing investments. There will always be a great focus on customer conversion and retention. A good product needs to be backed up by a very good payments partner that is committed to monetizing as many sales for the merchant as possible. Zooming in to payments, from our experience merchants will invariably look for increased approval ratios and good customer support. Due to this we are witnessing the emergence of best practice in different areas of the world that are using latest technologies when building their solutions, unencumbered by legacy systems.
Understanding what the merchants will look for is understanding what their customers will look for: speed, convenience and when possible, sharing as little private information as possible. Thus, mobile carrier billing, bitcoin and even e-wallets (especially in China and Russia) are making a step forward and have the potential to revolutionize the industry even more as they play into the consumers’ expectations.