The payments landscape has been transforming for years, primarily driven by changing customer expectations and demands. The Covid-19 pandemic accelerated this global transformation, which encouraged quick-thinking corporations and SMEs to adopt a digital-first mindset that focuses on simplifying and elevating acceptance of virtual payments.
Therefore, as consumers continue to embrace next-gen payment methods, businesses need to start implementing Payments 4.X alongside other financial trends to remain at the top of their game.
In this blog, we explore the trends we can expect to see as the paradigm shift in the eCommerce landscape fuels the Payments 4.X revolution, and how businesses can adopt these principles to future-proof themselves and thrive in this new era of payments.
What is Payments 4.X?
Payments 4.X is all about the user experience. It's about creating a frictionless, seamless payment experience embedded deep within a company's infrastructure. Over the last few years, it's clear that the recent changes across the industry are more sophisticated than just giving consumers the ability to pay for a product or service - and this is where Payments 4.X comes in.
Compared to Payments 4.0 - which was largely shaped by the need to secure new avenues for connectivity and integration - Payments 4.X focuses on refining these innovative elements and tailoring them towards personalization and engagement.
What trends can we expect to see from Payments 4.X?
With customer demands and expectations growing, combined with an increasing digital adoption rate, higher transaction volumes and instant processing conditions are pushing payment infrastructure to the limit. Therefore, all-in-one integration between eCommerce players and global payments and banking providers is crucial.
Additionally, as consumers shift towards next-gen payment methods, Payments 4.X will introduce more transparency and anti-monopoly measures through these shared infrastructure platforms and open collaboration. This approach will help deliver a superior customer experience and create a level playing field, indicating a future that supports open finance and banking.
By the end of 2022, 65% of the world's GDP will be digitalized, with global spending on services and products that support this digital transformation estimated to reach $2.3 trillion USD by 2023. Additionally, Capgemini's World Payments Report revealed that consumers and commercial clients now want digital payment experiences to match the convenience of other services.
The World Payments Report also revealed that 65% of bank executives perceived non-traditional competitors as more of a threat than traditional banking institutes. Compared to conventional banking providers who still function on legacy technology, many newcomers are naturally prepared to diversify their products and services to better align with Payments 4.X principles.
How can businesses thrive in the Payments 4.X era?
New-age companies will likely gain a competitive edge by pinning their success on several non-card-related products like digital wallets and crypto exchanges. Low barrier entries have already attracted PayTech's focused on payments initiation, processing, authorization, customer due diligence, and e-KYC - priming them to thrive in the Payments 4.X era.
Businesses will need to focus on API maturity, augmented processing capabilities, and leveraging data, all paired with cloud-based dexterity, to successfully adopt the Payments 4.X approach. Key elements of this will include data transparency, shared infrastructure, embedded finance options, and developing platform capabilities.
As digital payments and eWallets become the norm, rather than the exception, payment providers will need to meet demands for speed and ease of use. However, the transformation can prove challenging with regulations changing depending on the country, region, and industry, with officials introducing more demands that Fintech's are obliged to comply with. This is where finding the right payments partner is essential in navigating these complex areas.
In the era of Payments 4.X, the most successful businesses will create a strategy that focuses on leveraging data and building digital capabilities while working closely with PayTech and ecosystem partners to build solutions that enhance current business practices and support a customer-centric approach.
Are you prepared to transition to Payments 4.X?
Yapstone's full-stack payments solution is built on layered microservices that can seamlessly facilitate your transition to Payments 4.X.
With our powerful payments platform, you can plug into the features that suit your business requirements or leverage our entire full-stack platform to supercharge your growth this year. Get in touch today and chat with a member of our team, to learn more about how we can future-proof your business.
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