The Unfolding State of Payment
For a long time, cash has been the king of the payment industry. This is because it enables instant payment for goods and services, without hassles. Though going around with cash has its downsides, several people, both young and old, still prefer using cash to make payments.
But as technology began to disrupt the world order, many things changed, giving way to new ideas. The payment industry was not also left behind in the new world order since the wind of change got to its threshold. This change brought about the digitalization of the payment industry, with banks and other financial institutions offering digital products and services to their teeming customers.
How did financial institutions digitalize their services?
Before the introduction of the Automated Teller Machine in the 1950s, which eased banking activities and reduced traffic in banking halls, banks’ mode of operation rested solely on manual labour. But as the ATM was introduced, making consumers become aware that payment transactions can be faster, easier, and safer, customers started demanding more of such services. This also led Financial Institutions to start offering steady streams of new services.
What Phases Followed the ATM Era?
The Cash Decline Phase
With the possibility of making payments without touching cash, cash lost its grand position as the king of payments. The whole world is gradually tilting towards a cashless society, with noncash transactions on the rise globally. According to a report by Business Insider, the use of cash in the UK is expected to stop by 2026.
The Digital Wallets Growth
The wallet payment system is a new and innovative payment system. It is an electronic payment system which enables fast, easy and safe payments leveraging the internet to achieve this. Nowadays, there are many Financial Institutions offering their customers this option to better serve them. These wallets are linked to the individual carrier’s account and can be used for various transactions with little or no glitch. Examples of these wallets are Alipay, and sundry other bank applications.
Tech Giant Currencies
As many tech companies are springing up by the day, it has become imperative for the big players in the industry to set the tone of things. This being so, big tech players such as Facebook, Samsung, Apple, and a host of others are making concerted efforts to create their own currencies which will enable their users make business transactions on their platforms. While this is more of a business move with territory-marking undertones, it is equally a way of buying consumers’ loyalty through the offering of consumer-centric solutions.
The Rise of Cryptocurrencies
Since the payment industry is somewhat fragmented and heavily regulated, cryptocurrencies started gaining wide acceptance. A cryptocurrency is a decentralized digital currency which is not immune to inflation and other market factors, though it has its vulnerabilities. Because cryptos have proven to be credible payment methods, if not lots more, they have gained wide acceptance globally for payment security, ease and swiftness. Examples of cryptos widely in use are: Bitcoin, Ethereum, XRP and others.
The Advent of Contactless Payment
Contactless payment has been in the scene since the mid 90’s but it didn’t gain popularity until the year 2019/2020 when the COVID-19 pandemic shook the whole world, changing the world order forever. The imposed lockdown by governments across the globe brought contactless payment into limelight. This is because as the coronavirus disease is a highly contagious disease, people needed to avoid contacts. While this was in full swing, it became difficult for many businesses who needed contact to thrive to cope during these trying times. That was when contactless payment — which embodies a series of payment methods viz: Bluetooth payment, QR payments and Tap and Go — came to the rescue. To this end, contactless payment is one of the payment methods that has proven to be the silver lining in the dark cloud of the COVID-19 pandemic. It will also transition the payment industry to the next phase.
The above listed payment phases are the current stage the payment industry is in. While nobody envisaged that the industry will be where it is today, it is also a subtle way of reminding everyone that change is constant as long as the world constantly evolves.
