According to experts of the consulting company Bain & Company, the payment market in the near future, expect major changes — the payments cease to be a separate specialization and are embedded in multi-function applications, and e-wallets are becoming more common. In addition, payments and transfers cheaper, and at some point may become free. This requires a payment of companies to seek new ways of development.
Money from apps
The payments market is changing rapidly with the advancement of technology, the proliferation of e-wallets and a parish in this area of different companies, from retailers to technology corporations. “Payments will be free for consumers, and ultimately for retailers, they will be instantaneous and integrated into other services and products. Cars and refrigerators, not the people, can start making orders for automated replenishment”,— stated in the report of the consulting company Bain & Company.
According to forecasts by Juniper Research, a system in which the buyer scans the phone when entering the store and leaving him and thus pays for all its products, will rise from the current $253 million turnover to more than $45 billion in 2023.
According to the authors of the report, now payments are often only one of the services in multifunctional applications. This option is particularly common in Asian countries, which “jumped” through the option of payment by Bank cards and cash went straight to the payments using e-wallets, often included in “superpriority”.
The company estimates Worldpay, payments using e-wallets will continue to spread, so, when you purchase goods in physical stores, their share in 2022 will increase by 18 percentage points, and in the case of online trading by 11 percentage points. Such method of payment in 2022 will account for nearly half of all online payments and more than a quarter of the payments in retail stores.
The very same online trading in this period will grow by an average 19% per year.
The spread of new methods is uneven in different countries — for example, residents of Germany are still very often paid in cash and the U.S. traditionally distributed cheques and credit cards.
Especially actively new payment methods are distributed in the Asia-Pacific region: now, the share of electronic wallets is 52% in the case of purchases in online stores and 27% in conventional stores, by 2022, these shares should rise to 66% and 42%, respectively.
According to analysts at Bain, yet another competitor to traditional payment methods can become a cryptocurrency, for example, is Libra, which is going to launch Facebook. The social network plans to embed a payment option in your messenger. The authors of the report acknowledge that the cryptocurrency as long as they don’t get wide distribution, will have to face many regulatory and technical obstacles to their rapid spread as a means of payment.
Instant and free
One of the trends of the payment market, according to the authors of the report, is the continuing decline in the value of payments on the background of intense competition and technology diffusion.
In some regions, mainly in Asia, the payments soon can become an instant and practically free for the buyer and the seller. In the case of Singapore, the Philippines and Thailand officials hope to extend it into cross-border payments. Some applications have already made payments free in an effort to attract new customers. Their gratuity is achieved through the monetization of other services.
Even in countries with a traditional spread of payment cards, for example USA, Australia and some European countries, the transaction cost is reduced.
Although quantitatively dominated by domestic transactions, the most profitable for banks and payment systems such as Visa and Mastercard, are cross-border transfers. The report States that one of the European banks have about 10% of the profits in 2016 from cross-border transactions. This source of income is also threatened by new payment methods. So, the British service TransferWise, specializing in translation around the world, reached a valuation of $3.5 billion, becoming one of the most expensive European startups.
According to the authors of the report, payment companies and banks must change to meet the actively developing market and keep the income. Last but not least this is related to the many recent mergers and acquisitions of such companies: they thus strive to increase efficiency, reach new markets and new business segments. Among the major transactions in this sector over the past year buying U.S. financial company Fidelity National Information Services, the British operator Worldpay payment for $43 billion, the merger of American suppliers FINTECH services, Fiserv and First Data — $22 billion and the purchase of MasterCard shares in the Danish payment service Nets for €2.85 billion According to estimates by research firm Dealogic, M&A FINTECH-companies in the first five months of 2019 reached $117 billion.
A payment system has begun to expand the services offered, adding to transaction processing and working with the terminals lending to businesses and consumers, or creating software for business management.
“Russia has also in recent years there are significant changes in consumer payments, said the partner of Bain & Company Oleg Geiler.— Continues overall growth of cashless payments, the rapid development of “contactless” payments using Apple Pay, SamsungPay and other systems. We are seeing the emergence of new systems using QR codes: this year, the Bank of Russia launched SBP (fast payments), a similar system has also launched a savings Bank. In General, Russia follows, and in some ways even ahead of the trends for the other countries in the development of various options of cashless payments”.
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