Julie Muhn casts an eye over the current payments landscape
Let's face it-- we're not to the point of transacting on the blockchain for daily expenses. What’s more, Apple wallet hasn't reached massive adoption, and tap-to-pay NFC payment schemes aren't taking off.
In some ways it seems as if we are regressing. BBVA's Simple just launched paper checks and fintech headlines have been cluttered with the news that newcomer Binji is launching a credit card that promises to combine all of a user's credit and debit cards into a single card. Both options work as methods of payment, but they are physical, not digital.
So it's 2019 and we're somewhere in between a 3 to 4 day ACH transaction and a near-instant crypto payment. Despite the fact that payment methods and rails are stuck in this payments purgatory, there is movement in the space that goes beyond a swipe, tap, or wave.
Cross-border payments
A handful of fintechs are aiming to make cross-border payments less of a headache by fostering a network of banks across the globe. By making exchanges within their own network, they can undercut the traditional interbank exchange rate.
Physical point of sale technology
While point of sale (POS) technology isn’t new, there have been fresh entrants in the space in the last decade. The competition has spurred positive change that not only makes it easy for small business owners to keep up with regulations, but also creates a more enjoyable user experience for both the merchant and the customer.
Inventory management, for example, can be streamlined on a touchscreen device. Instead of searching for a product code, cashiers can simply look for a picture of the item to quickly input the customer’s order. And from a security perspective, some POS technology providers have reduced friction for the end consumer by using biometrics such as a fingerprint, a photo, or an iris scan to authenticate the user for the transaction.
PFM
PFM may be a fintech dinosaur, but it is another area of development. Tracking payments has come a long way since Mint took the Finovate stage in 2007. Small businesses have the opportunity to view and manage cashflow in a way that spreadsheets could never make possible.
On top of that, credit card fleet management solutions have come onto the scene to allow companies to safely distribute credit cards to their employees. Not only can these fleet management companies establish payment limits, they can also set up geofencing payment rules and send push notifications for spending approvals.
Spending categorization
Additionally, the explosive growth of AI has made massive waves in spending categorization. By cleaning and analyzing massive sets of data, banks can offer their customers a clear view of their spending habits. And banks themselves stand to profit. In analyzing consumers’ transaction data banks can gain insight into their customers’ financial lives and spending habits to create more effective marketing initiatives and provide them access to useful financial products and up-sells.
Ecommerce
While a range of point of sale options has emerged in ecommerce, there hasn’t been much consolidation in the space. Regardless, we’ve seen a rising popularity of payment options such as shop now, pay later solutions, as well as more traditional point of sale lending technology.
Security and authentication tools— which can fill an entire other article—are an ever-evolving component of ecommerce. Online merchants are not only required to protect their consumers information, they also need to protect themselves by authenticating their users. This is especially true in card-not-present transactions. AI technology has opened up possibilities for behind-the-scenes fraud detection and the prevalence of smart phones has allowed the use of both physical and behavioral biometrics.
Even though payment methods remain stagnant, there are plenty of payments technology solutions that are making headlines these days. Hopefully we’ll see renewed interest in alternative payment rails and methodologies in 2020, but until then, we can rely on other developments within the space (voice-powered transactions!) to satisfy our inner fintech nerd.
