The COVID-19 pandemic has accelerated a phenomenon that was already in progress – the digitisation of the way we live. Part of that has been the rapid increase in demand for electronic payments and the way payment services should be delivered.

We are living in an increasingly cashless society and payment services have a critical role to play in the development of a seamless digital economy and the drive for innovations that integrate digital payments into our daily lives. This article explores the payment industry and how it is responding to these key developments in an everchanging digital landscape.

We were already starting to see the adoption of digital payment systems before the pandemic – scanning a QR code or tapping a terminal with your mobile phone to pay for groceries, for example, was becoming the norm. Today paying all bills digitally by scanning a QR code and a simple tap to confirm payment on a mobile device has made transferring funds effortless and virtually instant. The entire infrastructure of the way payments are made is spawning new business models and the trend will only increase as the technologies make payment seamless. It is projected that by 2030, the number of cashless transactions could be triple the current level, across all regions.

Six trends will define what happens in the next eight years and, as payment service providers in this new digital economy, we believe these are trends you should be aware of.

While the World Bank’s goal under its Universal Financial Access programme for all adults to have access to an online account to store money and send and receive payments by 2020 is far from being met as yet, there are countries, particularly in emerging markets, that are making huge strides to harness existing technologies to make this happen. Thailand’s PromptPay and Singapore’s PayNow are examples where bank accounts or digital wallets are linked to the payer’s national identity number, phone number or email address. Inclusion into the financial system will continue to be driven by mobile devices and provide access to affordable, convenient payment mechanisms.

The biggest disruptor to the financial industry over the last 20 years has been the emergence of digital tokens or electronic records that represent the virtual form of a nation’s currency along with private sector cryptocurrencies. The Diem, proposed in 2019 by Facebook as a form of cryptocurrency backed by a basket of sovereign currencies is one example that could replace account-based payments with a tokenised system. The fact that 60% of central banks have put aside their initial scepticism and are considering, and some pilot testing, these solutions is evidence that this trend will continue to play out.

Digital wallets allow the storage of payment methods such as ApplePay, Google Pay, Alipay and WeChat Pay on consumers’ mobile devices and such methods of payment are set to account for more than half of all e-commerce payments worldwide by 2024, as consumers shift from card-based to account- and QR code-based transactions. Banks are now responding with solutions.

Behind-the-scenes payment processing is also changing with the move away from card payments to digital wallets. Card processors are scrambling to remain relevant by providing value-added services and opening up the existing card rails to a wider range of payee and payer points. Digital wallet providers will respond with “open-loop” technologies and seek interoperability so as take advantage of the ongoing globalisation of payment rails.

The slow and costly traditional banking mode has driven consumers towards instant, low-cost payments services from new players competing with bank and card-based solutions at scale. This is being supported by the adoption of ISO 20022, a globally developed methodology for transmitting data which provides a consistent messaging standard for payments.

Singapore and Thailand recently linked their national systems PayNow and PromptPay respectively so users can now instantly send money between the two countries using just a mobile phone number. This is just the start of a revolution in cross-border money transfer solutions.

However, the convenient digitisation of payments has opened the floodgates to potential crime and the emergence of scams across payment networks globally have resulted in a rise in attempted fraudulent purchases by 70% in 2020, according to digital fraud prevention company Sift.

Concerns raised by payment providers of security, compliance and data-privacy risks, highlight the need for greater collaboration among banks, payment providers and the public sector in preventing fraud and money laundering. Consumers can expect to experience a trade-off between cybersecurity and convenience moving forward as these risks are countered.

Payment providers now need to define their role in this revolution. They must decide what they need to do to stay relevant and how to improve the customer experience while balancing the need to remain compliant and provide adequate cybersecurity measures.