Businesses are continuously trying to find new ways to streamline and secure payments to maintain customers' trust and loyalty. Unfortunately, traditional processing methods often fall victim to security threats.
By implementing the newest payment technology, businesses can protect sensitive shopper data to complete transactions effectively, accept various payment methods, and boost sales.
Within the last decade, several new payment technologies have been introduced to streamline transactions in different sales channels. Among the different payment processing options, the following tools are projected to continue into 2021.
1. Biometric Authentication
Biometric authentication is a verification process that uses a customer's biological characteristics to authorize a purchase. The most common methods include fingerprint scanners, facial recognition, and eye recognition.
This method prompts a screening from the customer in order to finalize a digital transaction, such as online shopping or accessing the virtual wallet. By using the consumers' unique characteristics, biometric authentication improves payment security.
The popularity of biometric authentication increased exponentially with the rise of identity theft and fraud, and there are no signs of slowing down. According to studies, there will be more than 18 billion biometric transactions by 2021.
2. Generation Z
Generation Z, also known as Gen Z, consists of people born between 1996-2012. Gen Z is known as the generation of the digital world because they have not lived without technology.
Trends project that Gen Z will soon surpass the millennial population, creating a significant global shift. This shift would mean that the majority of people living would be tech-savvy and will have a dependency on automated technologies. This creates a strong demand for digital payment systems and services.
3. Security Codes
Traditionally, cardholders would make a purchase by sliding their credit or debit card in the payment terminal, which read the string of digits and recognized the bank or credit account. Now, many institutions utilize Europay, Mastercard, Visa (EMV) technology, also known as the chip card.
EMV technology uses a unique code for every transaction to enhance security and prevent account hacking. Many banks and financial institutions have since switched from the traditional magstripe to EMV cards.
4. Mobile Point-of-Sale
Mobile point-of-sale (mPOS) enables retailers to extend their sales channels beyond traditional brick-and-mortar buildings. mPOS allow businesses to complete transactions on-the-go via portable devices, such as tablets, laptops, and smartphones. This means retailers can interact with customers at trade shows and outside events.
Even traditional retailers can use mPOS systems to process transactions on the sales floor, so customers do not need to gather at a centralized checkout location. This promotes impulse buys, as salespeople are ready to complete digital payments on the spot.
More and more businesses are incorporating mPOS technology into their services. In fact, Business Insider projects that there will be approximately 27.7 million operating mPOS devices by 2021.
5. Smart Speaker Payments
Smart speakers have unique features that allow users to place online orders via voice command. While initially, these home assistants were used to update users on traffic, weather, and other happenings, large manufacturers capitalized on their convenience.
Since then, Amazon, Google, and Apple have utilized smart speakers to allow consumers to easily place orders. Studies show that 35% of home assistant users buy a range of products, such as home care items, groceries, and clothing. Additionally, 28% of people also use smart speakers to transfer money and make direct deposits.
Providers continue to invest in their smart speaker technology, and Business Insider estimates there will be 77.9 million home assistant users by 2022.
6. Artificial Intelligence and Machine Learning
The most prominent concern that customers have when making a payment is security. Therefore, businesses need to invest in the newest, top-grade security to keep the trust of their patrons.
Companies that handle large amounts of sensitive information use artificial intelligence (AI) and machine learning. These tools actively monitor real-time transactions to detect suspicious and fraudulent activity. With each transaction, the software improves its detection skills.
Many consumers have interacted with AI without even realizing it. Some banks will send account holders text messages to confirm odd purchases before finalizing the transaction. These alerts are sent by machine-learning software that flags suspected fraudulent activity based on the transaction type, amount, or location.
7. Contactless Payments
Contactless payments enable customers to simply wave their card or smartphone across the terminal rather than inserting into the card reader. This method streamlines the transaction process, reducing wait times in the checkout line. It is also more secure than PIN technology as it encrypts the financial data before transferal.
With near-field communication (NFC), contactless methods transfer payment information to the point-of-sale (POS) system instantaneously. While this method is commonly seen at grocery stores, it is now spreading to other industries, such as public transportation, banks, and financial institutions.
8. Mobile Wallets
Mobile wallets allow shoppers to store their credit and debit card information in their smartphones to streamline online and in-store transactions. People can also use mobile wallets to transfer and receive money from other users.
Studies show that nearly 2.1 billion consumers utilized a digital wallet in 2019, and the numbers continue to rise. Large companies, including Apple, Google, and Samsung, have established their own mobile wallets to spread brand awareness and enable customers to make mobile payments.