Believe it or not, online payments are still in their infancy.
When you break it down, the ways that we’ve paid before are all somewhat old-fashioned, especially when it comes to infrastructure. As banks have, and still largely are, the focal point of finance, they never found a reason to change their processes. That was until outside competitors started challenging them to keep up with the trends.
Fast forward to now, and FinTech is one of the hottest startup industries in the tech world. In a few short years, everyone has started to catch onto this trend, as CB Insights notes, investments in FinTech are up 19 percent this year alone.
Yes, this industry is going through some major shifts, as firms are gearing towards changing how we look at not just payments, but how payments are made/what elements are behind them. It’s the difference between why sometimes when you pay someone online, it comes immediately versus a day or two. There’s honestly a lot of mechanics behind this (I.E., Account balance verification, identity verification, etc.), which is what everyone is trying to get up to speed on. And for some firms, they’re already ahead of the curve. Here’s how:
A change in banking behavior
One of the earliest changes involving the payment industry is how banks and customers behavior is shifting with one another. Quite simply, people have different expectations with how money should move, as well as how quickly. This is a cross-generational phenomenon and something that banks are trying to keep up with.
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An excellent example of this is with how popular online services have become. According to Bank Innovation, approximately 70 percent of millennials now do their banking online. This is playing a significant role in how banks compete with one another, as their digital offerings are coming under much more consideration. This includes features like peer-to-peer payments, savings plans, automatic bill pay, and even just updating account balances in real-time. And while a lot of banks are working towards seeing how their FinTech products can work internally, external efforts in the payments world should be taken note of as well.
Paying people differently
A big part of how the payment industry is changing is how people are able to pay each other, as well as how we pay businesses. It’s the idea of how transactions are shifting. According to Business Insider, peer-to-peer payments alone are on pace to be worth $86 billion by 2018. And with the popularity of apps like Venmo, PayPal, and even Square Cash continuously on the rise, this trend doesn’t show signs of slowing down anytime soon.
Another aspect of the payments industry that’s shifting is how major purchases can be made in real-time while cutting out the middle person. For example, CurrencyPay, an online payment system that not only finances major equipment for businesses, but extends online payment methods from credit and debit cards to include ACH or wire, all the while reducing fees across the board. Innovations like these are going to play into how sales are completed quicker via knowing the parties at hand.
Finally, many of us are probably familiar with how people are paying businesses, with devices like ApplePay or AndroidPay allowing for cashless/cardless payments. These services are gaining ground in popularity as they’re not only easier but becoming safer as well. After all, credit cards are somewhat built on an archaic model, one that’s been roughly the same since the 1950s. However, beyond just how people are paying, what they’re paying with is becoming a wild-west of sorts.
How cryptos are playing a role
A huge change in the payment industry this past year has been the popularity of Cryptocurrencies, Tokens, and Ethereum. Pundits have argued why there have been massive surges in the prices of things like Bitcoin, but that’s only part of the story. The other portion is the very structure of how a Coin/ICO (Initial Coin Offering) is structured. These are the first of their kind in being both a publically traded company as well as a form of currency, cutting out the intermediary of how we traditionally think about money. And as noted by SteemIt, there have been 76 ICO’s this past year with a total valuation of nearly $800 million. The best part? This revolution is only at the beginning, so it might not be a bad idea to study up on how you can be a part.
The way our money is moving is changing forever. What are some payment applications you’re most interested in or using on a day-to-day? Answer with your comments below.
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