With digital transformation, the payment ecosystem is undergoing rapid change

Recent technological innovations are increasingly altering the financial ecosystem. It is enabling consumers to shop using multiple payment options. Contactless payments are one of the well-received payment options that witnessed significant adoption during the COVID-19 crisis. While the payments industry is the crucial driving factor of businesses and consumers' financial facet, a growing number of companies like Google, Apple, Facebook, Amazon, and others, are already exploring the payment market with trademarked solutions, intending to capitalize on their vast user bases.

Now as we are heading towards 2021, digital payment is expected to continue to grow owing to the rise in the number and efficiency of alternative payment methods.

Here’s a look at the top 5 payment trends redefining the payment scenario in 2021 and beyond.

Mobile-Based Payments

Thanks to fast, secure and convenient capabilities, mobile payments are an increasingly popular way to accept in-person payments. The development of Apple Pay and other NFC payments is making this payment method is extremely valuable for businesses. Mobile payments are enabled by near field communication (NFC). It is expected that the global mobile-based payment volume will reach US$6 trillion by 2024.

Growth of Payments-as-a-Service

Payments-as-a-Service (PaaS) is a cost-effective payment method for conventional payment infrastructure and operations. It performs on a cloud-based solution where a third-party service provides software and hardware tools, covers servers, storage, and networking, and developers can then develop their customized applications on top of it. According to a report, the global payment as a service market is forecast to grow at a CAGR of 23.9 percent from US$5.7 billion in 2019 to US$16.7 billion by 2024.

Use of Distributed Ledger Technology

Distributed ledger technology, well known as the blockchain, has grasped much attention in the financial sector, especially for secure payments, clearing and settlement. As per the IDC, the financial sector was anticipated to invest over €1.4 billion in blockchain solutions in 2020. DLT has been viewed as a potential platform for the next generation of payment systems, enhancing the integration and the reconciliation of settlement accounts and their ledgers.

Data-Driven Payments

Leveraging customer data allows financial institutes to deliver germane, targeted offers to customers as they shop. Most banking services providers already have the means to communicate directly with customers, in the form of a mobile banking app or email. Most of the recent innovation in payments has come from new market entrants, creating a wave of new offerings by utilizing mobile platforms, social media, and location-based technology. Financial institutes can capture this opportunity and can access and leverage the wealth of proprietary transaction data that they control to generate a clear marketing ROI for their merchant customers.

Digital ID

With growing contactless payment during the pandemic, malicious actors have gained massive opportunities to access customers' data. This has led to a real need for the industry to cope with enhanced security. Digital ID is imperative in facilitating payments through seamless authentication and authorization. Embedding digital ID into payment systems is crucial as customers these days want fewer touchpoints. Savvy retailers can use digital ID solutions to make strategic decisions based on consumer data, enabling them to compare, contrast, and combine purchasing behaviors.