In the second and final part of this article, we take a look at some of the important developments in how payments work using our fintech industry knowledge and experience working on some of the most performant fintech systems in the world such as Vocalink’s Instant Payments Solution (IPS).
In part 1 we looked at the rapid growth in e-commerce, demand for faster payments and consumer adoption of relatively new ways of payments. You can read it in full here.
If you are involved in the payments industry in the Nordics region of Europe, make sure to catch up with our Nordics Managing Director, Erik Schön, who will be taking part in a panel discussion at NextGen Nordics taking place in Stockholm, Sweden, on 27 April.
Leveraging payments data
The diverse range of digital touchpoints involved in a cashless payments ecosystem provides vast amounts of data. This is of significant value to banks and fintechs to grow client relationships based on analytics and insights. Companies that can unlock the true value of payment activity data by leveraging powerful AI and ML tools can offer more efficient, tailored products and a more secure, protected environment in which to operate.
We can expect the full implementation of the messaging standard ISO20022 to be a potentially vital part of improving the amount and quality of payments data available in the industry. ISO20022, as the global standard for payment messaging, provides, for the first time, a shared language to be used for transactions made by anyone, anywhere.
All of the converging trends discussed here and in part 1 of this post present a clear dilemma in modern payments – customers are demanding easier in real-time transactions actioned on any connected device, while regulators are concerned about increased exposure to fraud. Payments companies, therefore, need to strike the right balance delivering new user-friendly processes that are also highly secure and compliant.
Rapidly increased e-commerce provides an opening for fraudsters. The use of AI and ML allows payment companies to detect fraud earlier by learning the financial habits of clients so that unusual behaviour is highlighted. Fraud prevention security measures, like voice-activated transactions, biometric authentication, and smart assistant payment verification, all have a part to play in securing the future of digital payments.
Future models of payments infrastructure
On the frontend, we are seeing more forms of instant payments and innovations such as digital wallets and embedded finance. Disruption of the payment industry is moving on from providing these user-friendly frontend mobile apps to improving backend processing and the infrastructure used to execute payments.
For instance, real-time payments technology and the utilisation of cryptocurrencies, stablecoins, CBDCs, blockchain, AI and ML, can all help improve the speed and security of payment gateway services used for cross-border and multi-channel payment systems that have suffered from being slow and expensive transaction fees.
With the emergence of blockchain and decentralised finance, transactions can bypass the traditional financial initiations altogether to enable direct payments between parties and revolutionise the industry.
The modern payments ecosystem is varied with lots of layers and companies filling niche use cases. Overall, it can be said that the journey towards more digital, open and real-time operations mirrors the way society at large is increasingly living online.
Many of the trends covered in this article may be set to converge in the emerging metaverse space, but the shape of that is some way from being determined. What will money look like in the metaverse? How will existing cross-border payment rails integrate with a borderless, global ecosystem?
To discuss the answer to these questions and the P27 response to the metaverse, you can join us at NextGen Nordics taking place in Stockholm, Sweden, on 27 April, where our Nordics Managing Director, Erik Schön, will be taking part in a panel discussion on the topic.
Our payments expertise
We help create digital and mobile payment solutions that facilitate e-commerce, payments processing and backend services that enhance the customer experience and protect customer data. We work with clients who provide services in DeFi, cryptocurrency, blockchain, GameFi, clearing and settlements, embedded finance, real-time payments, payment gateways and more.
Our solutions use battle-tested technologies delivered by domain experts for secure, compliant and resilient solutions.
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If you want to start a conversation about engaging us for your fintech project or talk about partnering and collaboration opportunities, please send our Fintech Lead, Michael Jaiyeola, an email or connect with him via Linkedin.