In many ways, the future of digital payments is already here.
What remains is that businesses need to adapt to this rapidly changing consumer landscape, capitalizing on the growing popularity of digital payments, especially among younger consumers.
“There is a huge opportunity for small businesses, midmarket businesses, and even large corporations to continue moving away from checks and adopting other payment methods.” Jill CapicchioniProduct Director, Payee NCR Voicestells PYMNTS.
meanwhile, According to research According to research from NCR Voyix and PYMNTS Intelligence, 27% of small businesses still rely on traditional payment methods, and Capicchioni believes education and awareness are key to accelerating the adoption of digital payments.
Many businesses continue to use checks due to familiar cash flow practices and the perceived financial incentive associated with late payments. As trusted advisors to businesses, financial institutions can play an important role in educating businesses about the benefits and risks of different payment methods, he said.
But it's not just the form and function of payments that is being reshaped by new innovations.
The underlying concepts of trading itself are being rewritten through advanced payment technology.
“I'm amazed at how many small businesses are now willing to accept card payments,” Capicchioni said. “I get really excited when I have a contractor at my house and I ask how he wants to pay and he says he can pay by card.”
“Businesses are starting to realize that the opportunity cost of getting that payment on card right away outweighs the fees they might pay,” she added.
Rapid adoption of new technology
With 8 out of 10 Gen Z and Millennial consumers choosing digital wallets and contactless alternatives to traditional payment methods, it's clear that digital payments are rapidly gaining popularity.
That's because the future of digital payments holds immense potential to enhance convenience, security, and financial decision-making for consumers and businesses. But it also requires buy-in from both sides of the deal.
Mr. Capicchioni emphasized the importance of financial institutions quickly adapting to the adoption of digital payments. She believes she can support businesses by educating them about the different payment methods available and helping bridge the gap between traditional and digital payments.
“We forget that there are a lot of opportunities for fraud with old-fashioned checks,” she says.
But apart from the security, convenience, and ability to meet consumer expectations that digital payments offer, payments are also rich in valuable data that can be mined for better insights that support better products and payment experiences. Create a separate environment.
Data is the future of payments
Emerging innovations such as data analytics and artificial intelligence (AI) have immense untapped potential that can be applied to customize digital payment solutions to meet evolving consumer needs and preferences. .
“The opportunities with data and AI are huge and relevant to common money movements, so there is a huge opportunity to use that data and predictive analytics to educate business customers and consumers about potential cash flow issues in the future. There’s an opportunity,” Capicchioni said. , added that data analytics can support and monitor spending habits and provide personalized recommendations for bill payments.
Financial institutions themselves can leverage data to improve the customer experience and provide valuable insights that help consumers make informed financial decisions, he said.
“There is a huge opportunity in the data that already exists, and we just need to be able to analyze it and provide user-friendly feedback on how to use it,” Capicchioni said.
By leveraging data analytics and AI technology, financial institutions can play a key role in mitigating fraud risks associated with new payment rails.
Looking ahead to 2024, Capicchioni predicts innovations such as real-time payment networks will continue to evolve, albeit at a relatively slow pace.
“I am cautiously optimistic about the new real-time payments rail,” she said, noting that the irrevocable nature of instant payments makes them a “prime target” for fraud.
The introduction of external credit transfers and the potential for SME adoption of real-time payment rails are other areas of interest highlighted by Capicchioni, particularly regarding the practical opportunities they offer to improve the overall payment experience.
