While riding post-pandemic growth in digital transactions, the industry needs to boost financial inclusion and cybersecurity. How?
The payments industry has undergone a dramatic transformation in recent years, with changes outpacing those seen in previous decades.
As consumers embrace new payment experiences, from embedded digital commerce to contactless transactions, the entire ecosystem is evolving to meet these shifting demands.
Contactless payments gained momentum during the pandemic and continues to grow. This rapid digitalization of payments presents both opportunities and challenges for businesses, merchants, consumers, and financial institutions. While innovation is crucial for economic growth, it is equally important to address concerns around data privacy, security, and inclusivity.
Key trends to watch
Several key continue to shape the future of payments:
- Consumers increasingly expect versatility in how they pay, driving the development of solutions that allow a single card product to switch between various payment methods such as debit, credit, or instalment plans.
- Real-time payments (RTPs) are also becoming popular, with many South-east Asian consumers using them at least once a week for various transactions.
- Card payments remain a top preference in the region, with at least a third of consumers choosing cards as their primary payment method, particularly in mature markets.
- Accessibility of smartphone technology is unleashing billions of NFC-enabled devices worldwide, facilitating fast point-of-sales transactions, online authentication and peer-to-peer fund transfers.
- E-commerce continues to grow, driving demand for faster, more secure checkout processes. Solutions that reduce the need for manual data entry are gaining traction. As AI continues to be used to reshape online experiences, business will need to strike a delicate balance between improving personalization and maintaining privacy.
- Tokenization is one technology that can be leveraged to give consumers greater control over their data, while enabling better payment services.
These technology trends are interacting and combining to make digital payments more convenient and secure for consumers and merchants alike.
However, it is important to note that no single company can address all the challenges alone. Collaboration between financial institutions, technology providers, regulators, and consumer advocates is essential to ensure that digital payment innovations benefit everyone.
Keeping an eye on inclusion and security
The future of digital payments holds immense promise for making transactions more convenient, secure, and personalized. However, realizing this potential will require ongoing dialog and collaboration across the entire payments ecosystem.
Ensuring financial inclusion is paramount — the industry must make sure that new payment technologies do not leave behind underserved communities. Also:
- Balancing innovation and regulation is another crucial aspect, as governments and industries foster innovation while maintaining necessary safeguards.
- Interoperability is also a significant concern. As new payment methods proliferate, payment technology firms need to ensure they can work together seamlessly.
- Lastly, consumer education plays a vital role in helping people understand and feel comfortable with new payment technologies.
Together, governments and industry can create a future where digital payments truly uplift and include everyone, everywhere.
