January 6th, 2020 - Payments
Wow. 2019 has been filled with mega-mergers, more consumer experience changes and another demanding period of evolution for the payments industry. A multitude of alternative payment methods hedging forward, security breaches with greater sophistication, and open banking offering as much promise as it does confusion. All that and we have a mixture of regulatory participation in many developed markets. So, what’s in store for 2020? TNS’ Vice President of Payment Solutions, Brian DuCharme gives us his insights and predictions into the potential developments and possible disruptions in 2020.
Cash usage and the evolving role of the ATM
Cash is first on my agenda and Cash in Circulation (CIC) is expected to remain strong in 2020 at around 7%, with more than 35 countries that report CIC figures likely to see stable or increasing levels*. In line with this, the evolving role of the ATM should see it take some interesting steps in 2020, with more deployments of biometric identifiers, cardless usage and mobile app integration real possibilities.
The pursuit to become the world’s first cashless society will continue in 2020 but is unlikely to come to a conclusion in the next 12 months because of security considerations and growing concerns around the unbanked and private payment schemes replacing public notes. While Sweden remains the favorite it’s interesting to see new contender Australia is making strides with some reports predicting they could become cashless in 2022˄. Either way, more dependency on payment schemes demands greater focus on every angle of transactional security.
Electronic payment acceptance
But where does this leave the wider mix of payment methods? NFC QR based payments such as Alipay, Venmo, GooglePay and ApplePay will be available in over 40 countries in 2020+.
Alipay’s recent decision to allow foreign travelers to load non-Chinese issued bank cards in the app could further normalize Alipay to western consumers. Something to watch closely next year. The US is expected to remain the largest market for non-cash transactions in 2020, while India is likely to see the highest growth rate at almost 40%* in part fueled by growing UPI uptake in India, mobile payments will continue to grow at a huge rate.
And what’s in store for retailers? In 2020 I believe retailers who appear to be entering 2020 following strong consumer demand, would benefit modernizing systems that also get them out of the day-to-day operations of payment systems platforms.
Oh, and let’s not forget about EMV at fuel dispenser‘s deadline.
Mercator are predicting that autonomous checkout stores will multiply among US retailers**. The progress of tech giant AmazonGo has been slower than anticipated but it is rumored they are looking to bring their cashier–less technology to movie theaters and airports and with new developers set to appear on the horizon in 2020. I agree with Mercator that this is also one to watch out for in 2020. It is a call to action for grocery, petro, and QSR that frictionless payments will only penetrate traditional brick and mortar.
Personal payments and social media payments has been something I’ve worked on for several years and 2020 could be a turning point. Embedding payments into them has great potential, allowing users to pay for such things as cross-border remittances, charitable giving, disaster relief; that said, it also must be governed by payment standards. We will certainly be watching how the big players like Facebook and WeChat will evolve their platforms.
How do we make all this more secure?
The new Strong Customer Authentication requirements coming into play in Europe under the revised Payment Services Directive (PSD2) are set to take full effect in December 2020.
Combined with this, EMVCo’s update to 3DS 2.0 will see smoother transactions for users and provide technological advances, ease regulatory compliance and see higher levels of customer feedback over the next year.
As the open banking era is upon us, multiple banks across the E.U. are still not compliant with PSD2 and Mercator are predicting that 2020 will bring with it repercussions of non–compliance and fines that may escalate, leaving 2020 as not only an industry respite but also perhaps an opportunity for successful execution prior to eventual regulatory enforcement**.
And finally, I couldn’t end this blog without mentioning biometric authentication as I see this playing a leading role in 2020 as the technology becomes more prevalent. Biometrics are now making an appearance in ATMs, airports, unattended kiosks, and a plethora of IoT devices.
The UK’s Etihad Stadium in Manchester which seats 55,000 will see them able to pay in 2020 using biometric fingerprint technology as it has become one of the world’s first to use this new solution outside of airports. It works by allowing users to link their vein signatures with their payment cards enabling them to make a payment using just their finger.
There’s a lot for merchants, retailer, PSPs and consumers to look out for in 2020, the payments arena is a fast paced, challenging but exciting industry and I look forward to helping our clients and partners embrace the changes that will come in the year ahead.
*World Payments Report 2019
** Mercator 2020 Outlook Reports