Payment trends to watch for in 2017


You can use your credit card without taking it out of your wallet, replace whole wallets with a smartphone, and even make payments with a wristband. When it comes to new ways to make purchases, payments technology has made leaps and bounds in the past few years. So what's on deck for 2017?

"The real change is happening with merchants and commerce and how they're serving your needs," says Rodger Desai, chief executive officer of PayFone, a mobile security authentication company. "That's where the focus will be in 2017."

Here's what experts predict in the payments industry this year: 

Mobile payments are here to stay.
"Payment through mobile is now here to stay and is a tangible example of how new technology is changing the way people behave," says Alistair Brown, head of payments at EPAM, a global organization with software engineers building payment technology.

While Desai sees no big changes in mobile payments technology in 2017,  EPAM predicts that within the next year, 50 per cent of smartphone users will choose mobile payments as their preferred payment method.

The reason? Convenience. We carry our smartphones on us, and the screens are large, making them just as easy to use as a desktop, says Sandra Wrobel-Konior, marketing manager at SecurionPay, a cross-device payment platform.

"We can pay on the go, no matter where we are, so it makes our lives easier," she says.

Payments will happen in real-time.
We're gradually moving into a world in which money will appear in recipients' accounts almost immediately, says Brown.

Now, when you use your debit card to make a payment, the transaction might not show up on your account for a day or two. The merchant may not see the cash for that long, either. That'll be in the past, he says. It's already happening in the U.S.

"There won't be a clearing process taking days to settle," he said.

Cash will continue to take a back seat to plastic.
Cash is still on the decline, especially in Canada and the Western world, says Desai. EPAM estimates 10 per cent of consumers don't carry cash at all. It says by the end of 2017, fewer than 25 per cent of all purchases will be paid for with cash.

"Cash is expensive to handle at the bank, and it's prone to corruption," Brown said.

Physical cards will lose their lustre.
Plastic cards, like cash, are becoming redundant with the rise of apps, wearables and digital wallets, Brown says.

But the concept of credit - including the processing, the ability to borrow money and perks such as reward points - is timeless.

"Credit cards are more than just a piece of rectangular plastic," says Brown. "Mastercard or Visa - they're massive organizations that are very good at processing payments. That infrastructure will stay."

Security will get more sophisticated.
Financial institutions have poured billions of dollars into anti-fraud measures in recent years. With that came the proliferation of biometrics, including fingerprint and retina scanning or voice recognition to verify purchases.

Using PINs to verify credit card purchases has also been on the rise, and it's only going to gain steam in 2017, Brown says.

However, Desai says the real emphasis on security is behind the scenes, removing the onus on the consumer. Fraudsters can copy a fingerprint to hack into accounts, and PINs don't protect against online purchases, he says.

So what's next? Perhaps algorithms such as those PayFone uses to check the authenticity of a purchase.

If you're calling the bank, or transferring funds on your phone, PayFone analyzes more than 400 factors to assess your risk before the transition is approved. This happens in real-time and without relying on input from the consumer, so you don't notice any disruption.

Shopping will be made easier.
Online giant Amazon is pushing into a new frontier of shopping with the launch of Amazon Go: consumers simply walk into the store to pick up what they want, and their app registers the purchase when they walk out of the store. No lines, no stopping to make the purchase.

It's still in the testing phase in Seattle, but Desai says the move is ushering in a new way of shopping.

Right now, consumers go online to comparison shop, then make a purchase. But online competitors see that consumers want things instantly and hassle-free, so they'll respond to that need this year, Desai says.

Even traditional online shopping won't be as arduous as it is now. SecurionPay's Wrobel-Konior says "one-click purchases" are on their way this year.

Your bank branch will downsize.
With use of cash declining and the ability now to deposit cheques via your smartphone, who's going to need to visit the bank?

"Bank branches have a lot of empty space," Desai says. "They won't be used for basic banking anymore." Instead, they'll become smaller units and for specialized needs, such as getting a mortgage approved or applying for a business loan.

We'll see an increase in online banks, too. Brown said in 2017, officials will lay the groundwork to allow new financial players to store and move your money around.

In summary: Banks and payments providers will continue to make things easy and fast for customers. But as payments become more convenient - and less tangible than cash - the easier it is to spend money you don't necessarily have. Don't let convenience lead you into debt.

See related: Mobile wallets: not that easy to use yet, Canadian banks integrate Apple Pay; Samsung Pay on the way, Mobile banking trends help branchless banks evolve
Updated January 26, 2017

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