2020—the year that Generation Z takes hold of the consumer market. Businesses will need to cater to this “born digital”, mobile-first generation that expects on-demand service, extremely fast transactions, and a seamless experience for retail, banking, financial services, utilities payment, and more. They live their lives through their smartphone, hold an estimated global total spending power of 3.4 trillion U.S. dollars, and you can be sure they don’t want to carry cash.
Stereotypes of the much debated (and much joked about) generation appear to be filtering into many emerging trends that affect the payment industry. Here, we explore six megatrends predicted to shape payment in 2020.
2020 outlook: 6 megatrends for payment
1. The cashless world
It’s no longer just about cash to plastic. Digitalization is streamlining payment into a new cashless world of virtual currencies and mobile wallets. Scan to pay, tap and go, and other convenient, fun, new payment methods are likely to rapidly develop and become much more popular. Biometric payment with fingerprint, facial, or even gaitrecognition could make its way to the mainstream—though may face some regulatory challenges. The foundations are laid, and by 2028, some forecast that cash will make up just 9%of transactions.
2. Commerce: unified and frictionless
Today’s population waits for no man. The entire customer journey must be made effortless with payment methods such as in-chat payment, payment by voice command, and invisible payments requiring no interaction at all. As more customers use smartphones like personal shopping assistants in physical stores, innovations for delivering product info, making payments, and organizing delivery will advance. We’re already seeing restaurants offering mobile ordering for in-house guests and Amazon has built bricks and mortar. The omnichannel approach to commerce will step up a level to become truly unified and frictionless for customers.
3. The rise of FinTechs—and new collaborations
Seamless customer experience not only applies to commerce. The banking and finance space is ripe for innovation, as customers seek digital-first solutions for bills payments, loans, insurance, and more. Smart apps provided by a plethora of young FinTechs are starting to disrupt the market with a more customer-centric mentality. There are already signs of collaborations forming, too, as established banks and financial powerhouses struggle to adapt to next-gen financial services. 2020 could see some exciting fundamental shifts in the finance, banking, and payment industries driven by tech-savvy consumers.
4. The platform economy
Customer centricity will remain at the core of sales and commerce, with multiple channels targeting customers using 360-degree data analytics. But the customer journey is evolving, turning consumers into merchants. The platform economy is booming, connecting supply and demand via the digital sphere. And with Gen Z about to make up for nearly 40% of consumers, commerce will likely see an upswing in peer-to-peer (P2P) selling and social sharing of purchases. The market is also waking up to issues of sustainability and environmental awareness, particularly in fashion retail. This will likely fuel social selling and online marketplaces, which blur the lines between merchant and consumer. The platform economy will require simple ways to pay with features for instant transfers and cost splitting, as well as simpler systems for accepting payments.
5. Making tracks in new mobility
Urban mobility is undergoing an exciting transformation, with mobility-as-a-service (MaaS) models for ride sharing, renting, hailing, and, of course, the e-scooter hype, contributing to a predicted market size of 347.6 billion U.S. dollars by 2024. To accompany this streamlined, customer-centric approach to mobility, customers will look for fast, secure, hassle-free ways to pay. In-vehicle purchases for fuel, servicing, or snacks on the go are also beginning to take off via smartphone app but there’s even potential for voice-controlled purchasing.
6. Data levels rising
Higher demands for high-speed, endless data plans, 5G installation, and worldwide data volumes rising to what could be 175 zettabytes by 2025 might open up new market shares. Huge neural networks of data will need to be stored and consolidated into central hubs for easier management—with the help of AI algorithmic excellence. Increased popularity in digital payments could cause a surge in the volume of data transfers. Payment gateway connections, under new regulatory frameworks, will need to be able to deal with large amounts of data in a way that’s more efficient, faster, and more secure than ever before.
We hope you enjoyed our predictions of big topics for payment in 2020. Make sure to check out the following related articles to dive deeper into the concepts and innovations mentioned.