Money makes the world go round they say – but none of that would matter if the money itself couldn’t get around. That is usually the biggest issue with handling payments in the past: restrictions to how money can be paid, and where it can get to in the world.
Then, technology made an appearance.
Today, online payment processing services are as breezy as things could get. Constant technological evolution is making it such as there is now special attention to making instant payments to anywhere in the world as opposed to the existing traditional models.
Here, we examine the transformation of payments systems through technology.
4 Ways Technology is Revolutionizing Payments System
It is no news that technology is transforming the way nearly everything is done. Today, financial transactions have also undergone a fundamental change.
The opportunities offered by the advent of digital innovations to the traditional financial scene have helped institutions to project more comprehensive payments capabilities for better customer experiences.
So, we go through some of the ways technology is advancing the payments scene:
1. Leveraging Big Data for Improved Customer Engagement
Data management can make payments systems more efficient and tailored to meet up with customers’ needs by giving insights into trends and customers’ behavior.
The vital intervention of ‘big data’ in the financial scene has given payment systems the leverage to provide value-added services through optimized data-based understanding.
By providing means for effective interpretation and analysis of complex volumes of data, companies are able to optimize their decision-making process to empower improved customer engagement.
Today, AI and ML-enabled payments systems are able to provide highly scalable models of operations for better customer satisfaction. For instance, merchants might need a guide on payment gateways for the choice of a system to accommodate the needs of cross-border clients.
Thus, by analysis of clients’ data such as geo-locations and languages, merchants are able to provide means of faster and secured online transactions processing and better consumer relations. If you are interested in exploring options, you can check out a payment processors list.
2. The Advent of Digital Currencies for Globalization
Insights from the Global Findex Database provided by the World Bank on the reach of financial services explains that while more than two-thirds of the world’s total adult population has access to banking accounts, about 1.7 billion remain unbanked.
However, two-thirds of the population were reported to have access to mobile devices – highlighting the importance of an electronic payment system in extending the circulation of payments options to populations all across the globe.
The advent of digital currencies brought by the largest payment processing companies sought to open the door of mobile and digital systems to various sections of the world including the unbanked sector while bringing about globalization in various sectors.
Despite the lack of a global consensus on the use of digital currencies, these currencies have been found to revolutionize the payments scene by providing a well-developed online payment system tailored to counter the barriers of locations, cultural nuances, and literacy amongst populations.
Digital currencies were developed to proffer solutions to scalability issues found in traditional payment systems and bring about transparency in transactions. Here, transactions are optimized to be validated and secured within hours instead of days.
3. Decentralization and Security in Transactions with Blockchain Technology
As technology rapidly evolves, traditional financial systems have had to combat the rise in cyber threats. These days, cyber risks are taking more sophisticated forms, highlighting the need for more advanced ways to provide consumers with security and transparency in their transactions.
Statistically, cybercrime costs accelerated globally by 27% with the financial services industry taking in the highest cost at over $18 million per surveyed company. Predictably, cybercrime-related damage cost will hit $6 trillion by 2021 which provides strong evidence of an increasing need for a system that handles volumes of sensitive information effectively.
In this regard, the advent of Blockchain technology to payment systems is revolutionizing existing models by providing transparency and a strong security framework through its immutable background.
Also, one of the key advantages of electronic payment systems backed up by Blockchain is the power of scalability. Payment gateway systems in this variation are now equipped to handle faster and cheaper cross-border payments and remittances through automation and transparency.
4. Mobile Wallets
Within the last couple of years, smartphones have a regular facet of consumer activities globally and they are now significantly transforming the payment processing industry. Today, mobile “one-click” apps like WeChat and Alipay are taking the place of traditional payments models.
Studies on mobile payments growth by Sharespost indicate a steady rise in mobile transactions at more than 52% and an estimated global transaction value of about $379 million.
Stuck with a fragmented tech-enabled framework, the digital revolution is helping to consolidate these solutions to help companies project cash-less and card-less solutions to consumers for advancements into adjacent markets.
As such, various companies and players in the global industrial sector are partnering with mobile wallet services to enable data-driven apps equipped with commerce capabilities for their consumers. In return, mobile transactions via an online payment gateway are on the rise and projected with an estimated global transaction value of about $865 million by 2021.
Technology is Reshaping Traditional Financial Systems
Over the next few years, technology is poised to bring more change into payments systems, countering boundaries to better investments and finance opportunities.
With the trend in the adoption of digital innovations, it is expected that future purchasing decisions will be powered by more advanced payments mechanisms. Thus, employing the power wielded by technology is set to give companies the leverage to compete and advance.