2020 prediction: What will future payments look like?
According to TechNative report, it predicts the future of payments in 2020. We see that the most needed is faster and lower payment costs and the blockchain technology adoption around the world.
Cross-border payments will continue to get faster and smaller
Payment providers and banks will constantly provide ever faster cross-border payment services to their customers, allowing them to send and receive low-cost payments in real-time.
As the payment cost gradually shrinks, this trend will increase in 2020 when customer demand for frictionless and on-demand payments grows. Such solutions as Interledger Protocol (ILP) and distributed ledger technologies will gain traction and scale-up.
Adopting emerging technology for competitive advantage
More banks will use banking-as-a-service tech platforms to revolutionize their cost-to-serve and cost-to-change. As technology costs for running and development continue to rise, we can expect banks will turn to cloud providers of banking technology to help radically reduce these costs.
Because cloud-hosted banking technology providers have developed new platforms with modern methods such as Artificial Intelligence (AI) engines and other emerging Fintech categories, meaning the competitive advantage of innovative banks over slower-moving rivals will be intensified.
Creating consumer solutions
2020 will see new consumer purchase solutions emerge for tourists and travelers that do not require cards or payment rails. For example, a Japanese tourist visiting Thailand could buy goods by using a mobile app or QR code, triggering an immediate cross-border payment from their Japanese yen account to a Thai baht merchant’s account. If more consumer purchase solutions start adopting blockchain technology in the same way, the payoff will quite literally be large.
The global economy will witness the constant growth of micro and wallet payments to support immediate and low-cost payment flows. We can expect a surge of developers flocking to digital assets as the solution to keep up with in-app, real-time payment processing demand.
Addressing increased SME demands
The change from traditional, large-value batch flows to low-value, and high-volume payments will help SMEs break into new markets much faster. SMEs are often fast-growing, leading them to cash flow crises through late payments from their larger and foreign buyers.
Nowadays, international payment services are slow, uncertain, prone to errors and accrue extremely high costs. In some parts of the world, cross-border services are not even readily available—all of which puts enormous pressures on small organizations’ small balance sheets and lifeline cash flows. New blockchain payment technologies enable SMEs to invoice and receive international payments immediately, in small amounts and with certainty.
This will be a change, decreasing costs-of-business and enabling SMEs to free up precious capital for reinvestment, which will increase the access to new markets for SMEs. 2020 will see a rise in international payment services like Ripple for SMEs across emerging markets, supporting them to expand and process immediate payments around the world.
Asian market demand increasing
Surpassing of OECD economies by Asian economies in payments innovation will continue through 2020. With 80% of the volume in digital asset trading coming from Asia, the region has an appetite for innovation and perhaps the greatest need for a better payment infrastructure.
Blockchain has acted as a key role in this innovation, with its ability to make micro-transactions such as loans, payments and remittances much more efficient and transparent. In a region primed for advances in both consumer and enterprise remittances, there is an enormous opportunity for the use of blockchain technology to address issues of liquidity, speed of implementation and the cost of capital.