The 2020 global COVID-19 pandemic made the world move online, creating a momentous year in digital payment. It’s evident that the global pandemic presented the most significant challenge for cash transactions. This resulted in a drastic change from cash payments to contactless payments, and payment methods overall.
Although the pandemic contributed to the current trends in payments, it only accelerated what had been already established. Over the past decade, many people have shifted to cashless payments and have begun to appreciate contactless payment options amidst the pandemic. The trend is expected to continue throughout 2021, with the following trends expected to shape the payment methods.
1. Contactless Payments Methods are Expected to Grow
As the world sought to implement the hygiene requirements to curb the spread of COVID-19 in 2020, there was a massive shift in contactless payments and digital wallets. As many consumers are increasingly concerned with their health, contactless payment is set to gain momentum throughout 2021. Moreover, these payments, such as swipe payment, have proven reliable and flexible, especially in emerging markets.
Existing cashless payments such as swipe payment, QR codes, and EMV chip cards are expected to record an increased use. According to Visa, 75% of in-store payments are now contactless. With QR codes, consumers can integrate their favorite digital wallets into one application. Also, with EMV chip cards, users will be protected against fraud by providing a PIN to authorize transactions.
2. Voice-Activated Payments Methods Will Accelerate
Although Artificial Intelligence has been witnessed in other aspects of life, its application in payments has begun to gain momentum. In 2021, it is expected that voice-activated payments could be used to confirm the transaction in other applications, such as food delivery. Currently, some digital banking applications and merchant service review allow users to give an instruction regarding a transaction and initiate invoice payments using their voice.
Many merchants have begun to integrate their purchasing models that are activated by voice. This method is set to accelerate throughout 2021 since it’s secure, flexible, and avoids cash payments.
3. Dominance in Mobile Wallet
Statistics indicate that more than 2.1 billion people use mobile wallets, and the number is expected to grow in 2021. Mobile wallets enable users to send and receive money to other users with similar applications and save money inside the wallet. Also, a mobile wallet allows users to pay for goods easily and securely.
With the increase in the number of online consumers and merchant service review, mobile wallets are set to accelerate. Thus, some applications have begun to integrate different digital wallets into one application. Hence, users don’t need to download every individual application to make payments with different wallets.
4. Biometric Authentication
Due to the rise of identity theft and fraud in payment, biometric identification is set to gain momentum in 2021 to increase payment security. Biometric authentication is a verification method that uses the biological and structural characteristics of a person, such as facial recognition, fingerprint, heartbeat analysis, iris recognition, and vein mapping.
Biometric security has proven its significance in other industries. The verification method is set to accelerate its use in 2021, with approximately 2.5 million payment cards issued in 2021.
Biometric authentication is set to change the payment methods due to its accuracy, efficiency, and security under one package. Moreover, it’s a highly secured payment option since it uses an individual’s unique biological characteristics.
5. Payment Methods Will Adopt Top-Grade Security Powered by AI
When it comes to cashless payment methods, security is the primary concern for many consumers. Therefore, payment technologies will adapt top-grade security, primarily due to the growth of online shopping. Banks will adopt AI to detect possible threats within seconds. Users will receive real-time responses from their banks asking them to confirm transactions. This will help in reducing identity theft and fraudulent activities.
2021 will see payment methods transitioning from cashless to digital payment methods. As a result, many trends regarding security and authentication will be witnessed. Also, trends in the integration of different payment methods into one platform will be evident. Talk to one of our experts to learn more about updating your processing system to modern times.
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Guest Written By: Lindsey Patterson