What Should You Look for in a Mobile Payment System? Innovation, Trends, and What’s New
Money moves across the spectrum in terms of refunds, cashback, rewards, and so on, whether it is P2P, P2Merchant/Business, P2Govt (P2G), or Business2Person (B2P). B2B Payments, B2Govt (B2G) Payments, Govt2Person (G2P), Govt2Business, and finally, Govt-to-Govt (G2G) Payments have undergone several changes in the last 4-5 years.
With a goal to make payments convenient, instant, fast, secure, invisible, and low-cost, we have seen many countries in developed markets achieve all of these, and this was possible by using cutting-edge modern technology to power digital payment rails like UPI in India.
In the year 2023, we will see the following trends in mobile payments across the world:
- a) Biometric authentication: With the increasing trend and risk of identity theft and fraud, biometric authentication can become a reliable and secure option for all digital payment transactions. Further biometric authentication also helps reduce the cost of authenticating a digital payment transaction.
- b) CBDC (Central Bank Digital Currency): Like India, we will see the central banks of various developed countries and economies pilot and launch their own digital currencies in 2023. Digital currency, like the e-Rupee in India, is issued in the form of a digital token that represents legal tender. It is being issued in the same denominations as the fiat currency (modern paper currencies).
- c) Gen Z: More specifically, the teen population of the Gen Z segment is a more tech-savvy or tech-exposed generation. This generation is ready to experiment, wants instant gratification, and will raise the demand for digital payment systems in 2023.
- d) Tokenization: In the year 2023, we will see more and more cards getting tokenized, introducing customers to a more secure and reliable payment experience wherein a 16-digit card will get tokenized into a unique code that varies every time a transaction takes place.
- e) Merchant Acceptance: We will have more and more merchants accept digital payments by deploying QR codes, M-PoS, and contactless payments like TapNpay using NFC (near-field communication technology).
- f) Mobile wallets: They will continue to play a pivotal role in making cashless transactions possible. Newer use cases will emerge for mobile wallets in the next 2 years; wallets will be interoperable; and new use cases like mass transit, employee benefits, expense management, corporate gifting, rewards and recognition, banking for teenagers, etc. will grow over 3X in the next 2 years.
- g) BNPL (Buy Now, Pay Later): This has scaled because of its affordability and easy repayment process in most cases using Standing Instructions (SI). Customers find BNPL to be a convenient payment option, increasing merchant sales and allowing lenders to offer small-ticket loans with simple repayment terms while earning interest income.
- h) Fraud and risk management: With the increase in digital payments, we will also see an increase in fraudulent transactions. Modern RBA (risk-based authentication) will be used by banks and payment companies to detect and prevent fraudulent transactions while facilitating digital payments. We will see more tech service providers offering fraud and risk management solutions to banks and payment companies in 2023.
(The author is Mr. Mehul Mistry- Global Head-Strategy, Digital Financial Services & Partnerships, Wibmo, A PayU Company, and the views expressed in this article are his own)