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The technologies paving the way to a more flexible future of payments

The technologies paving the way to a more flexible future of payments 3

The technologies paving the way to a more flexible future of payments 4

By Paul Stoddart, President – New Payment Platforms, Mastercard


Over the past five years, there’s been a growing appetite for digital payments among the world’s consumers. People are increasingly choosing to pay with contactless methods over cash and mobile payments have spiked in popularity also.

The pandemic has supercharged this trend. Repeated lockdowns and health concerns have further accelerated the shift to digital, compressing adoption rates for digital solutions, such as contactless payments from years into a matter of months.

There’s been a considerable increase in people choosing to use contactless card or mobile payments when they buy groceries and other essential items in store. Between the first quarter of 2020 and the same period in 2021, for example, more than 100 markets saw contactless as a share of total in-person transactions grow by at least 50%.

Supporting an intuitive choice

I find it fascinating to look at payments from a behavioural perspective. Today people pay in different ways depending on the use case. According to Mastercard’s 2021 New Payments Index, 84% of people expect to make purchases how, and when, they want, with 77% saying their preferred payment method changes based on the particular situation.

When shopping in-store, they may choose a contactless solution so they can be in and out as quickly as possible, but when shopping online, they’re often willing to store their payment credentials with a trusted online merchant to make checking out faster and more convenient. When paying bills, people value control and the convenience of a digital aggregation service that presents all their bills in one place.

Ultimately, everybody wants and benefits from choice. Choice provides people with flexibility and control over their finances. But too much choice can be paralysing for some. Think about when you go to a restaurant: if the menu is too big and everything looks delicious, it takes you forever to decide. And you’re always left wondering if you made the wrong choice.

People need to be informed and enabled to make the best and smartest choice in any given situation. What’s best for them now might not be best tomorrow — optionality is essential. Luckily, emerging technologies are making payments more intuitive. These technologies enable and enhance one another, providing consumers with full control and visibility to inform the right choice.

Artificial intelligence (AI) is capable of assessing masses of information, such as a person’s transaction history or financial situation, faster and more accurately than a human. It can then use this information to suggest a preferred payment option. The technology and connectivity that enable the Internet of Things (IoT) can make payments invisible, such as a smart fridge that recognises a person is out of milk and places an order on their behalf.

Then there’s voice and other types of biometrics, which aid faster, more secure authentication and can initiate payments. Natural language processing via voice, or using chatbots, is allowing people to pay using a mobile device, or no device at all. Developments in real-time payments, meanwhile, are providing people with instant access to their funds and enable just-in-time payments, such as payment on delivery.

Many of these technological developments are fed by the growing global phenomenon of open banking, which empowers consumers to use their own data for their own benefit. In Europe and other countries, such as India and the US, open banking payment initiation services are underpinning more seamless payments, such as being able to split the bill with a friend from within a booking or chat app.

Picking out the frontrunners  

So what technologies are set to lead the way in shaping a more flexible future payments landscape? Which technologies will be most adopted by consumers as the use of cash continues to decline?

There’s certainly a healthy appetite for new payment methods amongst the world’s consumers and businesses. In our New Payments Index, 93% of respondents said they were likely to consider using at least one emerging payment type over the next year. The frontrunners include digital currencies, biometrics, and QR codes.

Cryptocurrencies are gaining ground. Four in 10 people across North America, Latin America and the Caribbean, the Middle East and Africa, and Asia Pacific say they plan to use a cryptocurrency in the next 12 months. Millennials globally are especially engaged, with more than half (67%) more open to using cryptocurrency than they were a year ago. While interest in cryptocurrency – especially floating digital currencies such as Bitcoin – is high, work is still required to ensure consumer protection and regulatory compliance.

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