The growth of digital payment has shown how fast the payment industry is evolving. Apple Pay, Samsung Pay and others are imposing themselves in the frontline as latest payment methods.
Payment processing trends
Since the old days of cash only payments, there has been an evolution in payment processing methods. First came cheques, hand written slips of paper that were as valuable as cash. Then the cheque guarantee card came along, meaning your cheque would always be accepted, and would not “bounce”. Then the credit industry produced the credit card, a little piece of plastic that could be used instead of a cheque. It was everyone’s “flexible friend” back in the day, and it meant you could spend money you did not have yet.
Bank debit cards came quickly on the heels of the credit card, and were validated by the biggest credit card providers, MasterCard and VISA. Then chip and pin, contactless cards and finally, mobile payments, all in the space of just a few years. With many payment options now at our fingertips, which are the best ones to use? The 4 most trending payment options are:
- Mobile Wallets
These could well be the biggest boom in payment processing in history. As long as they actually take off the way analysts predict. These are becoming popular with many retailers not only for the speed of transaction, but for the invaluable data they include. The system can give important insights into customer transaction trends that can help to improve the overall shopping experience. And that, in turn, would drive more traffic to the site or store.
Apple Pay was the first, in 2014, but was soon followed a year later by Samsung and Google, and then Wal-Mart, Chase and many others. The growth of the in-store mobile payment transaction is expected to reach $500 billion by 2020, from the 2015 total of just $75 billion.
With the constant movement of workers around the world, remittance has become a way of life for many. Migrant workers around the world can send their salary, or a portion of it, back home to their families via options like Western Union and Moneygram. And the shift to digital is making it even easier. Although the digital market is still only a small percentage of the total, it is expected to reach double figures in 2017. And with the expected remittance for the coming year forecast at around $636 billion, even 10 per cent is a massive chunk of that digital pie.
The boom in digital remittance is shown in the growth of US remittance and payment transfer company, Xoom. Founded in 2001 in San Francisco, the company grew 53 per cent from 2012 to 2013, and another 30 per cent from 2013 to 2014. Xoom are now making more money from their digital remittance business than old favourite, Moneygram, the world’s second largest remittance company.
- Visa EMV cards
Credit card fraud is a major problem in the US. In 2014, it cost the US retailers $32 billion, and those numbers are going up every year. In an effort to counter this, the major card companies upgraded their cards to EMV security. EMV – which stands for Europay, MasterCard and Visa – is a global standard for cards embedded with computer chips and the technology used to authenticate chip-card transactions. This is now the standard in most of the rest of the world. However, the US retailers were reluctant to make the switch to the new terminals, and EMV is only now catching up there. The reason it has become more popular is that the liability for credit card fraud has been shifted from the card issuers to the merchants. In the third quarter of 2016, almost half of the US small businesses had upgraded their terminals to accept EMV enabled cards.
The mobile point-of-sale device was almost universally disruptive when it first appeared. mPOS is the name for the terminal used for swiping, inserting or tapping the card as a means of payment. They also include the digital payment terminals for mobile payments like Apple Pay and Google Wallet.
The biggest group pushing the mPOS system are the retailers. Credit card processor, Square, who are popular in the US, has seen massive increase in mPOS sales over the last 5 years. In 2016, the large sellers with a volume above $125,000 in sales made up for 42 per cent of the total of Square’s gross volume. That was an increase of 34 percent from the 8% volume in 2011.
Mobile payment is becoming increasingly more popular as the future of payment processing. And with m-commerce and e-commerce being the new preferred shopping methods, cash could be vanishing sooner than we think.
Related articles published in EMV and Smart Payment Cards :
- EMV-enabled cards are taking over worldwide
- Decoding the EMV technology and liabilities
- The use of EMV technology expected to spike in 2017
- EMV: Safety and ease of use for retailers and consumers
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