With the digital payments industry trends taking over the payment market worldwide, businesses need to find ways to stay ahead of the changes in technology, consumer behavior, and compliance requirements.
Merchants also need to incorporate various changes, upgrading their business to keep up with the emerging technology and demands of customers.
Let’s Get into the Latest Payment Industry Trends for 2022:
1. ACH Transactions:
ACH transfer is a form of electronic funds transfer that uses the Automated Clearing House (ACH) network.
The ACH system includes participants from both the financial and payment industries. Banks, credit unions, thrifts, and other depository institutions are the account originators. They are the one who initiate ACH transactions by submitting debit or credit entries to the Federal Reserve’s ACH operator.
For international transactions, Letters of Credit are used because they depend on a common set of rules that can be understood by all parties involved in international trade.
How do ACH Payments Work?
ACH is often processed in two ways: credit and debit. While the debit process includes the withdrawal of funds from the bank, the credit is used by employees to deposit the payroll directly into the bank.
In both the credit and debit payments, the ACH transaction is entered into the payment system by the originator. The originator is responsible for doing the required authentication for every transaction.
Advantages of ACH Transactions:
Using ACH transactions to pay bills comes with various advantages.
- Save money with bills: Paying bills or recurring monthly expenses through electronic ACH payments help save you more in monthly bills.
- Quickly send and receive payments: Transferring funds or the settlement of transactions from one bank to another through the ACH network is easier and less time-consuming than wired transactions.
- Low transaction fee: Another benefit of ACH is low transaction fees, depending upon your bank and the type of funds involved. As compared to the wire transfers, they are more cost-efficient and are known for their speed.
- Recurring and flexible billing: Another popular thing of the payment industry trends is ACH payments. This will help in creating a reliable flow of revenue in your business as you can set the ACH payments one time or can schedule them for future dates.
**Related Read: How Payment Processing Can Help Grow Your Small Businesses**
2. Biometric Authentication:
Biometric authentication is not an entirely new concept in the payment industry trends, as it has been used in some form or another for centuries. Biometric authentication refers to the security process that verifies users identity through a unique biological trait-like irise, voices, facial characteristics, retina, and more.
It traces this unique data to verify a user’s identity when that user accesses the account. Since the data is unique for every user, biometric authentication is more secure than the traditional form of multi-factor authentication. Biometric systems are sophisticated enough that they can authenticate one person from another with over 99% accuracy.
3. Contactless Payments:
Contactless payments are all the rage nowadays. Introduced in 2006 with MasterCard’s PayPass and Visa’s payWave services, they are one of the most accessible and easiest ways to pay anywhere. Businesses can benefit from the technology by saving on transaction fees and having a faster checkout process.
This contactless technology is also making headway in other areas of our lives like public transportation and the workplace. For instance, contactless cards make it easier to get onto buses and trains, some industries let their employees pay for lunch with a simple swipe of their card rather than fumbling with cash or pulling out a credit card. It uses RFID for transactions, which makes it more convenient, safe, and fast to do them in-store.
4. Authorization Rate Optimization:
This technology allows retailers to increase their revenue from online transactions by using machine learning and data. It is primarily designed for businesses that need to access a high volume of digital payments.
Having a high authorization rate with zero declines will add extra revenue to your business. There are a number of things you can do to increase your authorization rate. Some of them are:
- Optimize the payment flow: The optimal payment helps build balance between the conversion rate, customer experience, and the cost, which is different for every business.
- Collect and submit the additional billing information: If you are entering the charge request, make sure you include as much information as you can. This will give the bank more details about legitimate transactions.
- Keep your fraud rates to a minimum: Businesses with high chargeback rates often see more declines. So, try to keep your fraud rate to a minimum to increase your ARO.
Enable card account updater: Update your card account updater to reduce customer declines and to increase authorization rate optimization.
**Related Read: Top 9 Challenges in Online Payments and How to Overcome Them**
5. Mobile POS Devices:
Mobile POS is a Portable Point of Sale on a smartphone or any device that works as a register. It helps you take credit card payments on the go.
One of the most important advantages of mobile POS devices is that they provide a smoother shopping experience. Customers don’t have to wait in long queues and can use their time browsing products and making purchase decisions. Mobile POS devices also enable retailers to track inventory, manage their stock, and provide faster customer service.
How to Choose the Right mPOS for your business?
When looking for the best mobile point of sale provider for your business, consider the following factors:
- Security: A secure mPOS is PCI compliant and lets you take all the encrypted payments like NFC payments and chip cards.
- Simplicity: Look for the one that has a simple interface and is easy to use. Consider the one that comes with an intuitive interface so that the employees get trained quickly.
Affordable: It is very important for the mobile POS to be affordable, so make sure what you are spending on. Apart from the hardware cost and the credit card transaction fee, there could be other fees, which you must be aware of.
**Related Read: All About EMV Chip Card**
6. Identity Authentication:
Traditional methods of authentication (e.g, KBA, SMS-based 2FA) don’t provide much identity assurance. Thanks to large-scale data breaches and identity theft, businesses can’t trust that someone is who they claim to be, even if they have their mailing address or possess the correct Social Security number.
However, both physical and behavioral biometrics can be applied as authentication methods for card-not-present (CNP) transactions and provide the strong layer of defense that is needed to protect against mobile fraud. When both biometric technologies work together, it makes it even more difficult for fraudsters to mimic customers.
7. Face-Based Authentication:
Given our collective obsession with our smartphones, it’s not surprising that face-based biometrics are becoming the most popular method of authentication thanks in large part to Apple’s Face ID.
It is convenient and is much more secure than traditional methods of online verification. Also, it cannot be hacked or duplicated. It’s a simple one-step solution to the problem of remembering a vast array of PIN codes and passwords.
8. 3D Secure 2.0:
3D Secure (3DS) is a globally accepted authentication solution designed to make eCommerce transactions more secure in real-time by providing an additional layer of security. It enables the exchange of data between the merchant, card issuer, and, when necessary, the consumer, to validate if the transaction is being initiated by the rightful owner of the account.
The improvement in 3DS acceptance is great news for merchants. Developed and owned by EMV, 3D Secure 2 (3DS2) is designed to improve upon the 3D Secure 1 (3DS1) by addressing the old protocol’s pain points and delivering a much smoother user experience.
With 3DS2’s frictionless flow, cardholders can authenticate themselves without being challenged. The quick and painless checkout process will benefit cardholders, while merchants can expect up to 66% less cart abandonment rates, according to Visa.
Why Should Businesses Care About 3D Security:
- Reduced Risk of Fraud:
A significant selling point for 3DS is that it reduces the risk of fraud. This extra layer of security helps merchants accept card payments only from legitimate customers. Even if the customer’s card number and card details are used fraudulently, it is less likely that a fraudster would also have access to the cardholder’s 3DS pin or one-time password (OTP).
- Chargeback Liability Shift:
The biggest benefit of 3D Secure is the chargeback liability shift. It shifts the liability for chargebacks due to fraud from the merchant to the cardholder’s bank. This additional protection is why customers often face the 3D Secure challenge during high-value transactions such as airline tickets.
Implementing 3D Secure is the best method to comply with SCA (Strong Consumer Authentication).
9. Cross Border Transactions:
Expanding your business to accept cross-border transactions is a relatively simple process. Though every expansion plan is unique, there are a few steps that need to be followed in each market covering both technical and non-technical aspects.
Connecting to an international payment gateway is the single biggest integration lift when preparing to accept international payments. Payment gateways connect multiple payment methods and systems to make transactions safe, fast, and easy for your customers.
The selection of a payment partner is among the most important steps in any international expansion strategy. Merchants need a reliable, experienced global partner able to support their expansion strategy with the widest coverage and the least amount of incremental integration.
Beyond ease of integration, it’s important for merchants with international expansion plans to work with an acquirer with truly global capabilities.
Payment partners should not just be able to provide access to the world’s largest markets – that’s a baseline. Your payment partners should be experienced in providing payments through a diversity of mechanisms: local entities, cross-border payments, and other partnerships.
10. Peer-to-Peer Transactions:
A P2P payment app will:
- Enable payment to a landlord or a merchant who is on an installment plan.
- Make payment for taxi or cab services along with applied discounts.
- Set the balances when money is borrowed from a friend or a relative.
- Set a borrow limit for anyone and thereby allow them to withdraw some amount at a specific time or predefined intervals.
- Transfer money on any borrowing request from the people you know (typically from within your contact list)
- Split the bill amongst multiple people, especially for expenses like dinner, outings, trip payments, etc.
- Transfer money to your loved ones instantly.
- Make payments for utility bills, services, etc.
P2P has enabled people to take far greater control over their financial lives and brings a sense of relief for people when handling day-to-day expenses. The ability to quickly and securely transfer money without having to go through unnecessary, complicated procedures has cemented its place in the lives of modern consumers.
Even late adopters are recognizing the incredible convenience, speed, and simplicity that mobile P2P services offer and are becoming more comfortable using their smartphones to securely handle their financial needs.
APM refers to Application Performance Management or Application Performance Monitoring and is an essential tool to help optimize and monitor the performance of your apps.
APM, or Application Performance Management, is largely an industry or vendor-created term for anything that has to do with managing or monitoring the performance of your code, application dependencies, transaction times, and overall user experiences.
Since APM is sort of a ubiquitous term for anything and everything performance-related, some vendors use the term to mean totally different things. APM can span several different types of vendor solutions.
- App Metrics Based – Several tools use various server and app metrics and call it APM. At best they can tell you how many requests your app gets and potentially which URLs might be slow. Since they don’t do code-level profiling, they can’t tell you why.
- Code-Level Performance – Stackify Retrace, New Relic, AppDynamics, and Dynatrace are the typical type of APM products you think of, based on code profiling and transaction tracing.
- Network-Based – Extrahop uses the term APM in regards to its ability to measure application performance based on network traffic. There is a whole product category called NPM that focuses on these types of solutions.
The power dynamics of the payments industry are evolving as businesses and clients are shifting, from hard cash and checks to digital payments. Cards are boosting the retail businesses, and trends like mobile wallets paving the way for the future of payments. So, if you want to take your business to new heights, you must look into the above-mentioned trends.