PayTechs’ speedy expansion in finance signifies that banks and payment service providers will offer value beyond payments to give a competitive edge in the digital era.
FinTech firms have leveraged their technological capabilities and customer centricity into the payment landscape to expand payment modes and methods to boost speed and efficiency.
PayTechs have expanded into the market as faster and frictionless payments from anywhere and everywhere. As the digital economy propagates and customer demands for seamless payments increase, PayTech offers unified solutions to meet the demand. With its expansion, finance companies need to rethink their strategies. Meanwhile, a glimpse into how PayTech is reshaping the payment landscape is critical to understand.
Forces Driving the Future of the Payment Industry
Real-time Payments
The trend of real-time payments involves modern payment methods to transfer money from end to end. As real-time payments infrastructure has changed the payment landscape, it has increased the value of PayTech by adding value-added services. PayTech platforms are now extensively used, allowing customers to use mobile numbers instead of account numbers to initiate payments through PayTech platforms. Such services are becoming more popular and effectively helping the RTP network expand rapidly.
Open Banking
Open banking is a turning point for the FinTech ecosystem as it has created new methods for bank payments and a framework for payment innovations by leveraging PayTech platforms. Open banking builds a new mechanism for payment initiation in support of Application programming interfaces (APIs), thus giving flexibility for customers to pay. The APIs in open banking have helped customers to easily access payments through the ‘pay by bank’ option and have made banks adopt more of PayTech platforms. As a result, today, customers and banks have far more opportunities to pay and receive payments instantly.
The Effect of Cross-Border Payment – Faster, Cheaper, and Efficient
Cross-border payment regulators are laying the groundwork for PayTech platforms. PayTech is transforming the cross-border payments business model and customer experience. Notably, most payment providers have realized the potential of digital payment mechanisms and technology that are improving the novel payment landscape. The evolving opportunities and ease of cross-border payments have boosted PayTech, generating faster and cheaper transactions.
Buy Now, Pay Later Offers More Sustainable Future
Buy now, pay later (BNPL) is a newer payment method that offers instant payment options through technologies that set installment options.
Companies and consumers choose BNPL for its convenience, low cost, and predictable payment schedule that relies on the PayTech mechanism. BNPL, with the PayTech mechanism, is expanding its application rapidly.
However, given the rising cost of capital and increased regulatory scrutiny, the BNPL model will need to evolve to deliver sustained profitability. Yet, for banks, it is an opportunity today and in the future to explore more channels to drive collaborations with PayTech partners.
Embedded Payments
As finance businesses today are actively providing more personalized and frictionless experiences with finance management and services, embedded payments supported by PayTech are becoming prevalent. The benefit of the emerging PayTech mechanism is that even non-financial services companies offer embedded payment functionalities to their business customers. As such, embedded payments are becoming very common in B2B business models, and PayTechs will continue to play a significant role in driving adoption rates. Embedded payments expect to scale and be more effective and advantageous for customers.
The Status of PayTech Today Is
Finance companies and banks direct texts to pay customers and provide QR codes on mobiles are the latest ways to use PayTech mechanisms. These smarter ways of paying are evidence of a steady shift to digital payments and leveraging technology to speed up payment modes rapidly. According to PwC and Strategy analysis study in Payments 2025 & Beyond, global cashless payment volumes may increase beyond 80% by 2025. Between 2020 to 2025, about 1tn digital payment transactions rose to almost 1.9tn. The study highlights that transaction scores may triple by 2030.
The study depicts that the reshaping of the payment landscape with the emergence of PayTech involves two trends. First is an evolution of the payment system’s front- and back-end development. Second, massive structural changes to the payment mix include the emergence of “buy now, pay later” offerings, cryptocurrencies, and bank digital currencies.
PayTech Trends Supporting the New Payment Landscape
Machine Learning
Machine learning in payment methods and platforms serves the capabilities that identify authorized payment fraud, detect malicious pay activities, gain customers’ data, and record financial activities. The technology also provides the necessary speed and processing capabilities of digital payment platforms to match the rising competitive edge of the payment landscape.
Artificial Intelligence
AI in payment platforms refers to flexible biometric authentication that verifies methods of payments from a business perspective and customers’ data every time they use a particular payment mode. AI reads customers’ data the first time and saves it for the future so that customers pay by putting details each time. That’s the power of PayTech today with AI. These verification methods include fingerprint scans, facial recognition, and iris recognition.
Biometric authentication also becomes a reliable and secure option for all digital payments with the rise of identity risks of theft and fraud. In this space, AI is unique in providing efficiency, accuracy, and security under one roof.
Also Read: Ways to Secure Financial Software Systems with AI and Automation
Smart Voice Using VR
Smart speakers are new in the latest payment landscape and are being leveraged more in PayTech platforms. It uses voice commands in digital payments for various activities, such as assistance using the platform, providing payment options, and notifications of receiving payments.
NFC (near-field communication) Technology
Contactless payments are globally accepted and initiated in the wake of the pandemic. Now that the impact of the pandemic is near zero, companies have adopted this PayTech mode to endure due to convenience, faster, instant, and security. Contactless payments function on NFC (near-field communication) technology. That’s why they are also termed NFC payments. Many financial institutions and banks have initiated NFC-powered contactless cards to boost PayTech capabilities.
With that said, companies can even more, understand the rise of PayTech, reshaping the evolution of the payment landscape the more they adopt it as the future of payments remains digitalized. A study by Allied Market Research in Near Field Communication Systems Market: Global Opportunity Analysis and Industry Forecast, 2023-2032 mentions that the market for NFC expects to indicate rapid growth by 2032 in the wake of increasing adoption of mobiles, Wi-Fi network, Bluetooth, smart credit card, and NFC standards at a global level.
The Incessantly Evolving Payment Landscape
FinTech companies today are under pressure to protect consumers amidst the constantly evolving payment landscape. As digital payment trends impact current business models, it is believed that companies in the financial services sector will enjoy benefits by relying on emerging trends, cybersecurity best practices, and streamlined payment processes and models to help and provide their customers with the best possible experience.
