As a business, you've probably noticed significant evolution in the way we accept and process payments, with payWave and Apple Pay being just two of many new technologies to emerge in recent years.
However, a recent report by PricewaterhouseCoopers (PwC) suggests we'll see a drastically changed landscape for the payments industry by 2020, with "changes not only in the way we conduct transactions, but also in the way we conduct commerce more broadly". So what are some of the developments we can expect to see?
An increase in payment revenue
Projected data from McKinsey's Financial Service Practice indicates that by 2018, annual revenue from payments will account for 43% of all banking revenue - a significant increase from 34% in 2009. Much of this will be due to emerging, non-traditional payment technologies that's tapping into new revenue pools - especially those in developing countries where significant portions of the population have been previously excluded from traditional payment methods.
The challenge for many established institutions then will be to keep up with the change, and to be nimble enough to hold their own against their non-traditional competitors who are driving much of the disruption in this space (and who PWC expects to increase their market share to up to 10 per cent of payment revenues by 2020).
Customer demand for greater ease and convenience
With the Millennial generation firmly ensconced in the workplace and Generation Z following hot on their heels, digital natives will soon make up the majority of clients for financial institutions. These are generations that expect convenience and consumer usability as the norm.
We're already seeing customer demand driving innovation such as biometric identification and the internet of things, and it's a trend we will see continue. Both customers and businesses will expect seamless, efficient and personalised solutions that integrate their finances with other facets of their lives or business.
More efficient use of data
A significant outcome of increased personalisation will be the ability to better utilise all the data that various participants in the payment chain accumulate. Many companies are already using the pieces of data they hold to provide an increasingly personalised experience to customers - but there is the potential to do so much more.
If increasingly sophisticated payment platforms are able to aggregate the information held by the different players, each can get a much more holistic view. For example, retailers will be able to discover what other stores or sites their customers are buying from, and banks and card providers could go beyond simply knowing how much a customer spent in a store to knowing what exactly they bought. Marketing, promotions and customer service can then be enhanced accordingly.
An upgrade of payments systems
New technology is all well and good, but much of the current infrastructure is outdated and incapable of supporting emerging technologies, essentially stifling innovation. As a result, many countries have already started to upgrade systems, or announced plans to do so. Australia is fortunately one of these, having started work on the New Payments Platform (NPP), which is designed to deliver real time, data-rich payments.
The NPP will of course force changes to traditional operating models for industry players, and there will also be significant issues to be resolved around topics such as data protection, fraud and governance. It won't be an easy road, but in a world where technologies such as blockchain have the potential to rival the status quo, it is a necessary one.
There are then some very exciting times ahead for the payments industry, which although likely to be disruptive, should ultimately provide a better future experience for both businesses and customers alike.