2019 marked several new and different ways in which people pay for goods and services. Smartphones and other smart devices gained traction, such as virtual assistants like the Amazon Echo and Google Home. On the backend, the innovations that enabled these new payment methods centered around transaction speed, data integration, and cloud migration.
Let’s look at some of the top payment trends of the past year, as we gear up to see what the new decade will bring.
Money now is better than money later. There is definitely a demand for faster — even instant — payments. And the numbers show that this demand is growing. According to the PYMNTS Disbursements Report, only 11% of US consumers had received an instant payment in 2017. That number climbed to 42% in 2019, at which point the majority of consumers had at least some familiarity with instant payments (whether or not they actually sent/received any).
Given the choice, 9 out of 10 consumers will choose a digital payment over a check. And instant payment options are preferable when available. As instant payments grow more popular, we may start to see card issuers and banks offering incentives, much like today’s credit card reward programs.
Homes are becoming smarter, with smart appliances, doorbells, and light fixtures now household staples. A large portion of having a connected home involves the use of a smart speaker or virtual assistant. Simply uttering an activation phrase — such as “Hey Google” or “Alexa” — prompts these devices to listen for verbal commands, which might include ordering meals, purchasing items online, ordering a ride share service, or sending flowers.
Smart speaker devices hit the market in 2014 and their expanding capabilities are making them a more popular way to conduct commerce. Over a third of consumers now using them to order food or send/receive money. Data also shows that consumers who use voice commands for commerce tend to replicate the experience across multiple devices. Shopping by voice is the draw, with the type of device taking a secondary role.
The field of voice commerce saw big strides in 2019, and it’s a field that continues to grow and expand. More companies are getting involved in voice-based purchasing as the demand rises, putting voice commerce on a long-term upward trajectory.
Contactless payments and mobile wallets
US in-store mobile payments are expected to reach $503 billion by 2020, up from $75 billion in 2016. Consumers are growing more comfortable using the mobile wallets made available by their smartphone, such as Apple Pay, Samsung Pay, or Google Pay. These apps store credit and debit card information, much like a physical wallet would.
Stored payment data allows consumers to pay simply by waving their smartphone across a compatible reader. The default card (or a selected card) will be used to complete the transaction. About 70% of US consumers use contactless payments, largely due to speed and convenience.
Contactless payments and digital wallets are meant to supplement credit cards, not replace them. These contactless transactions still use a card to process the payment. So we won’t be seeing cards disappear anytime soon, but the adoption rate of contactless technology will continue to grow.
Peer-to-peer payment apps — PayPal, Venmo, Zelle, etc. — allow consumers to send and receive money amongst each other. It’s a simple, quick way to move money between bank accounts.
These apps come in handy when people owe each other money, like for their portion of a meal or event tickets. This convenience has led to a boom in P2P payment popularity, with businesses starting to adopt this payment method as well.
Less than nine months into 2019, the number of P2P transactions had already surpassed the total number of P2P transactions for all of 2018.
Looking to the future
The technology that drives payments forward evolves with each passing year. The near future should see a strong focus on transaction speed, emphasized by the continued development and implementation of 5G networks.
A couple other trends we expect to see are the deeper development of customer experience and increasing interconnectivity. How will this technology affect the payments industry? Time will tell…and it should be an interesting ride.