2020 surprised us all since the beginning of the year, when it brought a global pandemic with it. But the surprise gradually began to be positive for the digital payments' industry, since the number of people in the region that performed online transactions doubled, rising from 45% to 83%, according to Mastercard and Americas Market Intelligence. The explanation is simple: Quarantines forced people to make online purchases, leveraging payment fintechs, which grew exponentially.
What we thought that this 2020 was going to happen with payments, accelerated tremendously, and gave way to new trends that experts expect for this period:
According to a Visa international study, 39% of micro and small companies have started accepting contactless payments in recent times, slowly leaving cash.
It is expected that this year, the number of people that prefer contactless payments continues to grow, even when the pandemic is over, since the awareness that it is safer and more hygienic has already been settled among the population. In that respect, virtual wallets that are used in mobile phones also gain relevance.
Security in transactions is an increasingly present concern in consumers. In that line, tokenization of payments has been growing in popularity. With this technology, card data is transformed into an encrypted token, which encrypts the account numbers under a numerical code, thus guaranteeing the safety of the purchase.
In the world, some institutions have taken the topic further, and have started launching credit cards without numbers or data, as not to compromise user security. Instead, they have a QR code on the back of the card, which has all the data necessary to make a transaction, but more confidentially.
In the United States, it is already a reality in some stores, such as Amazon Go, which is an innovative system where the customer moves around the store with a kind of smart basket, which is processing the codes of products that enter the cart, and loads them to the person's account, that is to say, to his/her credit card. The sequence is finished when the customer leaves the store and payment is processed.
The prediction, according to Juniper Research, estimates that this type of payments will reach USD 78 billion worldwide by 2022. In China, Alibaba already has this system in place. Europe does not remain behind, and already has companies launching pilots of this purchase model.
With more and more online processed transactions, fraud opportunities increase. According to data from the Cybersecurity Report 2020 of the Inter-American Development Bank (IDB), damage for cybercrime —including fraud— will reach USD 6 billion in 2021. As hacker techniques become sophisticated, our ways of defense should also do so.
It is expected that more big data, artificial intelligence, and machine learning in fraud issues start being used to identify the buyer behind each transaction better. According to experts, predictive analysis delivered by these tools is becoming an increasingly effective way for payment companies to examine their security and compliance systems.
Facial recognition payment or even beyond, eye retina recognition, are among some of the most futuristic payment developments. This biometric technology is already used in places such as the Moscow subway and stores in Asian countries.
Although we are still far from reaching these technology levels in Latin America, it is a good example of how payment innovation can achieve more agile and safer transaction mechanisms.
More Payment as a Service or Paas services will emerge for 2021. What does this mean? It refers to when banks and financial institutions subcontract the technology and operations of their payment platforms, to boost digital innovation, stay competitive, and reduce their operating costs.
Among the benefits that experts highlight from this model, is a 50% reduction of cost when managing processes, and the fact that Paas platforms are constantly updated, versus bank processes that do it every several years.
As we can notice, cash is less and less desired by people, which are moving to faster, safer and more hygienic digital means. Thanks to the pandemic, the world has evolved to different ways of paying with the lowest possible contact. This has facilitated that the card and fintech industry, to have a significant growth in the world, being also exponential in LATAM.
In addition, new technologies have been created, which today facilitate the purchase without the need of people paying in counters, or moving away from the comfort of their home. Not to mention progress in protecting digital transactions with biometric methods and artificial intelligence.
Also, nowadays, banks take fintech as a strategic ally that helps them to increase volumes, having safer transactions, innovating in a more agile way. This leads us to think that we are in a world that migrates, and radically migrated, to faster and more contactless transactions in the last 14 months, and will continue to evolve, giving more facilities to end consumers.
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