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How is the payment processing industry changing in 2020? Find out as you read through this list of the hottest new trends in payment processing.
No matter what type of business you have, accepting payments is a must. If you don’t have a way to receive funds, how will you have a business?
Credit and debit card payments have grown 8.9 percent a year between 2015 and 2018. That makes understanding of the ins and outs of the payment processing industry a must for any business owner.
Would you like to know more about payment processing and the trends you should expect to see in the coming year?
Read on to find out how payment processing works and the top trends of 2020.
How Does Payment Processing Work?
Before we get into the trends of the payment processing industry, let’s look at how payment processing works.
A customer wants to buy something, so they give you a card. You swipe it or they enter the number online.
Your bank will route the transaction through your card association (Visa, MasterCard, etc.), which routes the transaction to the customer’s bank.
Your customer’s bank will make sure that there are enough funds to cover the purchase and approve the transaction.
That approval gets routed to your card association, and back to your bank. Your bank will send the information to your payment system where the transaction is finalized and a receipt is printed.
The Top Payment Processing Trends In 2020
Payment processing is a very complex process that happens in mere seconds. Let’s find out if these trends will simplify the payment process or not.
1. Ecommerce Payments Will Grow
If there’s one thing you can be certain of, it’s that online payments will continue to grow. On Black Friday 2019, almost half of all payments were made on smartphones. That’s a 24 percent increase over 2018.
More people are getting comfortable with the convenience of shopping online on smaller devices. That means that you should expect to see more transactions on mobile devices.
If you’re a retailer or restaurant, you’ll want to incorporate some kind of e-commerce into your business. That will enable your business to reach customers where they’re shopping.
2. Security Remains A Huge Issue
As you accept payments and store payment information, your business is a target for cyber attacks. You have to make sure that you comply with PCI payment standards as a baseline of security.
Your business can also become a victim of fraudulent transactions that will cost your business more money in the long-term.
You want to make sure that you have protocols in place to prevent fraudulent transactions, both online and offline.
3. You Need To Be On Top Of Technology
One of the technologies being used by banks to prevent fraud is artificial intelligence. AI is being used to decide which payments are legitimate and which ones aren’t.
That’s allowing payments to happen much faster. They’re also much more secure. AI was used in the past, but it was based on certain rules that were defined by financial institutions.
AI has evolved through machine learning to be able to detect abnormal payment patterns. These payment patterns are the ones that are flagged as fraudulent.
There are also more ways to pay through the use of technology. Mobile wallets are on the rise and grocery stores are experimenting with cashier-free shopping.
It’s hard to say whether or not the cashier-free experience will stick around, but it is something to keep an eye on.
4. Regulations Impact Businesses
Since you’re responsible for safeguarding payment information, governments are getting involved to protect consumers’ rights.
Regulations like GDPR and the California Data Privacy Act will impact your business and how you handle data.
One potential issue in 2020 will be state taxes. The Supreme Court ruled that South Dakota can impose state taxes on Wayfair, even though Wayfair doesn’t have a location in that state.
Expect to see state legislatures tackle this issue, which can impact your business. You may have to pay state taxes, depending on your location and where your customers are located.
5. Peer-to-Peer Payments Are Increasing
One of the emerging technologies that is gaining momentum is peer-to-peer payments. This is where you can send payments to friends through an app without paying transaction fees.
Apps like Zelle and Venmo are convenient for people to use and send money. There are sites like TransferWise that let you send money internationally without paying a massive wire fee to the banks.
6. Fees Are Increasing
Every time someone swipes a card, you’re paying a small percentage of the transaction to banks. Swipe fees made companies like Visa about $64 billion last year.
These fees are actually going to increase for transactions where the card is not present, meaning e-commerce transactions.
7. Older Forms of Payments Aren’t Going Away
You may think that with these payment industry trends, no one uses checks or cash to pay anymore. Those forms of payments have declined significantly, but they’re not going away.
There was a movement by retailers to have cashless stores. What people have found is that cashless stores discriminate against poor people and immigrants, who are unlikely to have access to a bank account or credit card.
That has lead city governments to ban cashless stores.
Follow Payment Processing Industry Trends
Technology is changing just about every aspect of life. It’s changing how you do business, and it’s changing how people pay for purchases.
You need to make sure that you’re providing a great customer experience, and that includes a way to accept payments seamlessly. There are a number of growing trends throughout the payment processing industry that make payments easier for customers.
For businesses, you have to be aware of what they are. There are increased regulations to protect consumer privacy, increased security threats, and more ways for customers to pay. You can also expect to see an increase in processing fees for your business.
While that’s not all good news for you, you still have to take credit and debit cards because that’s how customers prefer to pay.
Visit this site often for more business technology news and tips.
No matter what type of business you have, accepting payments is a must. If you don’t have a way to receive funds, how will you have a business?
Credit and debit card payments have grown 8.9 percent a year between 2015 and 2018. That makes understanding of the ins and outs of the payment processing industry a must for any business owner.
Would you like to know more about payment processing and the trends you should expect to see in the coming year?
Read on to find out how payment processing works and the top trends of 2020.
How Does Payment Processing Work?
Before we get into the trends of the payment processing industry, let’s look at how payment processing works.
A customer wants to buy something, so they give you a card. You swipe it or they enter the number online.
Your bank will route the transaction through your card association (Visa, MasterCard, etc.), which routes the transaction to the customer’s bank.
Your customer’s bank will make sure that there are enough funds to cover the purchase and approve the transaction.
That approval gets routed to your card association, and back to your bank. Your bank will send the information to your payment system where the transaction is finalized and a receipt is printed.
The Top Payment Processing Trends In 2020
Payment processing is a very complex process that happens in mere seconds. Let’s find out if these trends will simplify the payment process or not.
1. Ecommerce Payments Will Grow
If there’s one thing you can be certain of, it’s that online payments will continue to grow. On Black Friday 2019, almost half of all payments were made on smartphones. That’s a 24 percent increase over 2018.
More people are getting comfortable with the convenience of shopping online on smaller devices. That means that you should expect to see more transactions on mobile devices.
If you’re a retailer or restaurant, you’ll want to incorporate some kind of e-commerce into your business. That will enable your business to reach customers where they’re shopping.
2. Security Remains A Huge Issue
As you accept payments and store payment information, your business is a target for cyber attacks. You have to make sure that you comply with PCI payment standards as a baseline of security.
Your business can also become a victim of fraudulent transactions that will cost your business more money in the long-term.
You want to make sure that you have protocols in place to prevent fraudulent transactions, both online and offline.
3. You Need To Be On Top Of Technology
One of the technologies being used by banks to prevent fraud is artificial intelligence. AI is being used to decide which payments are legitimate and which ones aren’t.
That’s allowing payments to happen much faster. They’re also much more secure. AI was used in the past, but it was based on certain rules that were defined by financial institutions.
AI has evolved through machine learning to be able to detect abnormal payment patterns. These payment patterns are the ones that are flagged as fraudulent.
There are also more ways to pay through the use of technology. Mobile wallets are on the rise and grocery stores are experimenting with cashier-free shopping.
It’s hard to say whether or not the cashier-free experience will stick around, but it is something to keep an eye on.
4. Regulations Impact Businesses
Since you’re responsible for safeguarding payment information, governments are getting involved to protect consumers’ rights.
Regulations like GDPR and the California Data Privacy Act will impact your business and how you handle data.
One potential issue in 2020 will be state taxes. The Supreme Court ruled that South Dakota can impose state taxes on Wayfair, even though Wayfair doesn’t have a location in that state.
Expect to see state legislatures tackle this issue, which can impact your business. You may have to pay state taxes, depending on your location and where your customers are located.
5. Peer-to-Peer Payments Are Increasing
One of the emerging technologies that is gaining momentum is peer-to-peer payments. This is where you can send payments to friends through an app without paying transaction fees.
Apps like Zelle and Venmo are convenient for people to use and send money. There are sites like TransferWise that let you send money internationally without paying a massive wire fee to the banks.
6. Fees Are Increasing
Every time someone swipes a card, you’re paying a small percentage of the transaction to banks. Swipe fees made companies like Visa about $64 billion last year.
These fees are actually going to increase for transactions where the card is not present, meaning e-commerce transactions.
7. Older Forms of Payments Aren’t Going Away
You may think that with these payment industry trends, no one uses checks or cash to pay anymore. Those forms of payments have declined significantly, but they’re not going away.
There was a movement by retailers to have cashless stores. What people have found is that cashless stores discriminate against poor people and immigrants, who are unlikely to have access to a bank account or credit card.
That has lead city governments to ban cashless stores.
Follow Payment Processing Industry Trends
Technology is changing just about every aspect of life. It’s changing how you do business, and it’s changing how people pay for purchases.
You need to make sure that you’re providing a great customer experience, and that includes a way to accept payments seamlessly. There are a number of growing trends throughout the payment processing industry that make payments easier for customers.
For businesses, you have to be aware of what they are. There are increased regulations to protect consumer privacy, increased security threats, and more ways for customers to pay. You can also expect to see an increase in processing fees for your business.
While that’s not all good news for you, you still have to take credit and debit cards because that’s how customers prefer to pay.
Visit this site often for more business technology news and tips.
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