The way we buy and sell is changing rapidly. Just a few years ago, credit cards were seen as groundbreaking. Today, we are exploring various new avenues, giving consumers more options for paying for everything. Let’s examine five key trends reshaping the payment processing solutions landscape.
1. Mobile Payments
Mobile payments are quite convenient, with so many people carrying their smartphones everywhere. You can handle everyday transactions using a device that’s likely in your hand or pocket. Several types of mobile payment options are available.
SMS Payments
Also known as text-to-pay, these are payments sent via text message. In this case, the seller texts the customer a link. The merchant may send the customer to a payment processing page to complete the purchase. An even more streamlined process is letting the customer pay by simply texting back with a response code. In the latter case, customers would need a balance with the merchant or agree to have funds deducted from a bank or credit card.
Mobile Wallets
Digital or mobile wallets let customers make payments from their phones or other devices. Popular examples include Apple Pay and Google Pay. These systems store names, credit card information, and other customer data. Digital wallets are used for various transactions, including the following.
- Everyday payments at stores, restaurants, and other retail businesses.
- Membership and loyalty cards.
- Coupons and promo codes.
- Travel reservations, including plane tickets and hotels.
- Cryptocurrency transactions.
- Driver’s licenses and personal ID. This is a newer use that some states have adopted.
P2P Services
Peer-to-peer (P2P) apps allow individuals to transfer money directly to one another. Venmo, Zelle, Cash App, PayPal, and Apple Cash are some common examples. These applications simplify sending money without logging into a bank or credit card website.
P2P apps are used widely for personal and business payment processing solutions. Some services, like PayPal, are often utilized by businesses and freelancers for invoicing. They also make it easy to send money to friends or family. Before these services emerged, quickly sending money to someone in another city was more complicated, often requiring methods like Western Union money orders. Now, transactions can be completed with just a few taps.
2. Biometrics
To identify individuals, Biometrics uses physical traits, like fingerprints or facial recognition. Although this technology has been around for a while, its application has grown considerably. Police and other law enforcement agencies have long used biometric data to identify criminals. Then, large companies started to adopt this technology. For example, a secured area might require employees to pass through a facial recognition system.
Now, we’re starting to see biometrics used in everyday life. For example, you may already use your fingerprint to unlock your smartphone. Biometric systems can accurately confirm people’s identity to prevent fraud. While thieves may use stolen credit cards, they can’t duplicate the unique physical features of their victims.
3. Social Media Commerce
In some ways, social media commerce has moved slower than anticipated. Merchants spend millions on advertising, of course. A significant gap in the system, though, has long been keeping transactions on-site. Finally, we’re seeing progress as Meta and other companies move forward with more sophisticated payment systems.
Deloitte reports that all Meta Shops retailers must process payments through Facebook and Instagram. They also predict that in-app payments on social media sites will likely be the norm by 2030. There’s an obvious incentive to keep users on-site rather than going to third-party payment processors. Additionally, social media companies can collect consumer data when they process sales. These are benefits long enjoyed by Amazon, which provides one-click ordering while using customer data to recommend more products.
4. Cryptocurrency Payments
Bitcoin and other cryptocurrencies are changing how we think about money. All cryptocurrencies use blockchain technology, which acts as a decentralized record that eliminates the need for traditional banks. Crypto tokens are stored on secure crypto wallets, either online or offline. At first, people saw cryptocurrencies as investments. Now, you can use Bitcoin to pay for many products and services.
Even though more places accept it, cryptocurrency still needs time to become entirely accepted. One big problem is its price changes a lot, which makes it risky for essential payments. Some experts think that as more people use cryptocurrency and rules are made for it, it will become more common for everyday buying and selling.
5. ACH and Wire Transfers
ACH payments involve transactions between banks through the Automated Clearing House (ACH). This system has been around for decades and continues to grow. Most adults in the US use the ACH network to pay for direct deposits, Social Security benefits, IRS payments, and many other transactions. ACH allows for automating regular payments, such as wages and monthly bills, helping people avoid credit card fees.
Wire transfers operate similarly, letting people send money between individuals or institutions. While ACH is usually used for small or recurring payments, wire transfers are more often used for larger transactions such as home or car purchases. One advantage of wire transfers is that they can be sent internationally, while ACH is a US-based network.
Payment Technology Continues to Evolve
Paying for everything from groceries to utility bills looks very different today than it did 10 years ago. The realms of finance, technology, and payment systems are changing fast. Developments such as biometrics, cryptocurrency, mobile apps, and more will continue to spark innovation in how we do business and send money.