Where is payment tech headed, what role will alternative methods play, and how can businesses make sure they pick the right solutions for their circumstances?
ECOMMPAY’s payment tech expert, Head of Regional Business Development Vladimir Polakov, steps in to answer.
These days, everyone’s trying to broaden their range of payment methods by accepting newer alternatives, but are there disadvantages to that tactic?
The disadvantage is that those alternative methods are highly regional. There’s no such thing as a ‘universal alternative payment method’. For them to cover the whole world is just impossible, for that you’d need to create a global payment system like Visa or Mastercard. But for entrenching your business in regional markets, alternative payment methods (APM) are important for all kinds of businesses.
Should we anticipate the emergence of a global alternative to bank cards?
No, payment systems adapt to the conditions of the market, which can mean investing in alternative payments, but cards are universal. Cards are accepted in 80% of cases while APMs have a much spottier rate of acceptance.
Will cards themselves evolve?
That depends on the technology available and on people’s habits in the next decade. Right now we live in the mobile era; every shop has an NFC and POS terminal in it. It would be impossible to change all that overnight. Naturally, new payment technologies will emerge as habits change. The mobile phone operates on the same principle: we struggled to adjust to touchscreens after blocky handsets, but now we're comfortable with them. It’s a habit.
What do you need to know before you start broadening your accepted payment methods?
You need to keep track of how the market is adapting to new innovations and think ahead a bit. You need to build on people’s needs and the technology that’s out there, and keep an eye on how society is changing. For example, nowadays, people don't buy cars and phones the old fashioned way, they finance them or lease them and switch to new versions as they come out. That means people increasingly need more convenient recurring payments. Or consider how people are increasingly ordering and paying for food delivery by mobile, instead of cooking at home. These changes mean it’s necessary to understand how new habits develop, and to try to adjust your approach for them. In other words, to see the reasons why habits change. Payment services do not, by themselves, create those global innovations. They adapt to technology and allow it to spread and grow among people. A payment service is a bridge between the business and their customer. There’s no need to create new payment methods just so that people can pay for the innovation. People will do what’s most convenient and comfortable for them, and it’s the job of payment tech to adapt to that.
What’s the most interesting thing happening in payment tech?
The most interesting thing happening right now is the development of alternative payment systems. There, tech is developing in such a way as to take into account the needs of everyone involved in the payment process. Like the development of credit systems that let merchants receive money immediately after the sale, and the customer to pay within 2 weeks from the day of purchase. Innovation in card tech is more complex, their infrastructure was all built a decade ago, but bits and pieces are changing: new ways to pay contactless, new functionality, and protocol updates. And it’s all assisted by tools like BigData.
How much longer can we expect to be using traditional bank cards?
They’ll presumably be on the market for another 10 years.
To ask about something other than alternative methods, where will the development of fintech take us?
Cryptocurrencies, the blockchain, these are technologies that let you do completely new things according to completely new principles. They run on different rails, like those supersonic Elon Musk trains. Traditional banks, meanwhile, run on the old rails, though they get better incrementally. But no matter how cool the tech there gets, its infrastructure is old. The future belongs to those companies that can craft their product to the end user and build their solutions from scratch.
How would you describe the prospects for payment services?
This industry is very dynamic, you can’t just fix something once and go on with your life. Socrates summed it up when he said, “I know that I know nothing, but no one else knows anything either”. It reflects the dynamics of this industry! It’s a business where it’s always interesting to come into work each day.