This month The Fintech Times is exploring paytech, meaning any technological innovation that changes the way we pay. As the payment space continues to evolve, we explore some of the innovations next in line.
Continuing our focus on digital payments, we now ask another question: what digital payment innovations can we expect to see in the next year?
According to Alistair Cotton, co-founder at financial infrastructure firm Integrated Finance, popular social media platform X will likely become the next popular payment platform: “Social media becoming a daily routine for many and therefore any additional innovation such as payments will be adopted more quickly.
“Additionally, X users are provided with a host of complementary services that facilitate the creation of centres of commerce faster than any other outlets. AI is going to drive a lot of freedom to focus on intellectual property in payments.”
To best understand how the digital payments space is likely to change throughout the next year, we reached out to a range of experts in fintech and finance.
For Ramez Hanafi, head of digital solutions at Visa, interconnectivity holds the key to future innovations in digital payments: “We are seeing continual innovations in digital payments, but to deliver the most value to people, businesses, and economies, it’s about recognising interconnectivity; across sectors, markets, and platforms, and harnessing them at scale.
“One example of this interconnectivity is through our own work with tokenisation, which conceals and devalues sensitive payment data to make digital payments more secure. We can embed token technology into any device.
“For example, in the not-too-distant future, we envision a driver asking their car to find the nearest café, order them a cappuccino, then enable them to pay using biometrics on the steering wheel. A token is seen as a high-quality credential – so the more tokens that exist (and are embedded into devices, apps, and wallets), the bigger the pool there are to transact with. The knock-on effect is a stronger network, higher trust among consumers who can enjoy a more seamless and secure way to pay. It also means revenue for businesses who can benefit from better user experiences, lower transaction costs, reduced fraud, and increased authorisation rates.
“In addition, the growth of real-time payments will continue to set expectations amongst consumers for speed and convenience. It will be critical to ensure that the ecosystems for these payments are secure. Visa’s RTP Prevent Service helps detect and prevent Authorised Push Payment (APP) and other scams on instant payment networks. It harnesses artificial intelligence and operates in real-time, for enhanced trust and security.”
As Mark Munson, managing director at Moneyhub Payments, explains: “Smart Payments are on the cusp of mainstream adoption, paving the way for a more interconnected and consumer-centric financial ecosystem.
“Over the next year, expect to see a surge in bespoke financial products and services, tailored to consumer choice: from AI-driven predictive payment solutions to enhanced biometrics driving secure transactions.
“As boundaries blur between different financial entities and tech giants, demonstrated by Apple’s foray into open banking, the consumer emerges as the ultimate winner.
“In this emerging landscape, one thing is clear: the next chapter in digital payments will be one of unprecedented personalisation and empowerment.”
Retailers and AI
We also heard from Ralf Gladis, CEO of payment services provider, Computop, who expects AI to significantly impact the world of digital payments: “All retailers aim to provide a seamless, frictionless checkout, whether online or in-store, and they are reliant on payment service providers to facilitate it.
“This is why analysis is incorporated into the interfaces that connect shoppers with retailers and their payment mechanisms. These allow merchants and PSPs to analyse everything from the location of a customer and the device they’re using through to their past purchase behaviour and habits so retailers can build outstanding, personalised checkout experiences.
“Payment processors are also now using AI to analyse past data to help them combat fraud attempts. Generative AI creates content based on existing data, but to help manage fraud, it could potentially be utilised to construct new fraud rules, or through machine learning, to assess the performance of new rules to test if they are effective.”
Open banking exploration
Tim Hood, vice president of EMEA and APAC at Hyland, the enterprise content management and services provider, explains: “The UK government’s exploration of open banking-driven digital payments for public services signifies a significant stride forward.
“One prominent advantage stems from the enhanced convenience open banking can offer for public service payments. People could seamlessly utilise their bank accounts to settle transactions like council tax or parking fines, obviating the need for physical payments.
“Open banking’s potential extends to boosting the efficiency of public services. This might entail automating benefit payments or facilitating streamlined tracking of applications for services such as passports and driving licenses. Additionally, it has the capacity to empower individuals to better manage their finances. Users could employ it to monitor their expenditures or establish automatic bill payments.”