• Dean Wallace, Director, Consumer Payments Modernisation at ACI Worldwide


• 10.02.2021 01:30 pm
payments

Without a doubt, 2020 was a pivotal moment for payments. The rocky start to the decade saw the way we pay for everything from DIY items to food shopping change significantly. With the desire to prevent the novel coronavirus from spreading, we saw the volume of digital payments increase exponentially. In fact, the overwhelming majority of UK consumers reported they made more contactless payments than ever before following the outbreak of the virus. With nearly a quarter (24%) of these consumers using mobile wallets as their primary form of paying while in physical stores. 

With uncertainty surrounding future national lockdowns, and the likelihood of more on the horizon across Europe, it’s clear the payments trends of 2020 are here to stay. Looking beyond the next 12 months, we will likely see a number of payments predictions become reality by the end of the 2020s. 

Real-time payments will be the norm

The pandemic clearly highlighted that instant access to cash and payments is a necessity for both consumers and business owners. Banks have been heavily investing in access to real-time payment rails across Europe for a number of years. But the number one task in this decade will be how real-time payments are embedded into the customer journey. 

The bank-led European Payments Initiative (EPI) will be the driving force behind making this a reality in Europe. We will see EPI introduce a new “card” that enables physical point of sale purchases – which are still seen as the prize target in some markets – and settles funds over the instant payment rails. 

Added to this, EPI will also provide digital wallet capabilities – which will likely leverage Request 2 Pay (R2P) – underpinned by the same instant payment rails. The wallet capabilities will be introduced to enable European digital wallet providers, like Bizum in Spain, offer payments that follow a standard set of EU rules that govern the whole EPI consumer payments ecosystem. 

The 2020s will see real-time payments move far beyond just connections. When combined with modern digital capabilities, real-time looks to what value there is to be added to the consumer payments journey that enriches the experience, helps keep customers or win them from competitors, and changes payment habits. Though we will undoubtedly see a hype curve towards the end of this year, by 2026 we will see real-time payments in use across most, if not all, consumer payments use cases. 

Contactless will win the race

Last year saw consumers move from contactless to contact-free. Cash and plastic cards were out and mobile-based payments were in vogue when lockdown restrictions were eased. Online shopping from the comfort and safety of home wherever possible also became the norm. 

With Strong Customer Authentication (SCA) now in place across Europe, and mandated for the UK by 14th September 2021, even more consumers will become at ease with using their mobiles for making payments. SCA extends the consumer / mobile bond into a number of purchasing experiences – paving the way for enhanced customer experience with user-friendly biometrics offered via bank and mobile wallet providers. 

While this is starting with text message codes to begin with, and a definite step in the right direction, this extra layer of friction might initially seem awkward to some. To others though, having some security friction will be very welcome amid increasing cases of fraud. The friction between convenience and security has been around forever in payments, and banks should look to iron out the bumps in their customer journeys to enable faster adoption. R2P is a key example of this in action – currently ushering in contact-free payments across Europe, which will become the norm by the end of the 20s. 

Undeniably, many of the trends that were already emerging in the payments landscape have been accelerated by the events of 2020. And while we will not see wholesale adoption of instant payments and contact-free overnight, by the end of the decade they will be the norm.