Online Payments

Three Payment Trends Set to Make Headlines in 2020

2020 Payment Predictions

The payments industry continues to modernize and evolve under the influence of new payment innovations and changing consumer preferences for convenient and quick transaction processing. 

For many, these new waters can be challenging to navigate, and we continue to see countries react to these demands in different ways. In Canada, desire continues to grow for faster, frictionless payments from both consumers and businesses yet, it has traditionally been a country slow to adopt new payment methods.

To supply this demand and with the rise of fintechs over the past several years, we have witnessed a considerable shift in digital and mobile payments to industry consolidation and collaboration. With major tech players now entering the payments space, such as Facebook and Google, businesses can find it challenging to sift through the noise and find the solution best suited for their needs. 

So, with 80% of businesses demanding more payments options, how will the industry react in 2020? We have shared our top predictions for 2020 below: 

Increasing Digital Payment Options 

Customer experience is becoming more of a priority for businesses as consumers continue to drive brand value and competition. Now more than ever, consumers are opting to conduct payments through direct account-to-account transactions, as opposed to traditional credit card processing. This is illustrated through Payments Canada’s 2019 report which found that electronic payments accounted for 73% of Canadian consumer financial transactions in 2018. 

As such, in 2020 we will see increased competition and availability of digital payments options for consumers, leading to a busier marketplace and an intensified need for businesses to differentiate. 

Growth of Open Banking

Open banking addresses consumer demands for enhanced speed and a seamless, streamlined payments experience through opening internal bank data and processing to external parties through digital methods. This year, North America has witnessed an increase in growth in open banking services due to ongoing innovation from fintechs transforming interactions between banks, incumbents and consumers. 

In Canada, consumers continue to choose banking institutions over fintech disruptors with a recent report from Ernst and Young finding that only 50% of Canadian respondents were fintech customers compared to 64% of respondents globally. However, a PYMNTS and Green Dot survey found 57.5% of consumers are interested in banking with companies that are not FIs so in 2020 we could witness Canadians shift away from traditional banking methods to embrace fintech offerings. 

With this in mind, we expect to see banks facing increasing challenges when it comes to competing for consumer attention in an increasingly digital environment.  

Fintech & Bank Collaboration

In order to be able to offer the improved digital payments options consumers have come to expect, in 2020 banks will need to collaborate and establish strategic partnerships with fintechs. This will enable them to utilize behavioural data insights to enhance offerings and build a better payments experience for consumers and businesses alike. 

A collaborative banking environment would also help to strengthen consumer trust as consumers can remain with their banking institution while benefitting from the improved customer experience that fintech technologies can provide. Therefore, as we enter a new decade, we predict that more banks and fintechs will start forming and leveraging strategic partnerships in order to deliver the financial services expected from an increasingly digital-savvy set of consumers.   

Overall, it is anticipated that 2020 will be a year of restructuring for payments globally and both businesses and consumers alike will be able to take advantage of the benefits, including safer data sharing, increased choice and enhanced services.

Learn more about the solutions we provide at VoPay.

read more
Open Banking

Open Banking: Convenience Doesn’t Have to Compromise Security

payments security

The Convenience Factor

In the digital age more and more consumers seek convenience in banking, and this is demonstrated with the digital payments industry reaching a value of US$721 billion in 2017. This desire for convenience is especially true of the younger generations with a survey by Accenture finding that 1/3 of those aged 18-44 were happy to share their financial data with non-banking third parties if they would benefit through deals or better user experience, whereas the average figure for individuals aged 45+ was half that.

Therefore, as an increasing number of consumers seek a better payments experience, technological innovations are necessary to adapt to and fulfill this need.Open banking is one such innovation which is causing a stir as fintechs continue to revolutionize the global payments landscape. Open banking not only increases convenience for consumers but it also reduces friction and saves businesses both time and resources.

However, as with all new payments’ innovations, it is necessary to introduce regulations and legislation that safeguard against potential security risks. This ensures the public feel confident in the knowledge that new innovations are secure while also providing the smoother payments processes that they crave. Further evidence from Accenture echoes Canadian consumers desire for these regulations with 71% of respondents citing that additional security measures would help alleviate their open banking concerns.

Security Implications

The introduction of such regulations is causing hesitancy in the adoption of open banking in Canada. This is leaving room for practices, such as ‘screen-scraping’ whereby third-party providers (TTPs) access user financial data by logging into digital portals, that pose potential privacy and security risks.

So what solutions exist to overcome these potential security risks?

Tokenization is a solution that we use at VoPay to ensure consumers remain protected while enjoying this increased convenience. Tokenization is a security technology method that is designed to reduce the amount of data necessary for a business to access in order to complete financial transactions, thus protecting consumer’s credit card transaction data. This is achieved through replacing the sensitive personal data with unique identification systems that are randomly generated. These tokens retain the essential information needed for the transaction while protecting the security of the data. Some of the benefits of this solution include:

1.     Quicker transactions: tokenization is completed with smart contracts which allows for elements of the process to be automated, reducing administrative time and improving the speed at which transactions can be completed.

2.      Payments efficiency: improves the potential for more efficient and easier transactions.

3.     Increased accessibility: this is especially true for small to mid-sized businesses as tokenization is empowering them to increase the security of customer’s credit card and e-commerce transactions and keep up with the larger competition.

Solutions such as this demonstrate that open banking does not have to compromise security and we are beginning to see Canadian authorities taking action to meet customer demands for banking innovation and convenience.

Learn more about the solutions we provide at VoPay.

read more