In the world of payments, technology is evolving rapidly — so it’s essential to keep an eye on payment trends to stay ahead of the curve. But payment trends have implications for more than just the financial industry: as payments evolve, more industries find ways to monetize and companies find new ways to optimize their software or customer experience through payments.
The big takeaway: payments are becoming ubiquitous — and that represents an enormous opportunity for businesses and platforms. Here are some of the biggest payment trends to watch for in 2020.
Payment Trends: 2020 Edition
1. Payments will become invisible for a seamless customer experience.
The customer experience has been a major topic in payments. In fact, according to Accenture, “as the payments universe expands, customer experience is becoming the prime competitive differentiator.”
That experience is reaching a new stage: invisible, frictionless payments. This is a big shift from the past. For a long time, there were just two primary payment experiences. You either went to a store, or you shopped online and entered your information on a checkout page. Now, with invisible and embedded payments, those experiences are starting to blend.
In many cases customers won’t even have to input their information to pay — it can be automatically loaded from eWallets. Uber, for instance, keeps its entire experience focused on getting a ride — not paying for it — by keeping customers’ information on file and charging them automatically, never even using the word “buy.” Increasingly popular online subscriptions store payment information to make checkout almost “disappear.”
Software has also evolved so that payments can be embedded easily into applications, which enables industries that are less payments-oriented to incorporate a frictionless payments experience for their customers. Mobile payments will be a major payment trend in 2020 as things like APIs enable a unified mobile payment experience.
We expect to see an even greater variety of payment experiences emerge in 2020 as customer experience and invisible payments become the norm.
2. Payments will start to show up in the places you’d least expect.
We mentioned that payments are becoming easier to embed in a variety of industries. And a key payment trend that results from this is payments appearing in the places you’d least expect. For instance, intelligent cars are starting to incorporate payments. Soon customers will be able to use saved payment methods for tolls, gas or even drive-throughs without lifting a finger.
3. The digital-first generation will hit its prime spending years.
Markets are increasingly feeling the rise of younger generations — for instance, last year millenials and Gen Z represented around $350 billion of spending power in the U.S. alone. This trend is only going to speed up: by 2020, Gen Z will account for 40% of global consumers.
Such a drastic shift has similarly drastic implications for anyone using payments: consumers are likely to care more about social and environmental issues, but less about digitalization or sharing information online. To keep up with the demands of this enormous group of shoppers, many of whom have grown up with the internet, businesses will need to innovate their use of payments and become fully digital.
4. Invoicing for small- and medium-sized businesses will transition to digital.
It’s not just payments that are evolving — it’s all the activities associated with payments, too. We see the digitalization of things like invoicing and account receivables as a major payments trend for 2020. In fact, the world is on the edge of a B2B digital billing revolution: B2B organizations are looking to simplify how they bill their customers and to get paid more quickly while reducing costs.
Digital invoicing isn’t new, but the B2B industry has lagged behind, representing the last bastion of paper checks and invoicing, especially for SMBs. In a mobile world, that’s not ideal: paper billing systems are slower, costly and lead to more mistakes. But that’s changing, and the switch to digital invoicing will take off in 2020. Agile payment partners are beginning to bridge that gap and enable those businesses to digitize all aspects of their system — for instance, BlueSnap and Armatic have joined forces to provide full payment services as well as invoicing, account receivables and more within one seamless digital platform.
5. Cross-border eCommerce will continue to grow exponentially.
We’ve been watching this payment trend for a few years now, and it’s more important than ever: global eCommerce is on the rise. According to our recent report with Kount and Internet Retailer, eCommerce accounted for 1/6 of global retail sales in 2019 and will grow at a rate of 20% annually — in fact, global eCommerce is projected to exceed brick-and-mortar retail by 2036. That growth is especially fueled by increasing demand for U.S. goods from foreign markets, and it’s a payment trend that we expect to dominate conversation in 2020.
Of course, becoming a global retailer isn’t always easy with obstacles like international payment processing and fraud prevention. The majority of businesses still don’t sell across borders, missing out on enormous opportunities. But recent research from a number of providers, including Payments Source, tells one clear story: businesses can tap into these markets by establishing cross-border eCommerce alliances with modern payment providers.
Looking for more information? Check out our recent webinar, Global eCommerce and Fraud Trends: Cracking the Code to Grow International Business.
6. Both fraudsters and fraud prevention services are getting smarter.
Experts across the payments industry such as our fraud partner, Kount, and the analysts at Accenture agree that fraud will be a hot-button topic in 2020. Balancing customer experience with data security is an ongoing challenge in the financial industry, and innovation in fraud prevention is a major payment trend that will continue in the new year.
Our partners at Kount identified two key areas to monitor:
- The use of AI in fraud prevention
- Fraud data that can deliver key business insights
AI – Essential for Preventing Payments Fraud
Cybercrime and fraud threats are evolving in unexpected ways for retailers who accept digital payments. That’s why digital businesses are increasingly turning to AI to help them make faster and better decisions, particularly when it comes to approving good transactions and rejecting fraudulent ones. In fact, in 2020, AI will be essential for successful payments fraud prevention strategies.
Fraud is becoming more complex and relies on machine learning to execute fraudulent activities and bypass security solutions. Outdated fraud detection systems that rely on rules-based detection and basic supervised machine learning are not advanced enough to meet current fraud attempts.
By contrast, an AI-driven fraud prevention approach addresses major businesses needs. It can detect emerging fraud by uncovering anomalies and spotting fraudulent patterns. At the same time, it helps businesses increase sales and revenue by enabling them to accept more good orders and lowering fraud operations costs by reducing chargebacks and manual review rates.
Fraud Data that Delivers Business Insights
At the same time, businesses are discovering there is a gold mine of data that comes from analyzing their payments fraud. By relying on robust fraud prevention platforms, many analysts realize that fraud data can do more than stop fraud: it can also reveal hidden insights into the overall business.
Fraud data can include basic payment details, like credit card number, expiration date and zip code, as well as more detailed information, like email addresses, device fingerprinting, mobile phone numbers and how long the person has been a customer. This vast amount of data can be used to build a complete digital identity for every customer and successfully stop fraud.
In 2020, more companies will start to use the data generated by their fraud solutions for higher-value activities that solve complex business problems and derive added value from their fraud protection efforts. These may include identifying their good customers and targeting products directly to them or revealing problems with shipping or inventory. The creative use of fraud data is a major payment trend to watch that can ultimately help solve high-level business operations.
7. Regulations will continue to increase, particularly to protect consumers and local businesses — and affected organizations need to know how to adapt.
Consumer protection has been on the rise for the past few years, and that payment trend will hit its full stride in 2020. Legislation like GDPR and PSD2 in the EU or CCPA in California have been on the horizon, with implications for data protection and payment usage. In 2020, they’ll come into full effect — and a huge range of industries will feel the impact.
Companies like Visa are updating their free trial billing rules to increase transparency and protection for customers. These rules ensure that it’s clear when charges kick in after a trial, which results in fewer chargebacks and increased customer insight — it’ll benefit businesses and consumers alike, and it’s part of a larger ongoing conversation around protection and trust.
The Wayfair Act will also come into play in the U.S. in 2020, empowering states to impose local taxes on businesses that operate within their borders, even if they aren’t located there. Retailers will need to puzzle out local taxes and regulations to continue their business uninterrupted.
The upshot? A major payment trend for 2020 is that it’s getting more difficult to sell, because the number of regulations you need to maneuver around is growing steadily. In fact, most businesses would benefit from a partnership with payment, tax and legal experts to help them manage all these shifting laws and compliance issues.
8. More businesses will look for ways to simplify their payment stack.
On average, businesses have five gateway processors and four acquiring banks. Maybe their original gateway didn’t have a particular payment method, so they added one; then, neither of the first two offered cross-border support, so they added another, and so on. This multiplicity of payment solutions happens almost inadvertently in the name of improving the payment process. Instead of improving it, however, these businesses are now struggling to manage accounts, integrations, payment data, and payouts — particularly when they outgrow the solutions provided by those services.
Simplification is a payment trend that’s growing rapidly. All-in-one payment solutions are available that provide extensive and flexible coverage for just about anything a merchant wants to offer, with far fewer complications for their tech stack. We see more merchants taking advantage of these solutions in the upcoming year to make their payments life easier.
9. Outdated tech will no longer cut it.
Similarly, the changing audience for payments and eCommerce markets has implications for payment tech as well. The need to invest in new tech or to upgrade old systems is higher than ever, and organizations that can’t afford to do those upgrades will need to find a partner that enables them to do so. Consumers are far less likely to turn a blind eye to an outdated or choppy experience caused by older tech, and the friction caused by outdated systems will play an even more critical role in customer engagement in 2020.
All in all, it promises to be an exciting year for anyone that leverages payment solutions. Start prepping now to get ahead of the curve! And if you’re looking for more details, take a look at our recent in-depth report on fraud prevention and payment trends.