Online Payments

To our clients, partners, stakeholders and community,

During these unprecedented and challenging times I wanted to update you on how we’re approaching the situation at VoPay as the novel coronavirus (COVID-19) continues to spread and impact our families, friends, businesses and communities. We are all in this together.

Our first priority is to ensure the health and safety of our people and help curtail the communal spread of this disease. In support of flattening the curve of the pandemic and following the guidelines set out by government officials and health authorities, we have temporarily instituted a work-from-home policy for all VoPay team members for the foreseeable future. We have also cancelled all business travel to reduce any risk of our employees being stranded internationally, and we currently have no plans to attend any events through the end of Q2 to support social distancing measures.

Fortunately, we are able and are accustomed to operating our business remotely. We have well-developed business continuity plans and have therefore experienced no disruption since enacting these policies. 

Please be assured that our entire team is well-equipped to deliver an industry-leading digital payments solution and training to support businesses during this challenging period. This is a time for our communities to come together and for us to support one another. With that said we are deferring our setup fee for all small businesses that require an enhanced digital payments solution for 90 days from the date of sign up. Please get in touch if you have any questions.

Our decision-making with respect to COVID-19 will continue to be informed by the knowledge of local and national health authorities and we will continue to evaluate our policies as the situation evolves. 

We truly appreciate your partnership, support and continued trust in us. 

Take-care and stay healthy,

Hamed Arbabi

CEO & Co-Founder

VoPay

Even before the coronavirus outbreak, people were increasingly using cashless payments and digital checks (or e-checks) over cash, coins, and paper checks. What may have started out as a convenience, has—in the midst of a global health pandemic—also become the smarter and more hygienic way to pay. This is especially true as more people turn to e-commerce, digital payments, and digitized checks to transfer money (and pay bills) safely from the comfort of their home.

Money, of course, changes hands frequently multiple times every day. It is a very high-touch surface. However, since the COVID-19 outbreak, people and businesses have been avoiding cash for this very reason. To be clear, the World Health Organization did not confirm that banknotes transfer the virus. However, according to Bain & Co. partner, Thomas Olsen, there is a “psychological factor” for many people who believe it to be unclean and so choose to avoid it.

“Cards only” is quickly becoming the norm in brick-and-mortar businesses. 

This way of thinking may not only accelerate the already growing use of cashless, contactless, and digitized checks now but also in the future. Many of the same hygiene practices that we have become used to during this time, may stick with us in the future. Cashless payments and digitized checks, which we’ll discuss in more detail, are among them. 

Digitizing checks: Say goodbye to paper checks

Digital, digitized, or electronic (e-)checks performs the same function as a traditional paper check. However, digitized checks come with modern perks such as convenience, lower costs to issue, increased security features, and faster turnaround. Paper checks take days to process and are often fraudulent or bounce. Digitized checks can be delivered in real-time with the same day or overnight fulfillment. 

This time savings alone—not to mention the cost and convenience factors—should be enough to finally say goodbye to paper checks. In the U.S., for example, check payments fell 7.2% per year from 2015 to 2018. But it’s still not entirely gone. In Canada, for example, financial institutions still process nearly a billion checks every year. 

We wrote a post called Paper To Plastic To Digital Payments: Evolution Of Credit Cards And Checks if you’re interested in further reading. 

Why are nearly a billion checks still changing hands in Canada when there’s a modern, convenient, faster, cheaper, and more secure alternative? “People default to what’s familiar, unless there’s something to jolt you out of it,” Jodie Kelley, CEO of the Electronic Transactions Association told CNBC recently. “Contactless payments have come up as a new option for consumers who are much more conscious of what they touch.” What if this same thinking applied not to just contactless payments, but to paper checks as well? 

Ready for a secure and safer world of digital checks and payments

There are services, albeit VoPay included, that processes and verifies digitized checks—and digital payments, invoices, bulk e-payments, you name it—almost instantly. When it comes to digitizing checks, no physical material ever needs to be touched or changed hands. Personal financial information, such as our bank account details and bank branch numbers, ever need to be mailed or shared. 

What if we took it one step further, moving beyond an electronic version of a paper check and tokenized the whole process? At VoPay, for example, the entire digital payments and digital checks system are tokenized. We wrote a post about tokenization and digital payment security, but essentially, it means that we’ve scrambled (algorithmically) the bank information and issued a secure token in its place. 

During this time of health and safety uncertainty, many of us have turned to online shopping and delivery and digital banking to pay our bills or accept money transfers. People are steering away from handling cash back and forth. It’s a safer, more secure, and more convenient way forward. We believe that the same holds true of paper checks.

Learn more about digital payments and VoPay.

During this time of uncertainty, health and safety authorities recommend practicing social distancing. This means maintaining a safe distance from others and avoiding local public transportation. Because of this, large scale events and gatherings, such as March Madness, shows at the Met, Carnegie Hall and Broadway, and Disneyland and Walt Disney World, have been cancelled or closed. Companies are beginning to encourage employees to work from home. Now is the time to unwind, stay home with loved ones and connect in person on a small scale or digitally. 

One (very thin) silver lining throughout this global pandemic is the digitization of our lives should we need to stay home for a time. Here are five basic functions that can continue with relative normalcy as we practice safe social distancing. 

5 Functions during social distancing supported by digitization 

1. Get paid, pay bills, and transfer funds online

Digital payments have made it possible to get paid, pay bills, transfer funds, and make purchases online Perhaps without realizing it, the digitization of payments has changed how we do everything online. Employers can transfer funds digitally right into their employees’ bank accounts in almost real-time. People can pay rent, health care and utility bills, online—without ever having to physically handle money, cheques, or even go to a bank. 

Interestingly, a financial services agency, The Futurist Group, recently conducted a two-wave study on U.S. consumers and contactless payments before and after the coronavirus. Of the 3,187 Americans surveyed, about 38% now see contactless (or digital payments) as a basic need or feature of payments, up from 30% a year ago. Those who don’t need contactless payments has fallen from 41% in March 2019 to 33% in March 2020.

A World Health Organization representative explained that “money changes hands frequently and can pick up all sorts of bacteria and viruses,” advising the use of contactless payments whenever possible. 

2. Purchase groceries online and order food delivered

E-commerce sites, restaurants with online ordering options, food delivery companies, and digital payments have all made it possible to have food delivered right to our doors. We can shop online for essentials (and non-essentials) and have them delivered directly to us within days or even hours. We can order breakfast, lunch, dinner, snacks, groceries, and medications online. We can support local businesses, such as owner-operated restaurants that are otherwise hurt by social distancing, by ordering their meals via phone or online for direct delivery.

3. Stay connected to loved ones digitally

It is essential to maintain contact with our friends and family members during this time. Discuss their health, wellness, safety, and happiness to ensure that they have everything they need. Applications both on our phones and computers have made it possible to connect and check-in with our loved ones and those who may need us, instantly and digitally. Of course, whenever health and distance allow for it, socializing in person (in small groups) can do wonders for our overall happiness during this time. 

4. Work online from home and connect through video meetings 

Depending on our occupations and health, we may be able to work from home and conduct meetings online. Just as applications allow us to stay digitally connected, many of these same apps allow us to stay connected to our teams via email, video, instant chats, and shared documents, for example.  

5. Entertain, inspire, and educate ourselves online

While major in-person cultural events are cancelled for health and safety reasons, there are smaller-scale ways to entertain ourselves. For example, companies like Netflix, Amazon Prime, DisneyPlus, and CraveTV have made it possible to watch thousands of hours of movies and shows. Likewise, there are informative, entertaining, and inspirational e-books, podcasts, social channels, videos, documentaries, articles, news sites, articles, you name it, all available online.  
According to health and safety authorities, a few things that you can do to support yourself are to unwind, take care of your mental wellbeing and happiness, connect with others, and maintain positive thinking. Prepare yourself, but take some comfort in knowing that the digital world has options to support some of your needs and welfare. 

Consumers everywhere expect the same choices that they get cross-industries and services. They decide how, where and when they pay. Lenders have taken steps to rise to the occasion, adding new systems, billing and payment options to stay relevant and competitive, meet the digital demand and increase profits. But has it been enough? 

A 2018 Payments Canada study found that more than 80% of Canadian small businesses want more payment options. They’re willing to integrate new technologies into their operations and move away from cash and cheques—if they had other options. Conversely, in 2017, customers paid 78% of their loan payments electronically. What’s more is that Millennials—a majority of today’s workforce and borrowers—expect to do everything digitally, not paying their loans online but with their debit cards.

As more systems go digital to stay competitive and meet consumer expectations, how can the lending industry be more innovative? 

Loan management systems were designed as a streamlined way to evaluate, approve or deny, offer, provide and collect funds to and from customers. However, as with all digital systems and services, it’s time for an update. 

How loan management systems (LMS) benefit from digital bank payments

As the leader in payment innovation, VoPay’s technology offers a powerful layer that is designed specifically for the lending industry. Our iQ11 software is used for digital bank payments and loan collection and bulk e-transfers for disbursement. Here’s how LMS benefit from our software and digital payments:

1. Streamline disbursement and loan collection

VoPay’s API payment solution offers one centralized platform for all payment processes and loan collections. Businesses can easily send and accept money, set up and schedule payments, send bulk payments and review payment reports. Using our dashboard, users can view and manage multiple payments at every stage in their lifecycle from one single digital hub. 

2. Eliminate pre-authorized debits (PAD) initiation

When pre-authorized debits (PADs) were first designed, they were a convenient way to set up multiple bill payments and transactions. However, let’s look at the customer journey of setting up a PAD in Canada. First, whoever is setting it up has to fill out a PAD agreement in writing, online or over the phone. The bank then sends a written confirmation that acknowledges permission was given for the withdrawals. Three days later, the first withdrawal can happen. This process probably doesn’t meet consumer expectations today. Our Intelligent EFT/ACH (iQ11) payment service eliminates the pain points of PAD initiation.

3. Faster processing and reconciliation times

The Payments Canada study found that 54% of businesses believe they are spending too much time on payment processing activities. Our software makes it easier for businesses to be more efficient and effective with payment and loan processing. We’ve set up real-time acknowledgement and daily status reports into our dashboard for quick reconciliation. Likewise, beyond streamlining the signup and digital payment process through email, our funding process is near real-time. Businesses can now send funds within the hour or overnight, depending on volume, which we’ll cover in our final point. 

4. Reduces NSF and return transactions

Similar to the amount of time that it takes to set up a pre-authorized debit, it takes time for financial institutions to accept, review and process cheques—and even longer for the payments to reach its end recipient. Because of both our faster processing and reconciliation times and our use of digital bank payments, non-sufficient funds (NSFs) and return transactions are significantly reduced. Rather than using cheques or credit cards that are subject to longer processing times, we developed next-generation bank payments with our Intelligent EFT / ACH (iQ11) payment service. This informs the business in near real-time of whether there are sufficient funds but without ever sharing any bank account details or risk.  

Read more about the cost and risk of NSFs in our recent blog post. 

5. Enables efficient bulk payout

Lastly, our e-transfer bulk payout enables businesses to disburse loans instantly by only using email addresses. Up to 1,000 Interac e-transfers can be sent in almost real-time and up to 100,000 can be sent overnight. Plus, up to $10,000 can be sent per payment to multiple recipients all at once through our robust API. Not only does this streamline the bulk payment process, but it allows lenders and businesses to meet today’s consumer expectations for experience and efficiency. 

Learn more about VoPay today.

This post is based on the comprehensive findings published by Payments Canada in its annual 2019 Canadian Payment Methods and Trends report. 

Canada exchanges almost $210 billion worth of payments and financial transactions on average every business day. More of these transactions take place electronically each year as Canadian payment systems and business processes go digital. According to Payments Canada’s 2019 Canadian Payment Methods and Trends report for 2018, the payment market grew to 21.1 billion transactions worth more than $9.9 trillion. 

Here is a look at the most significant findings and statistics for both Point-of-Sale (POS) and remote transactions in Canada in 2018.

Canada’s cashless payments: Point-of-Sale (POS) stats

Point-of-sale (POS) transactions take place either physically or virtually via online and e-commerce vendors and payees, brick and mortar merchants, or mobile and in-apps. This space is undergoing massive growth, evolving largely because of electronic payments and to support mobile e-commerce. 

Fast facts on Canada’s POS transaction growth in 2018 

The big picture of POS in Canada

1. The total volume of POS transactions in 2018 was 15.7 billion.
2. The total value of POS transactions in 2018 was over $856 billion.
3. The average POS transaction value was $54 in 2018.
4. In the last five years, POS volume has increased by 5% and value by almost 25%.

Types of POS payments: Debit is king in Canada

1. Debit cards are now the most widely used payment method at 6 billion transactions, overtaking cash transaction volume for the first time in 2017. 
2. Contactless debit made up 60% of the total volume of contactless transactions and 35% of the value. The average debit transaction was $42.
3. Credit cards are the second-most-used POS payment method in volume and had more transactional value than all other POS methods combined in 2018.
4. Despite 4.5 billion POS cash transactions—it continues to decline every year, down 40% from 2013.

Mobile wallets and contactless transactions

1. Mobile device and contactless card payments totalled 4.1 billion transactions (a 30% increase since 2017) and $129.9 billion value in 2018.
2. More than one-third of Canadians used a tablet, phone or device to make a purchase in 2018.
3. Canadians who use credit contactless payments tend to be younger, have higher earnings and live in British Columbia and Ontario.

E-commerce POS and credit cards

1. Approximately 20% of all of Canada’s shopping has migrated to e-commerce.
2. Credit card usage is faster growing than debit because of rewards points and the perceived ease-of-use and security for e-commerce.
3. Canadian online merchants and businesses lack diverse payment options for e-commerce.

Canadian businesses love remote payments (and EFTs)

Remote transactions and payments are all those that don’t require a POS device or application. This often means that payors rely on a third party such as a bank or financial technology partner to route payments through Electronic Funds Transfers (EFT), cheques, and other payments. A few examples include bill payments, direct deposits, pre-authorized payments, and P2P and B2B transactions. 

Fast facts about remote payments in Canada

1. There were a total of more than 4.5 billion remote transactions in 2018.
2. Remote transactions totalled approximately $9 trillion in value in 2018.
3. These transactions make up 91% of the total Canadian transaction value, but only 25% of the total volume.
4. The average remote transaction value was $1,993.

Electronic Funds Transfer (EFT) transactions: Number one for businesses

1. EFT transactions are the leading payment method for businesses both in value and volume—and overtook cheques for the first time in 2018.
2. EFT growth lessened from its growth spurt in 2017 but accounts for 49% of remote payment value.
3. Electronic payments totalled 73% of the total payments volume and 59% of value in 2018.
4. The average EFT transaction size was $1,718 in 2018. 
5. EFT and cheques dominate remote payments in Canada totalling $8.8 trillion in combined value, but credit cards and online transfers are growing quickly.

In the end, Canadian businesses are continuing to move all systems, including payments, to digital. While they are not letting go of paper cheques and cash as quickly as consumers are, they are increasingly adopting electronic payments. Business owners and consumers will always seek more efficient, faster, and easier ways to make payments. 

Learn more about VoPay and how we’re digitizing payments in Canada.

Before plastic cards, credit cards were made of paper and contained a customer’s important banking information. This may sound archaic, inefficient, and insecure, depending on your age and whether you’re one of the millions of people who still use paper checks (or cheques). 

For one reason or another, the evolution of checks to safer, more convenient plastic checking or debit account cards never eradicated the original paper version. Canada, for example, processes nearly a billion checks every year, even though it still takes days to process (and they’re fraught with fraud). Likewise, unlike the rapid credit card evolution to mobile wallets and instant online payments, the evolution of checking accounts to instant online payments has had slower adoption. 

Let’s consider the history and evolution of both credit cards and checks—and predict the (present) future of online bank payments. 

Motivated innovation: The credit card evolution

In 1970, IBM launched a pilot project with American Express and American Airlines. They developed the first-ever magnetic stripe—that would become integral for the evolution of credit cards, bank cards, ticketing systems, passports, and the like around the globe. The back of every bank card could now automatically store personal financial data. This discovery was not only revolutionary, but it was also essential. 

IBM was building computer systems and needed a way to increase adoption. Airlines needed to streamline the ticketing and boarding process. Banks wanted their customers to be able to automatically withdraw and deposit money from remote locations.  

The biggest innovation motivator, however, for evolving credit cards was the uptick in fraud in the 1960s. A mechanical imprint and signature to verify someone’s identity may seem questionable today, but consider how far we’ve come. Back then, a merchant had to make a carbon copy of a customer’s credit card, handwrite the cost and tax, physically deposit the slip at the bank, and wait for bank tellers to manually check the signature and account for funds and against known fraud accounts. Only then could they approve or reject the payment. 

The several-day lag time between purchase and account verification opened customers, merchants, and banks up to all kinds of security, NSF, and fraud risks. Unfortunately for paper checks, this archaic security risk is still a present concern. For processing credit cards, the archaic carbon paper machines that manually “charged” credit cards quickly became a thing of the past. 

In the midst of this credit card revolution, in 1977, there were 8.2 million credit cards in circulation. Of course, we know that credit card evolution and innovation didn’t stop there. The 1990s saw the emergence of EMV chip smart card technology and its simple and automatic tap and instant approval system. By 2008, mobile wallets launched to improve Apple sales. Online shopping using credit cards and mobile wallets have taken off. By the end of 2017, the average American held 3.1 credit cards—and the outstanding debt they can hold.

Checks to debit cards to digital payments 

Interestingly, both credit cards and debit cards benefitted from and evolved with innovations like the rise of plastic, magnetic stripes, and EMV chips. Yet the former tends to send its users into crippling debt. In the third quarter of 2019, credit card loans reached $1.08 trillion in the U.S. The rise in credit card use over the decades has seen with it a rise in outstanding consumer debt. 

What if innovation and further adoption in the checking sector could put an end to that? The hassle of having to go to a bank to deposit a check, for example, and wait for days for it to be processed should be a thing of the past. Just like the carbon paper slips for credit cards. 

The same goes for processing and verifying digital payments for checking accounts. Since checking accounts have undergone digital transformation, the banking industry has seen a rise in more secure and efficient technologies thanks to financial technology companies and banks working together. For example, ACH (Automated Clearing House) payments in the U.S. or EFT (electronic funds transfer) in Canada transfers money online between accounts. Examples are direct deposits and online bill payments. These transfers between checking accounts online are becoming faster, more secure, and easier than ever. 

The future of checking accounts and digital payments 

At VoPay, our Intelligent EFT / ACH (iQ11) technology processes and verifies digital payments instantly—without the security risk of sharing credit card information online or mailing a paper check. In fact, with our intelligent EFT and ACH solution and secure partnerships, no financial information is ever shared. The entire system is tokenized (stay tuned for an upcoming blog post on what that means for your safety and security). In short, personal financial data is replaced with an algorithmically generated number. 

This is the future of online banking, payments, and shopping. Customers can work their way out of credit card debt by instead using their debit cards online, anywhere, instantly, and securely.

An ACH payment is a bank term that stands for the Automated Clearing House. ACH payments are electronic transfer systems that move money between bank accounts in the U.S. A few examples of ACH payments include direct deposits, payroll, online bill payments, tax refunds, and vendor payments for merchants and small businesses. 

Automated Clearing House Network

Since 1974, the Automated Clearing House (ACH) Network has been run by the National Automated Clearing House Association (also known as NACHA). In other words, they are responsible for the majority of all payments in America. 

The ACH Network that is responsible for the payments is one of the biggest payment networks in the U.S. In 2018, nearly 23 billion transactions were processed valued at more than $51 trillion. According to one source, the number of transactions in 2017 was equal to approximately 66 transactions and more than $140,000 for every living American. The ACH payment network also represents more than 10,000 financial institutions, not to mention consumers and businesses. 

How does ACH payment processing work

ACH payments are transfers of money between two bank accounts and can be broken up into ACH debit and ACH credit. Payments are either transferred (or pushed) from your account or received (or pulled) by another. 

ACH Debit: Pulling money

Pretend for a moment that you’re a business owner with a utility bill to pay. You had previously provided your account and bank routing number to the utility company and approved direct bill payments. The company sets up an ACH debit to pull money from your account. 

ACH Credit: Pushing money

Assuming that you are still that same owner with a utility bill, you can also initiate the payment. You can create an ACH credit to withdraw or push funds from your account to the utility company.  

How ACH payment processing works

In order to receive or send ACH payments, one has to connect their bank account and routing number to enable automatic payments online. Once that’s happened, here’s how the processing works: 

1. Initiate transfer: Sending money triggers an initial transfer request to the central clearinghouse.
2. Sorting: The ACH Network sorts the payment requests and sends it to a receiving bank.
3. Processing: This bank processes the transfer to either an ACH credit or debit. If the payment is approved and was an ACH credit that “pushed” funds, the transfer is complete. 
4. Pulling funds: If “pulling” funds, or an ACH debit, then the funds must move back through the clearinghouse before arriving in the other account. 

How long does an ACH transfer take

The ACH Network processing time is getting faster and easier with every innovation but can still take up to 3-5 business days. This is because of the multi-step process and various bank touchpoints that each transaction must go through to be completed. However, recent changes to NACHA’s operating rules will make transfers faster than ever. As of September 2020, most, if not all, ACH transfers will be completed by the same day. 

How to make ACH payments

VoPay connects directly to both ACH payments in the U.S. and EFT payments in Canada, allowing users to accept, send, and bulk transfer payments online. Our secure technology allows users to accept and manage ACH payments directly from any bank account. 

ACH payments in Canada

Digital payments in the U.S. are called ACH payments. In Canada, however, they are called EFT payments, or electronic transfer funds. The difference is that ACH payments go through the Automated Clearing House Network. For more information, read our in-depth blog post called Everything You Need to Know about EFT Banking. 

Learn more about VoPay and ACH payments.

With the dawn of our new decade comes innovations, connectivity, speed, ease, and security in banking like never before. It is a thrilling time to be in digital banking. Payments can be made in an instant by merely saying the words aloud, tapping our phones or even driving. The future of digital banking is now and it’s invisible, open, and highly connected. 

Here are the top five trends in digital banking for 2020 and beyond. Perhaps most interestingly, yet unsurprisingly, is how connected they are. One cannot thrive or exist without another. 

The future of digital banking: Top 5 trends for 2020

1. Invisible banking and payments

Invisible banking is just as it sounds: banking behind the scenes that takes place automatically or with a simple tap or even drive by. It’s banking that we don’t have to think about, explains Penny Crosman’s in the American Banker article, The Rise of the Invisible Bank. 

Invisible banking happens behind the scenes when, for example, we tap our mobile phones to pay for transportation, coffee, or gas. It takes place with voice banking when we tell Alexa or Siri to pay a bill or transfer money. Invisible banking connects to our mobiles, wearables, laptops, POS applications, cars, and other Internet of Things (IoT) products. 

Invisible banking—and invisible payments, for that matter—happen everywhere, all around us, and at any time. Every device can accept and transfer payments, pay bills, save money, or invest it. We can now pay when, how, and wherever we want.

VoPay is a great example of invisible payments at work. Users connect their bank account and can make digital payments instantly and easily from then on without a second thought. In 2020 and beyond, invisible payments like this will be the new norm.

2. Mobile payments

Analysts predicted that mobile payments would hit the $500 billion mark by 2020. That represents a yearly growth rate of approximately 80% in five years. That is major growth, but not unsurprising. Mobile innovations have changed the way humans live, work, connect, and now bank and make purchases.

In our two-part blog series, 15 Fintech Companies To Watch In 2020, we discussed only some of the hundreds of innovative financial technology companies on the rise. Revolut, for example, is a tech company that is now one of the world’s fastest-growing bank account providers. Fintech companies are leading the shift toward mobile banking—and millions of mobile users are signing up for their applications.    

3. Open banking

In order for invisible banking, invisible and mobile payments, and innovation in the digital banking sector to continue to boom, we need open banking. We wrote a post on open banking, which dives into much more detail, but essentially it means “open bank data.” It is the sharing of customers’ financial data between banks and innovators, such as VoPay and other fintech companies. Collaboration for a greater purpose, if you will.

4. Financial wellness 

The digital transformation of banking and payments will be powered by both banks and fintech companies. Working together. Financial data ownership and control has been a challenge for years. Banks own the data that fintechs require to innovate. Yet, we’re seeing more countries begin to consider open banking regulations and more banks and fintechs are entering into equally advantageous partnerships.  

The challenge with invisible banking is that because it happens without much thought (not unlike breathing, according to ING’s CIO, Benoit Legrand), users will have to take extra care to keep track of their money and spending. Kristen Berman, a scientist and lab co-founder at Duke University said that ‘overarching trends in money have had mixed results for financial wellness.’ Essentially, financial apps have made it too easy to spend money. 

There are, of course, mobile applications to counter this issue. In our 15 Fintech Companies To Watch In 2020 post, for example, we discussed many financial wellness applications that aim to help us to budget, save, invest, improve our credit, spend less, and learn more about financial literacy in general. 

For example, Alan McIntyre of Accenture explained in the American Banker article that “the U.S. banking industry still has tens of billions of dollars of insufficient-funds fees and we’re getting to a point where technology should save customers from that.” However, fintech companies like VoPay aim to put an end to this: digital payments can be secure and easy for consumers, without the non-sufficient fund fees and risk for merchants.

5. Security, service, and AI

Regardless of how, where, and when consumers and merchants choose to bank, they will always demand superior security and service. When it comes to digital banking, security is of the utmost importance. 

It is essential for fintech companies and banks to continue to innovate security solutions and be transparent about data use. As open banking regulations come into play, consumers will own and control their personal financial data. Giving up this data control does not loosen the implied and expected security that consumers need from their banks, third-party fintechs, merchants, and other service providers. The coming years will see new developments in payment security and authentication, especially via AI and Machine Learning. 

When it comes to customer service and user experience, there is, however, a fine balance between AI and human support. Customer support can be automated and digitized to a point. After that, humans are increasingly wanting human support and connection to help troubleshoot or problem solve. McIntyre explained that Accenture’s research found that the majority of people want the reassurance of talking to a human being. 

Learn more about VoPay and the future of digital payments. 

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.

Credit cards dominate e-commerce payments but Canadian businesses want to offer their customers more payment options. We’ve put together an infographic comparing credit card and bank account payments. Thanks to VoPay’s innovative Intelligent EFT / ACH (iQ11) product, businesses can now accept online bank account payments, just like credit cards while saving 80% to 90% in processing fees.