Consider it to be the ease of processing or the trend in making, digital payments have garnered huge attention worldwide. The global transactional value of mobile payments is projected to cross $12,407.5 billion by the end of 2025 whereas, the anticipated CAGR clocked between 2020-2025 is 23.8%. (Source)
Hence, it seems appropriate to say that the face of business transactions and/or the mode of payment has started transforming, and why not?
As more and more organizations transform their business operations adapting to digitization, it becomes mandatory to restructure the online payment policies. Additionally, the growing advancements in technology and the increasing popularity of mobile phones make online payments the real need of the hour.
Keeping this as the core of our disciplines, we have drafted this piece to shed light on the digital payment trends in 2021, and the role played by AI Chatbots in the efficient processing of these online payments.
So without further ado, let's get started.
Why Consumers Prefer Online Payments
Digital modes of payment have been in trend for a long time. From customized mobile applications to UPI processing, scan-pay technology, and net banking, there are several methods that facilitate online transactions. However, the numbers a year ago were a lot different than they are today. A lot has changed in the last few years. Much of this is attributed to the fact that customers today seek uninterrupted transaction experience. Digitization has given them the ease to connect quickly and hence the inclination towards digital payments keeps growing.
To note, digital payments offer many more advantages.
-
Eliminate geographical boundaries: Digital wallets are designed to accept payments in one or more currencies. When a customer travels from one region to another, he/she no longer needs to exchange currencies.
-
Extremely convenient: Irrespective of whether you are carrying a card or your smartphone, you can always process payments, pay your bills or buy goods with ease. The evolution of digital payment systems such as AI Chatbots further streamlines the payment processes, adding to the convenience parameter.
-
Time-saving: Waiting in a queue to complete the payment protocols has been one of the prominent reasons customers shifted from physical transactions to online payments. The scan-to-pay methodology reduces the wait time while improving the overall experience.
- Adds a protective layer: Digital modes of payment are highly encrypted and secured, eliminating all possibilities of fraudulent acts. Additionally, digital modes of payment have a tech-driven fraud detection mechanism in place for real-time screening to combat payment frauds.
Learn more: 9 Best Chatbots in the Financial Services Industry
Top 5 Trends Shaping the evolution of the Digital Payment Industry
The increasing demand and the growing popularity of digital payments paved the way for innovation opening doors for newer payment trends. Here, we introduce the top 5 digital payment trends to keep an eye on in 2021.
-
Trend #1: Biometric Authentication to strengthen security
Conventionally, online transactions like card payments, UPI, etc come with a secret PIN or a password to validate and process payments. In light of online fraud, the industry has now upgraded its security system adding biometric authentication.
Biometric authentication is a unique feature that takes into consideration the structural and biological traits of a user to authenticate and/or validate a transaction. The common methods of biometric authentication include facial recognition, fingerprint scanner, voice detection, Iris scanner, view mapping, etc. Only when the biometrics map one of the approved users, the payment gets processed.
Given the increasing cases of cyber theft and online fraud, biometric authentication serves as a reliable method for authenticating digital payments. The fact that the method uses the unique characteristics of a user to confirm the identity, helps set up a sense of loyalty winning customer’s trust.
A study conducted by Juniper presses on the importance of mobile biometrics. It is expected that such an authentication method will process payments worth $2 trillion by 2023. Further, Juniper’s study concludes that the contribution of biometrically-verified mobile commerce transactions would be 57% by the end of 2023.
-
Trend #2: Temporary Codes to replace card-based transactions
Bank accounts are conventionally characterized by a series of digits imprinted on the card. Entering them on online portals facilitates a quick transfer of money. Be it purchasing goods or sending payments to your friends, the combination of digits can be used to send payments on the go. However, the method faced criticisms in terms of security. Online fraud has become a common thing.
Hence, the need for a robust and reliable solution. This is where the idea of EVM steps in. EVM stands for Europay, MasterCard, and Visa. This has introduced a computer-driven payment mechanism, one that requires temporary codes to authenticate a transaction. The code varies from transaction to transaction making it practically impossible for hackers to impersonate users or make false payments.
-
Trend #3: mPOS Technology for flexible shopping
Physical retailers or merchants find it hard to collect payments on an ad-hoc basis. Often customers prefer making payments through a card. The inability to process the same incurs tremendous loss. This is where the idea of mPOS devices (tablets, smartphones, dedicated devices) comes into play.
As one of the revolutionary tech, mPOS aims at streamlining the manner in which payments are processed in retail stores. It consists of a dedicated device with a card reader to accept payments online. All that a customer needs to do is swipe his/her card through the device, validate it, and done.
Considering the fact that customers hate to stand in queues, introducing mPOS has helped retailers reduce the waiting time of the customers, thereby boosting sales and improving customer experience.
Survey results suggest that mPOS will grow at a CAGR of 19% from 2020 to 2026. This together with the benefits offered by the technology is sufficient enough to accelerate the adoption of the same in coming times.
-
Trend #4: Smart speakers as payment assistants
Voice assistants have been in trend for a long time. Be it asking for weather updates or instructing them to play a song, the present-day users are comfortable interacting with an automated bot. What's fascinating is that the application of these bots has now entered the payment industry. Survey results suggest that 28% of the users in the US have already switched to voice payments.
With voice-based assistants, customers have the ease to pay their bills, get a credit score, and/or receive notifications on their balance. Besides, voice payments eliminate the need of entering a security pin or password for validating the authenticity of the user. This further accelerates the payment process leading to faster checkout.
A few customers doubt the credibility of the technology given that the same is vulnerable to security breaches. Organizations are working to add dual-factor authentication, and/or biometric verification mechanisms in an attempt to overcome the security constraints and corresponding barriers. The big players have already invested in smart speakers to design and build new versions of the existing ones.
-
Trend #5: Contactless payments to be the new normal
The sudden outbreak of the pandemic made it clear that organizations must revamp their payment infrastructure paving way for alternatives such as digital wallets, wave to pay, etc. There has been a sudden increase in the usage of mobile wallets given the need for contactless payments.
With these, users will only have to wave their smartphones over the counter to initiate a payment. Such a system is both easy and convenient as compared to the conventional ones. Google Pay, Apple Pay, and Samsung Pay are a few of the many applications facilitating contactless payments.
Besides, NFC payments are also in trend as it eases the entire payment process. Top nations have already adapted to this trend and it is expected that by 2027, 36% of online payments would be processed through NFC-powered cards.
Chatbots in payment processing: Revolutionizing the financial sector
True that each of the stated trends has the potential to transform the payment system. However, one technology that stands out and apart from others is AI Chatbots.
Today, artificial intelligence bots have found tremendous implementation in financial services. They are fast, they are cost-effective, and above all, they are 24/7 available. It is predicted that the integration of AI Chatbots in the financial sector would save USD 7.3 billion by 2023. From improving the end-user experiences to streamlining the lead generation funnel, chatbots are both conversational and interactional. Industry experts are actively investing in the integration of technologies such as NLU, ML to further enhance the features and functionality of chatbots.
For instance, NLU based chatbots can emulate human behavior when interacting with the customer. It appears as if the customer is in conversation with a live agent, addressing their concerns and offering personalized services.
4 Reasons Chatbots in Payment Industry is the new trend
-
Chatbots are conversational
The best way to connect and communicate is through speech. When making payments or connecting with a business, customers often find it hard to understand a thing or two. Having someone who could guide and assist customers helps add value. This is where Chatbots come into play. Staying active 24/7, they help customers with all their requests and queries.
-
Chatbots can accept payments
The functionality of Chatbots isn't limited to solving queries or guiding customers. Instead, they have a lot to offer. The conversational interface of chatbots empowers customers with the ease to request clients for payment. Let's say a customer viewed one of your products on messenger and clicks on the ‘buy now’ button. Instead of switching to a different application, allow your messenger bots to handle all of the payments. Dedicated bots can quickly share the payment request followed by the currency and the total amount due for payment. As and when the payment is done, the bot will notify the customer, and the conversational interface returns.
-
Chatbots are reliable
Processing payments digitally, you need to be sure about the privacy and security of your transaction. Developed using the top technology stack (NLP, ML, AI), Chatbots ensure encrypted transactions safeguarding the reliability and security of the same. Multiple organizations are actively deploying messenger Chatbots to send transaction notifications to the customers. This further adds to the security helping them validate transactions. AMEX is one of the first few organizations to do such a thing.
-
Chatbots support omni-channel engagement
One of the biggest advantages of having a Chatbot is that it can be integrated with one or more platforms. Where a few users prefer connecting over a call, others have a tendency to chat. Owing to the multi-channel accessibility, Chatbots can be deployed on all platforms irrespective of the type. This adds flexibility to business operations ensuring that you are where your customers are.
In addition to all of the above, Chatbots help cut down the overall cost of payment processing, optimizing end to end revenue. However, one thing to take care of is the experience delivered. True that the technology holds the potential to transform the payment sector but it needs to be implemented in the right way.
Wondering how to build an effective Chatbot that facilitates payments?
Look no further as Haptik's Conversation Studio is here to help. Having served businesses across the globe, our team has both experience and the expertise required to build reliable and cost-effective Chatbots for payment processing. Allow us help you and the industry grow seamlessly.
Conclusion
The definition and meaning of simplicity have changed. Today, people look for ease of usage in a way that allows them to do things as per their convenience. Digitization is one term that totally justifies the above. While a majority of operations have already been transformed digitally, the payment processing segment has caught attention lately and the graph will only increase in the coming times.
