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Payment Trends

Four Trends Disrupting the Future of Online Payments

The payments industry has become an ever-changing landscape. Consumer needs are constantly shifting, causing a clear impact on the rate of technological innovation. Particularly with the rise of eCommerce, consumers have a defined expectation of what their payment experience should look like. This includes more variety in how they are able to pay and more transparency in keeping their private information secure.

These factors coupled with constant global policy change make it clear that merchants have many aspects to consider before converting a transaction. Staying abreast of all payment trends and latest technologies is crucial for seamless eCommerce conversions, but where do merchants even start? Lucky for you, we have compiled a few of the most pertinent trends impacting the payment industry. Let’s take a look.

Fighting Fraud and Cyber Attacks

The evolution of faster and more accessible internet has helped to revolutionize digital banking and give rise to eCommerce transactions. However, while these faster speeds are making payments more seamless for consumers, they are opening the door to major cybersecurity risks.  Many consumers have had their email addresses and personal data compromised in recent hacks, but thanks to new technology this is becoming more detectable. Yet, as we shift further towards digital and consumer-friendly platforms, many financial institutions open themselves up to potential breaches. Transactions are executed much faster now, giving retailers and processors less time to identify and manage risks. Losses to banks alone in 2018 due to fraud exceeded $31 billion. (1)

Because of this rise in cyber attacks, there have been many policy changes that have impacted the payments ecosystem. Merchants are now having to go to great lengths to protect the consumer, but these shifts are solely dictated by new innovations in payments and policy changes. General fraud prevention tools aren’t cutting it, yet merchants don’t want to make consumers jump through too many hoops to make payments. We must find a balance between offering a favorable customer experience and ensuring safe transactions for retailers and shoppers alike.

The Rise of Mobile Shopping

The ways in which consumers make eCommerce payments is also constantly evolving. While credit card usage is still very popular among U.S. consumers, younger demographics are showcasing vastly different shopping behaviors. The millennial and Gen Z groups are starting to shop via mobile devices at a much higher rate than other demographic groups before them; so much that 68% of Gen Z’ers claim they expect instant person-to-person transactions. (2)

Reason being is the ease of use for making payments. Many consumers want to pay on the go; once they find an item they like, they want to seamlessly purchase it.

From the rise of direct product checkout via social media to easy one-click mobile payment options, it is evident the future of payments is driven by mobile. Because of this shift towards mobile payment methods, we expect digital wallets like ApplePay to take on a bigger portion of the market over the next few years. Merchants should take notice of the preferences of these groups, as Gen Z, in particular, already holds a spending power of $143 billion. (3)

Keeping Payments Secure

Pressure from regulators and consumers alike have driven a major concern in payment security. New policies like GDPR and PSD2 have escalated the need for merchants to implement robust data security measures. Consumers in the EU have adapted and come to know extra security steps in the payments process, and do not see this as a hindrance in the consumer experience. Whereas many US consumers seek a more seamless experience and attribute many of these new policies with a poor checkout experience.

Many of these new security features like dual-factor and biometric authentications are starting to become more widely adopted. Around the world, this will soon not just be a way for merchants to protect shopper data, but also a legally required step in the payment process. It may not happen overnight, but soon we will optimize a solution that appeases both regulators and merchants while protecting consumers, without disrupting their checkout process.

Installment Payments

Another trend picking up steam is the evolution of installment payments. Popular payment methods like Klarna and Afterpay are revolutionizing how younger demographics pay by offering attractive buy now, pay later options. Essentially layaway for the millennial, these payment options help to make transactions that might traditionally require use of a credit card possible for those choosing not to use credit cards. With interest-free split payments, many shoppers can buy the goods they desire now, without having to tack on credit card debt. (4)

It’s clear that changes happening in the payments industry are inherently tied to three things: consumer preferences, the speed of innovation and policy. While we can try to predict exactly how certain things will fall into place, trends in payments are changing on an almost daily basis. Staying on top of changing consumer behaviors and the regulatory landscape is a great start to ensuring shoppers enjoy a seamless online shopping experience.

Interested in staying on top of all the latest payment trends? Drop us a line. 


1)https://www.mckinsey.com/industries/financial-services/our-insights/combating-payments-fraud-and-enhancing-customer-experience

2)https://www.paymentssource.com/opinion/for-payments-generation-z-is-generation-e-wallet

3)https://www.businessinsider.com/banking-and-payments-for-gen-z

4)https://www.nytimes.com/2019/05/03/fashion/afterpay-quadpay-klarna-affirm.html

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Rebecca Steele is Content Marketing Manager at PFS. Working closely with PFS’s global team, Rebecca remains current on the latest trends in the ever-evolving eCommerce industry and communicates those findings to consumers and retailers alike.

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