7 Innovative Payment Technologies You Should See

 7 Innovative Payment Technologies You Should See

For decades, technology has been drastically altering the world in which we live. But up until lately, there hasn't been the same need to adapt and evolve, even in the fintech industry, which has seen a lot of innovation and digitization.

Prior to this, point-of-sale systems saw little change due to advancements in banking systems, and small companies just needed to refresh their hardware and go on.

It seems like there are always new currencies coming out these days. Retailers that were lagging behind were compelled by the epidemic to adopt contactless payments. Additionally, in an increasingly cutthroat industry, e-commerce companies have forced to broaden the range of payment options they provide in order to attract new clients.

It seems that the onus has moved from just contemplating an update to being well-versed in financial technology and keeping a careful eye on modifications in customer transaction patterns.

It's a lot to stay on top of. However, it's important to keep an eye out to make sure you're staying current where you should be and to avoid getting too sucked into hailed advancements that may not be essential at this time.

We've put together a comprehensive post on the newest payment advances and technologies you need to know in order to help you sort through the clutter.

Briefly stated

Buy now, pay later (BNPL), cryptocurrency and blockchain, central bank digital currencies (CBDCs), and contactless payments are a few of the most well-liked payment advances.

Peer-to-peer, cross-border, and biometric payments are also available.

Picking which technologies to embrace and use requires knowing your clients' demands and catering to their preferences.

Purchase Now, Pay Later (BNPL): Purchase now, pay later payment options have been available for a while. With private-label Visa or MasterCard credit cards that allowed consumers to buy products on credit and pay them back within a certain payment period, large department shops were the forerunners in this field.

Naturally, most small merchants lacked the resources to create credit cards under their own brands. The major players were the only ones allowed access to the BNPL for many years. However, things have changed.

Affirm, a financial services company, debuted a novel kind of BNPL solution in 2012. Afterpay dominated that market two years later, and there are now a number of others, such Zip Pay and Klarna.

The way BNPL operates in the payment network is by using an intermediary. Consider Afterpay as an example. It functions as a mediator between the consumer and the merchant, handling the customer's payment arrangements and handling the store's payment.

Customers may make flexible, interest-free payments using BNPL services. Additionally, retailers may guarantee sales even if clients do not have the money on hand at that particular moment.

The epidemic accelerated the need for BNPL, which was probably not need until 2020. Consumers started to pay closer attention to what and when they were spending. It goes without saying that it grew increasingly difficult to pay for large goods in one installment as more individuals found themselves living paycheck to paycheck. Because consumers don't have to accrue large credit card debt, BNPL makes it easier for them to buy things they would not have been able to otherwise.

- Menda Sims, Head of Stax Payments

Is BNPL temporary or permanent?

It is official that BNPL is now widely used. Customers may already get it in various locations. If it's not available, clients could shop elsewhere.

blockchain and cryptocurrency

One of the most widely reported financial stories in recent years is the ascent of Bitcoin and other cryptocurrencies. These kinds of digital payments are one area that businesses are actively investigating.

Blockchain technology and Bitcoin, which were created in 2008, were put on hold for a while. Money transfers were complicated, and most people could hardly figure out how to get it. However, things have changed.

For years, fintech organizations have been using this technology to develop new initiatives to facilitate merchant adoption. The goal of all the payment providers, notwithstanding their differences, is to enable businesses to accept bitcoin payments for goods and services. usually via open banking and e-commerce connection.

The benefit for retailers is having an additional avenue to draw in new customers. Supporters of cryptocurrencies aggressively look for businesses that take them. As the competition is only getting started, those that are fast to market with these solutions may capitalize on the trend to capture that audience.

The companies who get there early with the proper sort of fintech startups and banks will flourish in the long run since cryptocurrency and NFTs are only going to increase. In my opinion, more use cases for abandoning cryptocurrency as a payment method will emerge in 2022. Many firms are still searching for the proper justifications and use cases.

Crypto and blockchain: are they for today or the future?

Although blockchain technology and cryptocurrency have officially entered the mainstream, it could take some time before payment methods are extensively used. While early involvement will provide you a competitive edge, it will take time for this to become a must for businesses.

Cryptocurrencies issued by central banks (CBDCs)

Digital cash is known as central bank digital currency, or CBDC. A digital token would stand in for coins or paper money of the same amount. The Federal Reserve Bank of New York and other central banks around the globe have been attempting to make use of the technology while preserving the central banking system as cryptocurrency has gained popularity.

CBDCs are not as well-known as Bitcoin and blockchain-based payment methods. The majority of nations, the US included, are still developing and may take some time to reach full development.

Do CBDCs apply today or in the future?

CBDCs should wait. Stablecoins are a kind of digital money that traders may find in the cryptocurrency suite supported by the US dollar.

contactless transaction

Though contactless payments became the most common payment option, the epidemic boosted several sectors of fintech. Despite being in use for a long time, both customers and retailers treated this payment method with passivity. It's okay if it's there; if not, everything is well.

It is now necessary for hassle-free purchasing. For those who aren't currently using it, a hardware upgrade is sadly necessary.

Contactless payments, which make use of Near-Field Communication (NFC) technology, let customers pay simply by putting their phone, wearable, or card up to a payment terminal. There's no need to search for cash, and a PIN is not necessary.

It made it possible for customers and businesses to do in-person transactions safely and without the danger of spreading germs during the epidemic.

Should we accept contactless payments now or later?

For now at least, contactless payments are a reality. The epidemic has altered how customers engage with companies, and even after the pandemic is finished, they will still demand contactless, cashless payment choices.

biometric cash

When a consumer touches their fingerprint to their phone to authenticate their identity and access their mobile digital wallet, many currently use biometric payments. There is no need for retailers to carry any new goods while using this kind of biometric payment method. The client's smartphone contains built-in mobile payment capability. This kind of transaction may be processed by retailers that have near-field communication (NFC) readers at the register—the same devices that allow contactless payments.

It does, however, appear in a few fresh and far more intriguing forms.

A customer's physical traits, such as a fingerprint or facial scan, are used by biometrics to confirm their identity and approve payments. Although it seems like science fiction, there are a lot of different applications for face scanning payments.

More than 200 metro stations in Russia have implemented face recognition payment systems so that people may travel easily and have their payments handled automatically. Nearer to home, the first face recognition payment system for restaurants and shops was unveiled in the United States in 2020 by PopID, a business located in Los Angeles. After opening an account and adding money, customers go to the register to be authenticated. After the clerk confirms their identity, the payment procedure proceeds automatically and doesn't need interaction.

Do biometric payments apply today or in the future?

Fingerprint-protected mobile wallets, the first kind of biometric payments we discussed, are undoubtedly still in use today. They provide a quick, easy, and contactless payment option that customers have already embraced in large numbers. Hold on tight when it comes to face recognition technology. It remains to be seen how far he will go.

international payment

Any payments made from one nation to another are considered cross-border payments. They are often generated using many currencies and may be made by companies, governments, or even private people. For those who have relatives living over the border and need help with housing or medical care, this is a big matter.

Regretfully, fintech businesses have created technologies that make these payments quicker, less costly, and easier than they were in the past.

This is made feasible by a few solutions.

Instead of charging hidden costs, online banks like Wise utilize the actual exchange rate and have minimal, clear fees. Customers benefit greatly from this since banks often charge three to five percent for overseas transfers. Assume for the moment that a client or customer in the UK sends you a B2B payment. With Wise, you can take GBP payments from customers at no extra cost to you. The cost is far less than bank conversion fees and is only assessed when the currency is converted. Although this is fantastic for small firms, as you expand, it can become really pricey.

Blockchain technology is another kind of remedy. There are no costs associated with making cross-border cryptocurrency payments since intermediaries like banking institutions—which impose fees for transaction verification and approval—are eliminated. The drawback is that because all of this is done using cryptocurrencies, individuals who are not acquainted with the technology will need to climb a steep learning curve in order to participate.

Do cross-border payments have a future?

It all depends on whether or not cross-border payments are necessary for your company. If so, it would be wise to hunt for a less expensive option than conventional banks.

reciprocal payments

Peer-to-peer payments are those that are made between two people as opposed to a company or organization. Recent years have seen a huge increase in the use of these solutions, which make it simple for friends and family to transfer money to one another.

In the past, you had to get your friend's bank account information and arrange a fresh payment whenever you went out to dinner and owing them $20. It can then take a few days for the transaction to get to them. Users may connect their debit card or bank account to services like Venmo or PayPal and make real-time payments.

Although this isn't a viable option for the majority of well-established companies, it may work wonders for startups or tiny enterprises. Peer-to-peer networks, which do not need new technology, may greatly simplify the process of being paid whether you're a lone proprietor or a seller of products on an online marketplace.

Peer-to-peer payments: is it today or in the future?

For the time being, peer-to-peer payments are unquestionably the best option for single proprietors and small enterprises. This idea isn't going to be helpful for bigger businesses with lots of staff.

In brief

The payments industry is undergoing fast change, and new products are constantly being introduced. You'll generally be able to tell when it's time to adopt. It's time to start thinking about if these options are essential to the customer experience when your clients inquire whether you take crypto, pay later, or now.

By now, contactless payments ought to be accepted by everybody. Right now, CBDCs aren't really worth taking into account. Everything else is contingent upon your operation's magnitude.

Peer-to-peer networks and fee-free online banking are options for solo proprietors and small enterprises. Now is the moment for both big and small enterprises to interact with blockchain. It really depends on the demands of your particular company.

Keep an eye on the Stacks blog, where we often provide all the information you need to know about the payments industry, for more on the most recent developments in payments.