What Will Payments Look Like After the Pandemic?

June 22, 2021
Makayla Santino

Over the span of the pandemic, there has been incredible growth in payment sectors. Three payment experts were asked to divulge any trends we will witness post-pandemic and came up with the five listed below.

One: Embedded Finance

Embedded finance describes when technology companies provide extra financial services like payment processing or wealth management. An example of embedded finance would be Uber. To pay for the Uber, the payment is easily taken directly from your linked account and physical cash/card is not needed. Additionally, Uber started a bank of its own, Uber Money, that gives drivers access to their pay in real time and provides a Visa debit and credit card. 

Embedded finance does not only apply to large tech companies, but can help a variety of businesses. For example, these services may play a vital role in helping SMEs recover after the pandemic. Embedded finance provides more flexibility and an ability to build safeguards for these SMEs. 

Two: Buy Now, Pay Later (BNPL)

BNPL is fairly self explanatory by its name. It has become widely popular during the pandemic and is considered to be the fastest developing payment option. With BNPL, customers can purchase items before actually paying for them. Klarna is an ideal example of this technology and growth. Just in the first half of 2020, it witnessed a 44 percent increase in transactions and over sixteen million new users. 

Though this technology has seen massive success in the past years, there are many critics of this form of payment. These critics argue that BNPL encourages people to overspend their money and has fewer protections than a regular credit card. It is unlikely that this form of payment will disappear completely. However, as regulation catches up to the industry, it is likely that growth would begin to slow down a bit. 

Three: Fintech and Incumbent Partnerships

A major domain in which incumbents can assist fintechs is expansion into other countries. A barrier to new fintechs continues to be access to regional currency accounts and arrangements. Incumbents are in a position that may play a crucial role in providing fintechs access to banking frameworks. 

The partnership is not one-sided and will also enhance parts of incumbents’ services that are deficient. Many banks are recognizing the importance of building this type of partnership and have plans to develop them. 

Four: AI

AI models allow for consumer behavior and automated processes to be analyzed better and more efficiently than when done by humans. AI is especially helpful for payment companies because of the expansive amounts of data they collect. With its inclusion in businesses, it can decrease costs while also lowering error rates. These skills are necessary in a world with rapidly increasing money laundering. Many banks have been finding it difficult to regulate laundering on their own and AI is a tool that can help.

Five: Request-To-Pay

Request-to-pay is a ‘pull’ rather than ‘push’ payment. Rather than you pushing your money to the bill provider, the company will ask for the amount it needs you to pay. This form of payment may even be combined with BNPL in the near future. When going to make a purchase, you would get a request-to-pay notification for said item and a proposal to pay for the purchase. Next, all you would have to do is approve the notification and the payment could automatically be taken from your account. This would offer a convenient method of payment for consumers.

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