mobile-phone-pay-m2020-booth

From the Floor of Money20/20 Europe 2016: Key Trends in Digital Commerce and Payments

Day 1 at Money20/20 Europe was off to a rocking start – Samee Zafar from Edgar, Dunn & Company discussed key trends and presented highlights from the 10th Advanced Payments Report 2016. The Report combines results from an online survey along with views from experts in the field and continuous research and monitoring of events in the payment industry.

Here are 8 major 2016 payment trends identified by Edgar, Dunn & company:

  1. Mobile trends are still in its infancy despite significant investment. Apple Pay, Samsung Pay and Android Pay have revived the interest in mobile payments although their adoption is not representative of future potential. Over 70% of survey respondents believe that multiple wallets with differing technologies will co-exist and that there will be a consolidation in the mobile wallet market in the next 2-3 years.
  2. Social Media will play a major role in the future of online commerce primarily for engagement and communication. 51% believe that social media will capture a lot of the online commerce spending. For example, Facebook is transforming its business ‘pages’ from a place to grab business information to a place to buy. Google, Twitter are looking for a way to get a piece of the e-commerce pie and it is not surprising given that according to Forrester Research, consumers spend 14% of their smartphone time on social media and 5% on shopping.
  3. Real time payments where speed is the priority will evolve into the next generation with  promise of much more enhancements like better security, richer data, improved end-user experience and network interoperability. In US, there is a sizeable majority of respondents in favor of moving to real time payment. 68% believe that real-time payments system in the US will provide merchants a viable alternative payment rail.
  4. Peer to Peer Payments have done well in some markets but the initiatives vary from market to market offering increasingly diverse technologies and business models. But mobile and social media will lead the charge in the future particularly in emerging markets due to lack of financial infrastructure and low penetration rates for bank accounts. 24% of respondents believe that mobile wallet providers like Apple, Google and Samsung are more likely to win the P2P payments battle.
  5. Bitcoins and crypo-currency – the new world currency with a lot of hype generates low confidence in payment providers. While its been gaining a lot of momentum in developing countries, 64%, believe that the greatest potential for bitcoin is that it can be used as a means to maintain anonymity in the online payment process. There are apparently opposite views of where bitcoin is headed but it is almost certain that the digital currency will not be able to gain widespread acceptance in the near future.
  6. Block Chain on the other hand, is not all hype and has real world markets – particularly in developing markets where is no central repository validating ownership of the the asset. 70% of respondents believe that financial institutions will invest in block chain technology to trade and transfer financial assets. While block chain is expected to make payment transactions faster, cheaper and more secure its success will depend on companies investing in the technology to deliver a successful application.
  7. Biometrics is heading mainstream. First time in the UK, mobile banking has overtaken internet logins. Given the prevalence of smartphones that more easily enable biometrics, there is an opportunity to finally deliver consumer experience with relatively lower friction, not just in the financial industry but also in online commerce.
  8. Internet of Things 68% agree that IoT will revolutionize the payment industry as every connected device can be a vehicle for commerce. In most of the use cases related to IoT, payments will be embedded in the devices (either physically or in the cloud) and will become transparent to consumers.

While the world of payment is evolving and adapting to the new age of commerce, concerns about fraud are top of mind for companies as they try to reduce friction and enable seamless experiences for customers. 82% of respondents think that fraud will remain a top concern for online commerce.  As payments, channels and consumer experiences get more sophisticated so will fraud.  It will be imperative for companies to not only focus on technologies that disrupt commerce but also invest in tools that will prevent fraud as they embrace the new ecosystem.

For more industry insights and survey results visit Edgar Dunn. For more information on how Feedzai can help prevent identify and prevent fraud in real-time, download the e-book Machine Learning for Fraud Prevention.