Latest Trends in Payment Processing
To remain competitive in an evolving landscape, businesses everywhere, regardless of scale or industry, are accepting the reality that they must be agile enough to adopt several payment processing trends. The more options you have when it comes to your ongoing sources of revenue, the more fluid your cash flow is, and the greater chances of more revenues coming your way.
Understanding payment industry trends 101, though, is almost inseparable from understanding your customer base. Some markets, for example, may prefer one digital payment platform more than others. The younger and more tech-savvy buyers would rather transact through their digital devices rather than visit a brick-and-mortar store. Then there are cutting-edge technologies that deliver quicker and more secure services, while providing each customer with a more personalized user experience. Neglecting or ignoring these solutions or apps risks falling behind the latest development trends or, worse, falling short of customers’ expectations.
The Business Insider’s overview of the payment processing landscape can also alert you regarding which technologies and solutions it might be wise for you to invest in. It also can give you a heads-up on which popular methodologies of today might go the way of the flip-phone by tomorrow. For example, if a bulk of your customers still prefers to pay personally in your store, then you still remain in good company: the retail sector counts 89 percent of their profits from in-store payments. These customers also prefer to pay through their credit or debit cards.
Yet, the same report cautions you to start making an early transition to e-commerce and mobile payment trends like smartphones and e-wallets. Give it a few more years, and chances are, you would have to incorporate virtual assistants, voice tech, and wearables in your buyer’s journey.
To keep up with the evolution of payment processing methods, you can begin by asking yourself: “How do my customers prefer to make their payments now, and in the very near future?”
To get a head-start, take a crash course in “payment trends 2020 and beyond”:
Peer-to-peer (P2P) payment
This platform makes it to the top of the list because the demographics of its users indicates that this will be the preferred payment option for the future. Creditcards.com cites the Bank of America’s 2018 Trends in Consumer Mobility Report which says that 51 percent of millennial users in the U.S. have gravitated towards peer-to-peer (P2P) payments.
P2P is the payment process that allows users to make a payment directly to others through the use of a smartphone or smart device app. The recipient can be an individual, a group of people, or an organization. The most obvious example would be a customer paying for your product through a P2P app that is connected to your system. You, as the vendor organization, receives the monies without having it coursed through a third party. This absence of a middleman also makes it convenient for the user to facilitate the payment.
P2P’s more advanced forms can also mean increased efficiency when it comes to multiple users. For example, a group of friends who dine at your restaurant want to split their bill, but do not have the necessary change. Instead of asking the waiter to break down their cash into manageable amounts, they can just divide the total amount according to the number of persons in the group; each individual then can simply send their contribution to your system digitally through P2P.
Digital billing and invoicing
Digital billing and invoicing software will drastically remove the paper trail from your accounting systems. Its automated process will make seamless the crafting of electronic invoicing and billing to obtain your payments of account receivables from your clients. Once installed in your IT infrastructure and accounting departments, it can email customized documents to your customers, itemizing the following: the products or services they contracted from you, the amounts they owe, and the due dates when they do have to pay. It saves your workforce precious man-hours in tedious credit collection, and instead frees them to do more creative, productive kinds of work.
Digitizing this payment process can also cut the huge costs related to printing checks, invoices, billing forms, acknowledgment forms, and official receipts.
Amazon might have led the way and cornered the market when it came to online retail, but small-to-medium-sized businesses are trying to catch up. Payment platforms like Paypal and Payoneer also pioneered the transfer of digitized cash or credit card payments across national and international borders. This means that, though you might regard yourself as a modest store or service provider in U.S. suburbia, customers at the other side of the world can like your offerings—and order them online. Depending on your arrangement, they would have to pay for shipping and logistics.
Many organizations and stores do a two-handed approach. They do promote their offerings on Amazon who helps market them to its millions of users. The customer can then order through the Amazon website who takes a percentage of the sale. Still, an Amazon placement does not stop you from installing your own e-commerce features on your own website. For example, this European mother who googled her way into your homegrown toy site can just click on your digital shopping cart and payment gateway. Transactions would be direct. Once you’ve acknowledged the order, you can email her directly about the product, its price, shipping costs, and estimated time of arrival.
In contactless payments, the user merely waves or taps their card directly in front of a card reader to make a payment. Signatures or signing the receipt printed by the reader has become a thing of the past. As some contactless payment innovators have described it, “All you have to do is tap the card and go.” The process is quick, convenient, and efficiently sends the required amount in digital form to your virtual bank account.
While contactless payment has made inroads mostly in groceries and convenience stores in the U.S., both the public and private sectors are studying to see its application on a more massive scale. Public transport systems, pharmaceuticals, logistics, and parking areas are counted as among the growth sectors.
Another component of the contactless payment is the digital wallet or e-wallet. Individuals, as well as organizational departments, can install these apps on their phones. Monies sent to or by them are easily tracked, lodged in, and accounted for. This payment process can fuse various financial services; financesonline.com website names them as follows: payroll, product purchase, remittances, savings, and account management into one. Let’s take the small business owner for example. Using the e-wallet, he can digitally pay the salaries of his teams, check the sales that came in that weekend, finish his balance sheets monitoring profit and loss, and book an anniversary dinner for himself and his wife.
Spotting the payment processing trends
As that popular tune goes, money does make the world go around. Its digitization can make that journey more convenient, user-friendly, and global in reach. Once untapped markets can open up to the enterprising business owner. His earnings and capacity to make a lot more are no longer hostage to an obsolete bureaucratic financial model. The latest trends in payment processing do not just lighten his load—they also point him to horizons of greater opportunities ahead.