This year, the payments landscape got disrupted in multiple ways. We saw digital wallets like Apple Pay, PaymentCloud, and Samsung Pay gain traction. Online payments became more mainstream as platforms like Stripe and Square gained popularity. And the card-not-present segment, which has seen tepid growth, showed signs of expansion. This begs the question: What does the future of payments look like?
Who Will be Disrupted?
The emergence of digital wallets will disrupt businesses that rely on physical cards or checks to conduct their transactions. Stores, restaurants, amusement parks, and other service providers will all suffer to some degree as they lose business to these new players. Card-present merchants will also need to adjust their strategies to remain competitive. Shoppers may soon opt for digital wallets over credit cards because of lower transaction fees, higher rewards rates, and greater security.
We’ve been working with startups that address these trends. Here are some of our favorites:
1. FinTech that solves expensive, complex problems
Mosaic helps banks and credit unions make loans more effectively by bringing together a diverse set of data sources and enabling a “drag and drop” approach to credit risk assessment.
Payment Cloud helps financial institutions bypass costly interchange fees by accepting payments from a growing universe of digital wallets and apps.Detailed guide can be found here;https://paymentcloudinc.com/blog/ach-return-codes/
2. FinTech that improves the customer experience
PaySimple offers a suite of products for ecommerce businesses that need a payment gateway for digital goods, recurring payments or SaaS subscriptions.
The format allows consumers to pay from any device using their fingerprint or face scan with the swipe of a finger.
3. FinTech that helps us all save money
Budgetable works by “budget sharing” – enabling individual team members to have a collaborative budget.
4. Black-owned startups are thriving
It’s no surprise that there are more than 3.5 million African Americans in startups across the country. And that number is at an all-time high. We’re seeing exciting companies like Cardlytics, ZestCash, and the family behind Sweet Black Tea using innovative ways to create solutions for small businesses.
And last year, half of all black-owned businesses in America were growing at the double the national average. This success is due in part to the entrepreneurship training programs listed above.
5. The payments landscape is getting crowded
New data show that although bank-issued cards remain the most popular payment instrument, new payment instruments are becoming increasingly competitive.
6. The Payments Landscape is Shifting
Like Handy and Airbnb, marketplaces are redefining how consumers get goods and services while changing the way small businesses do business. Today, 2 billion people use online marketplaces for everything, from discovering new tech products to finding the ideal photographer for their next event. At the same time, tech companies are creating new ways to transact with each other outside of traditional financial services. These innovative tech companies are reshaping the payments landscape by encouraging consumers to move away from cash and digital peer-to-peer transactions. From ride sharing to transferring money overseas, tech companies are making it easier than ever for consumers to engage in commerce without ever reaching into their wallets. Marketplaces are redrawing the future of ecommerce
Initially, marketplaces were seen as a threat to ecommerce – a means for businesses to reach a new audience directly.
7. The next wave of innovation will come not from banks but venture capital help
Startups are popping up left and right to offer alternatives to traditional banking services. Some payment apps are even trying to replace our credit cards. But the next wave of innovation will do more than disrupt how we pay for things. These new ventures give us tools to eliminate bank fees, send money internationally at the best rates possible, bypass credit checks, start our businesses with ease, and more. We may even soon see some new players moving into the financial services market specializing in lending to small businesses, just like how crypto startups such as Robinhood and Coinbase have moved into traditional brokerage and trading markets.
With the right regulatory framework in place and a little bit of luck, we’ll be surprised by what comes next in this space.