We’ve been surveying the fintech landscape as we head into 2020. Using a crowdsourced model, we polled some of the top executives in the payments space on what they expect next year and in the near future. We did a similar piece for 2019 -- you can find that here.
We received enough submissions that we split this series into multiple articles. Check out Part 1 and Part 3.
Specialized payments
Ryan Frere is the evp Global Payments at Flywire
“One of the biggest trends we see playing out in the payments space in 2020 is the move toward more tailored payment solutions. Both billers and banks are looking to create stickier payment experiences as a means of differentiating their offerings and driving new process efficiencies in both speed and cost. This means tailoring payment solutions to customers’ business, industry, and region wherever possible.
“Companies (billers) want the payment solutions they use to fit with their existing IT systems and business workflows – to enable more payment and receivables automation and easier monitoring. In some cases, payment solution providers will also be asked to support their customers with vertical-specific services – whether it’s payment-related end-customer support, FX protection, fraud monitoring, etc.
“Overall, most organizations simply don’t want to be in the payments business. As payments get more complex, they will look for solutions that shield them from the complexity and risk of payments so they can focus on their core business.”
Evolving plastic
Linda Kirkpatrick is executive vice president, U.S. merchants and acceptance at Mastercard.
For decades, we have all carried cards in our wallets and used it to buy and pay for things. These pieces of plastic have typically carried our name, a 16-digit card number with an expiry date and a unique number that is called a CVV and more.
In the last one year, this piece of plastic has seen more innovation and change than it has seen in the last 50 years. The card that you carry in your pockets and purses is taking on new avatars, reflecting the needs of the new consumer. As we look towards the next five years, Mastercard talks about five trends in cards and how they will impact consumers:
- Contactless cards – Most of our cards come with chips embedded in them. We used to swipe, now we dip, and soon we will be able to tap cards to pay. People can identify a contactless card by a symbol that looks like soundwaves. If contactless-enabled, cards will have the ability to be more than a payment card. For those who live in NYC, Miami, Boston and Portland contactless cards can be their ticket to tap and ride the subway or metro.
- Biometric cards – In 2017, Mastercard was the first to introduce biometric cards that combine chip technology with fingerprints to securely verify the cardholder’s identity for in-store purposes – all without requiring an internal battery. When shopping and paying in-store, the biometric card works like any other card at EMV card terminals globally. The cardholder simply places their finger on the embedded sensor and either dips or taps the card as normal. Powered by the terminal itself, the fingerprint is verified against the template and – if the biometrics match – the transaction can then be approved with the card never leaving the consumer’s hand.
This could be especially useful for benefits disbursement to ensure that the people who receive these benefits are the ones using them and these benefits are not falling in the wrong hands.
- Digital-First cards – In the near future, your card could only live on your device you’re your physical card being optional. Mastercard launched a new program in which consumers have the option of using only a digital version of a card and not carrying a physical card at all. If a consumer does choose to have a physical card the way it will look could be
Cardholders would apply, pay and perform all lifecycle management through their digital device (smartphone, wearable, etc.). Cardholders will access their card credentials immediately after applying using their digital device and will have the ability to perform payments immediately on contactless terminals or online (as opposed to waiting for 5-10 days for the Physical Card to be sent to the Cardholder). The card elements that such as the 16-digit card number, expiry dates and the CVV codes are optional on the physical card.
- True Name cards – For many in the LGBTQIA+ community, the name on their credit, debit or prepaid card does not reflect their true identity. As a result, for the transgender and non-binary communities in particular, the card in their pocket can serve as a source of sensitivity, misrepresenting their true identity when shopping and going about daily life. BMO Harris and Superbia Credit Union are the first issuers to implement the True Name feature for their card offerings, enabling people to use their true name on their eligible credit, debit and prepaid cards, without the requirement of a legal name change. So, your card truly represents who you are and your true identity.
- Purpose-driven cards – The new consumer is very aware of social issues and increasingly are choosing brands that make positive social impact. This is driving innovation in cards – the physical design of the card and more. Increasingly the card in your pocket will mean more than just something that you use to pay for things, it will go beyond what you earn and will be an extension of your passion point and will seek to make a social statement or create a social impact.
Faster payments
Rick Burke is the head of corporate products and services at TD Bank
"Faster payments of all types will continue to change how corporate treasury practitioners pay their employees, partners and vendors. As we enter 2020, many corporate practitioners are thinking about how their infrastructure needs to change to support these faster payment alternatives. Same-Day ACH and RTP payment rails will increase their maximum transaction limit to $100,000 in 2020 and more and more financial institutions will be able to connect their customers to one or more faster payment capabilities."
"Those corporate practitioners that focus on activities where speed really matters will be able to improve the satisfaction of their customers and trading partners allowing them to advance their businesses at the expense of their competition. But practitioners also need to understand that the faster payments move, the more likely it is that they will attract the attention of fraudsters, meaning that fraud deterrence and detection will continue to grow in importance in 2020 and beyond."
"In addition, as the trendlines of faster payments, mobile commerce and the gig economy converge over the next few years, corporate practitioners should think about the potential for payment volumes to grow dramatically and begin to examine their business models to determine the potential impact to their organizations and prepare accordingly.“
B2B payments
Sebastian Rymarz is the chief business officer at Fundbox
"In the coming year, B2B commerce will finally come into its own and in parity with the B2C transactional experience."
"First, with the advances of open banking, there are new data streams that, combined with machine-learning models, enables for the near-real-time assessment of credit risk. This is key because suppliers spend an inordinate amount of time assessing the credit risk of new buyers who are asking for trade credit in order to make a purchase. Next, we now have the capabilities through APIs to provide on-demand access to business credit at the point of transaction which means that buyers know almost instantly that they will have the credit to complete the purchase."
"Lastly, once a buyer is approved and provided with access business credit, they have the ability to accept the purchase terms such that the supplier gets paid much in the same way as their B2C merchant counterparts."
"When you combine machine learning-enabled credit risk assessment with access to business credit in the same transaction and the ability to pay suppliers right away it’s a game-changer for the world of B2B."
"Imagine a new world of B2B commerce where suppliers and buyers can transact in near real-time and payments and credit flow in a way that never has to miss another business opportunity."
Moving away from traditional FIs
Vidya Peters is chief marketing officer at Marqeta
"New fintechs, driven by shifts in technology and a war chest of venture capital, have been able to drive change in the market quickly. According to TransUnion data, 40 percent of personal loans in 2013 were originated by banks with just 5 percent coming through fintechs. Within five years, fintechs were issuing 38 percent of loans, and banks just 28 percent. There are now a growing number of fintechs competing with banks on every part of their traditional service offering: wealth management, investing, small business, payroll, merchant services, and more.
"An industry like investing has been upended by Robinhood and now Square’s Cash App, who have driven banking giants like Charles Schwab, TD Ameritrade and E-Trade to also start offering commission free online trades. Every nook of the banking industry now has several fintechs competing inside of it. The breadth of innovative and competitive offerings is growing and consumers are more open than ever to exploring new options."
Advances in business payments
Bill Wardwell is vp of strategy and product management at Bottomline Technologies
“Business payment processes continue to be wrought with friction and complexity. In addition to combatting the well-known challenges that stem from too much paper, inability to transmit the right data, and difficulty implementing technology, both the initiating and receiving parties in a business transaction have traditionally had to agree upon, manage, and attempt to secure the payment method they ultimately exchange."
"In 2020 and beyond, a major trend we will see is more intelligent selection and management of the payment types exchanged between businesses."
"When we book a flight to our favorite destination, we don’t need to tell the airline what plan to use and what flight route to take. Fintechs and banks can provided the same level of ease of use for business payments, this will make payment technology easier to use and increase the value of technology to the customer."
"New approaches to payment technology are driving the convergence of disparate payment methods into more unified solutions, which are layered with AI to help analyze businesses’ payment preferences, historical payment trends, the level of risk associated with a particular transaction or trading partner, and other attributes. These more intelligent technologies will lessen the burden on Treasury, Finance, and Accounts Payable departments to navigate how their trading partners will get paid. It will be technology, rather than people, doing the work to truly optimize payment method used—whether card, ACH, wire, check, RTP, or emerging cross border methods—while ensuring that payments are made securely, all on a more real-time basis. This will ultimately lead to unprecedented levels of digitization across all business payment flows.”
Cross border
Aron Schwarzkopf is CEO of Kushki
"One of the biggest trends in the 2020 payments landscape will be cross-border payments. This problem plagues both consumers and businesses alike, especially in regions like Latin America where business is continually done across borders. Cross-border payment options are not only limited, but they are also non-beneficial for the user. 2020 will be the year that this changes, simply from the growing need for better options."