The pandemic disrupted the payments industry, shifting the world away from cash and pushing it towards contactless payments. This is an exciting time for the payments industry and the future of global quick, easy, affordable, and reliable payments. In this article, we will discuss our predictions for the future of digital payments in 2022, including new methods, technologies, and trends.
Digital Payment Trends
The value of digital payments is expected to double over the next few years, from $5.44 trillion in 2020 to $11.29 trillion by 2026*. That growth prediction results from the expected rapid pace of innovation and rising consumer demand. Citibank predicts this trend will be hardest on traditional banks, as many of the new technologies cut the banks out entirely*.
Before we discuss the predicted changes to digital payment trends, let’s define “digital payments.” Digital payments, also known as electronic payments, represent the transfer of currency that happens online. Most payments today are considered digital payments.
Online Electronic Payments
An online electronic payment system digitally moves money from one account to another. Online shopping in nearly every industry has soared in demand over the last two years, which has forced a reconsideration of how to handle online electronic transactions. We can expect rapid innovation in this sector as eCommerce soars and will continue to grow exponentially over the next decade*.
Online electronic payments are transactions such as
- Bank transfers
- EChecks
Apps & Mobile Wallets
Payment apps and mobile wallets have created a new way to interact with money. They allow users to transfer money from their smartphones or wearable devices. This has made payments quicker and less cumbersome than ever. Shoppers no longer need to retrieve a physical card to make a payment.
Instead, they can tap on the card saved in their smartphone, or send a quick bank-to-bank transfer. This type of payment soared during the COVID-19 pandemic as it is contactless and does not require interaction with others, such as a bank teller.
Examples of this type of payment include:
- Venmo
- PayPal
- Apple Pay
- Google Wallet
- Zelle
- Etc.
Contactless Payments
While mobile wallets and payment apps are both examples of contactless payments, they are not the only options available. Contactless payments are any kind of in-person payment that happens without physically touching a payment device. For example, many credit cards and mobile wallets are powered by near-field communication (NFC) technology.
Let’s explore a couple of other examples:
QR codes
There have been several creative uses for QR codes. QR codes can create a unique payment portal for each transaction, a feature used by restaurants, advertisements, and ticketing agencies that allow customers to pay their bill, receive a discount code, or view their ticket via a QR code.
Mobile point of sale
Mobile point-of-sale (mPOS) technology is any piece of technology that allows a smartphone to accept payments. Mobile POS is another trend expected to continue to grow because of its flexibility and adaptability.
For example, a mobile point-of-sale can work well for merchants who present as vendors at trade shows, farmer’s markets, concerts, food trucks, events, etc. because it allows them to accept payments without a traditionally required Wi-Fi or Ethernet connection.
In the future, mPOS technology will allow traditional brick and mortar stores additional flexibility by creating non-traditional checkout lanes (for example, offering customer checkout on a non-central location).
Biometric Verification
Biometric verification offers a strong two-factor authentication option. Traditional credit and debit cards can typically carry out a successful transaction solely with the presence of the card. By implementing biometric verification, the card is no longer enough to make a purchase. Instead, the cardholder will also have to produce a matching fingerprint or face scan, which reduces the opportunity for fraud.
EMV
EMV stands for Europay, MasterCard and Visa. Founded in early 1990’s, EMV technology has increased transaction security by embedding a computer chip in credit, debit, and prepaid cards. EMV will continue to grow in popularity as EMV-capable hardware develops and becomes a standard. The adoption of this technology reduces fraud and adds an additional later of security on each payment transaction.
Blockchain
The introduction of blockchain technology creates an entirely new angle for payments to be completed securely without the use of a third party. Cryptocurrencies, for example, are built on blockchain technology.
A blockchain is an interconnected web of computers that each record (in real-time) their own copy of everything that takes place on the blockchain. It is extremely difficult to compromise a blockchain because the fake transaction would have to be updated on every single connected node (or computer) simultaneously and identically to avoid detection.
We are only seeing the beginning of the effects of this technology and it is a trend expected to grow through and beyond 2022.
Final Thoughts
Competitors in the digital payment space are coming from non-traditional sectors and will probably continue to disrupt this previously stable industry. The pandemic has shown consumers will try new trends that make their lives convenient and safer. Businesses and payment industry players hoping to stay relevant will need to invest their energy into these new methods, technologies, and trends for digital payments in 2022.
Source: Research and Market, Citibank, eMarketer,
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