Convenient and secure, cashless payments benefit both the customer and the business, improving transaction history tracking, record keeping and allowing greater functional flexibility for both parties. Big Tech has also embraced this innovation, with giants like Amazon and Google offering tap-to-pay options within their own portfolios of services.
“Proximity mobile payments in the UK are expected to grow significantly, reaching 16 million users by 2026," notes Rajasekar Sukumar, Senior Vice President & Head for Europe at Persistent. "Over the past three years, digital and mobile payments in Europe have surged by over 30%, with an estimated 700 million cashless payment users in 2023.”
Profit for both parties
Digital wallets are powerful drivers of innovations like embedded payments, e-commerce and finance overall. They can also be used by businesses to extend their services outside of traditional payments. These offerings could be exciting options like coupons, rewards and messaging around sales and stores nearby. This flexibility provides a big advantage over competitors and serves both the seller and the buyer. A few benefits:
- Convenience: no carrying wallets, counting cash or managing loose change.
- Universal acceptance: a local digital wallet can be a bridge to pay for goods and services in foreign countries.
- Financial access: digital wallets provide an entry to the digital world for those who don’t have a bank account and who are typically reliant on cash.
Change it up
Success in the cashless space relies heavily on the technical capability of the provider and their ability and appetite to embrace change. Safety and compliance to the evolving regulatory laws will be one such change.
"With the growing desire for convenient payment solutions, companies will have to introduce new measures to protect transactions," says Denise Johansson, Co-Founder and Co-CEO at Enfuce. "Payment providers will likely seek to improve tools, such as transaction monitoring and authentication, in which AI and machine learning will play a key role.”
Transparency and security are key with cashless payments, and providers need to give customers and businesses the same feeling of trust that traditional banks provide. While risk management is evolving to beat cybercrime, traditional structures and processes will need to change, adapt and be replaced by more customer-centric journeys and solutions.
Partnership and collaboration with innovative service providers will help financial services providers with legacy processes build out the kind of functionality and security needed to capitalise on the opportunities in this fast-changing space.
Big tech, big opportunities
Competition is fierce in digital payments, as providers fight to provide the most seamless, intuitive and cost-effective services, and digital giants like Amazon, Google and Apple are not making it any easier. Setting the bar high for secure and efficient payment methods, these brands have allowed customers to see what’s possible and they’re not settling for anything less.
“Agility is key,” says Peter-Jan van de Venn, VP of Global Digital Banking at Hexaware-Mobiquity. “A modern tech setup allows for quick feature updates, but with economic uncertainty, budgets are tight. Smart spending is crucial. Banks should use out–of-the-box solutions as much as possible, to allow more budget allocation and true differentiation.”
Both traditional banks and fintech companies have many benefits, and together, create an unbeatable offering – banks with experience, trust and reputation and cutting-edge start-ups with their efficiency and innovation. In collaboration, banks and fintechs can now meet the demanding modern consumer where they’re at, while remaining compliant and safe. By implementing modern solutions through partnership, banks can integrate with external applications and platforms, becoming more flexible and agile while expanding their offerings and making the most of each new wave of innovation.