Innovations in the payments industry have exploded throughout the pandemic. As multiple lockdowns restricted people from leaving their homes for months, there has been a rapid shift in consumer and business behaviour. A growing reluctance to touch physical money has meant that cashless payments now account for the majority of store transactions, and ecommerce increased by 47% throughout the pandemic. Yet, this only scratches the surface of what the future holds for payments as a force for good in the year to come. Here are a few examples of what to expect in the payments sector in 2022 and beyond.

Giving businesses more choice over cross-border transactions

The intricacies of international fees made headlines recently when Amazon UK announced that it would no longer accept UK-issued Visa credit cards from January 2022. This was primarily due to a post-Brexit rise in interchange fees on cross-border transactions between the UK and EU businesses. It served as a wake-up call to traditional banking institutions, as there is now a much broader breadth of payment options available for merchants. Beyond interchange fees, this applies to overseas transfers as well.

Ruth Wandhöfer, chief innovation officer at specialist financial services provider GC Partners, believes that 2022 could see more companies moving away from big banks to transfer money in a bid to save costs and boost efficiency. “There are some big financial advantages for businesses looking to use digital payments firms to send or receive money internationally,” she says. “Data gathered by the World Bank shows that banks have an average cost of 10.66% per transaction. Non-legacy systems such as ours offer efficiency, savings and value-add services to businesses that need to transact, no matter the hurdles in their way.”

Wandhöfer reminded us that despite rising costs, many businesses have continued to grow by actively seeking out digital payments solutions to successfully navigate their way into new markets and opportunities around the world. “Companies just need to be made aware that they have a choice when it comes to moving their money,” she says. “Fintech has done a brilliant job with payments innovation – the next hurdle is educating the public about what is available to them.”

Protecting businesses from fraud through AI 

With increased business activity comes increased fraud and during the pandemic, cybercrime rose by 600%. Jane Loginova, CCO of  BPC Banking Technologies and the CEO of its processing payments fintech Radar payments, believes consumers will need to be better protected.

“Across the fraud prevention industry, there are high expectations for the coming year as integrated connections and developments between technology and commerce drive major shifts,” she says. “As 2022 brings a welcome boost in alternative payment methods, we’ll see an increased use in fraud detection tools thanks to 5G leading us into a new connected era of networked transactions and IoT.” Loginova also believes that there will be increased demand for multi-layered real-time fraud solutions which tend to leverage machine learning and AI to detect fraud. These systems can significantly boost the reaction times of organisations to fraud innovations.

Shawn Tan, CEO of AI ecosystem builder Skymind, talks about how AI is spearheading the most significant technological revolution ever witnessed. AI solutions are already being used at most major banks, with 75% of banks with over $100bn in assets implementing AI strategies.

“AI solutions can give a more robust level of customer service in both visible and invisible ways to the consumer,” says Tan. “Although the consumer may not be able to view middle-office solutions, these play a crucial role in aiding banks’ actively monitoring fraudulent transactions in real-time, saving consumers tens of millions each year.”

Empowering consumers through crypto

The seeds of the crypto boom (bitcoin and its blockchain) were created to transfer economic and spending power back into the hands of the user, and many in the current crypto space continue to use this technology to do the same. Wirex is a borderless payment platform that allows users to store, exchange and spend fiat or cryptocurrencies as they wish. “We recognise that it is hugely restrictive to tell people what and how they use their money,” says its CEO, Pavel Matveev. “We see that there is a huge financial advantage to being able to transact in whichever currency you choose.”

As central banks continue to intervene in currency markets, it is sorely felt by users who have long noticed their money just isn’t going as far anymore. “For too long, we have been told what money we can spend, and in an international world, this is costly to both consumers and businesses,” Matveev adds. “Wirex is here to help people get more from their money, to reduce the friction in the payments network and to generally help users to feel more included and empowered.”

Supporting charities with efficient payment systems

Charities were hit hard financially by the pandemic: 40% of charities dipped into reserves at the peak of the crisis and lost over £6.4bn of anticipated income.

Payments firm Banked wants to help. The London-based start-up sits in between banks, businesses and individuals to help manage how financial data is accessed. From zero fees on donation transactions to innovations around how donations are paid, Banked is passionate about supporting charities in their fundraising efforts and will continue to offer considerable efficiencies to charities in the year ahead. “We believe the entire donation that someone gives should reach its destination and not be subject to payment fees,” says Banked CEO Brad Goodall. “At Banked, we have a zero-fee policy for any direct Pay by Bank charity donation.” Goodall highlights the desperate need for innovation in digital fundraising and how significant changes are being brought about as a result.

“There is a reliance today on costly and inefficient payment methods, like mailers with manual card entry fields, collecting cash, and so on,” he says. “At Banked, we’ve created Payment Links to enable QR code scanning on a television for taking donations during live events, inserts on mailers for direct instant and secure payment, and the ability for street charity fundraisers to collect simple one-off donations without the need for a card reader.”

Banked has also built a platform to help businesses to support charities by donating some of the cost savings they receive with Pay by Bank payments. “Beyond transaction fee savings, businesses have benefits in lowering costs and improving sales, and we enable them to give back to social causes on behalf of the customer with ease,” adds Goodall.

Promoting financial inclusion and budget control

Women represent 55% of the world’s unbanked population that have zero access to banking or insurance products. “Financial inclusion includes facilitating savings, payments and other financial services for the previously unbanked population and has largely become possible thanks to payments innovation,” says Kristy Duncan, founder and CEO of Women in Payments.

One of those innovations has been prepaid, branded cards, which also support budget control. Customers can manage the balance stored on a prepaid card or the amount allocated for their monthly expenses. This is just one opportunity to help close the financial banking divide, says Günther Vogelpoel, CEO at Recharge.com. “Prepaid cards don’t require a connected bank account the way a debit or credit card does,” he explains. “They are a lifeline for the billions of people around the world who remain un- or underbanked without access to regular financial means.”

Another crucial innovation has been increased access to digital transactions, which can lower transaction costs, as Azimo COO Dora Ziambra explains. “Different payout methods such as mobile wallets and home delivery, means rurally based recipients (usually women) are easily reached,” she says. “For Azimo customers, the cost per transaction is a fraction of that of traditional money transfer companies, which is useful for small value transfers.”

All in all, the payments industry is set to see many exciting developments that lead to more empowerment for consumers and businesses alike. While these have already arguably begun throughout the pandemic, 2022 is expected to see even more progress.

Dec 14, 2021 | Source: UKTN