Digital Payments: 5 Trends Business Owners Need to Know

Expert advice to help expand your business’s point-of-sale potential.

June 2022

<p>Digital Payments: 5 Trends Business Owners Need to Know</p>

COVID-19 transformed the consumer landscape, speeding up digital and ecommerce payment trends. Now 82% of Americans use digital payments and digital payment technology. More people are familiar with Zelle® and Venmo®. Wallets have moved to your phone, and you can buy what you want now and pay for it later—in crypto.

These nontraditional payment methods create some exciting opportunities for business owners. But you may be wondering how to adapt and what you can do to stay ahead of the curve. Here are our top 5 tips to help you take advantage of emerging digital payment trends, make the most of what we’ve learned from the pandemic and understand what experts are predicting for the future of payments.

Contactless Payments and Cashierless Technology

Forecasters suggest that nearly 75% of Americans will use digital wallets regularly by 2025. They make transactions more sanitary, allowing for quick scans and easy checkout using contactless technology at point of sale.

Contactless cards are also becoming more common. Shoppers with cards that feature the RFID symbol can forget the swipe and chip reader and go “touch-free,” taking advantage of modernized payment terminals with fast tap-to-pay transactions that minimize physical contact and keep cards clean.

Another part of the “clean commerce” movement, QR codes are one payment industry trend that have also made a huge comeback. Once thought to be an ineffective gimmick, these handy printouts have been a great solution for brick-and-mortar businesses, removing hand-to-hand interactions in favor of the camera on your mobile phone.

So how are they used? QR codes are great for rewards and promos, connecting shoppers directly to your customer database via a point-of-sale (POS) system. You may have also seen them on menus. Diners can scan to pay or participate in quick customer-satisfaction surveys. Some merchants have taken this instant connection to the next level, offering digital gift cards emailed or texted to the customer with just a simple QR code scan.

They also can save your business money. Find out how with our article on the cost savings of digital payments.

Increased Security

With more digital payments comes more exposure. Efficient cross-border transactions are slowly becoming an integral part of the global economy, and enhanced security and fraud prevention measures are a must to keep sensitive information away from prying eyes. Businesses are looking to artificial intelligence (AI) and machine learning (ML) to lead the way toward a safer, more secure digital experience.

Improvements in the Customer Authentication process like facial recognition and biometrics offer much needed peace of mind to clients who rely on their mobile device as the first line of defense. We’ve also placed emphasis on offering technology at point of sale that utilizes card data tokenization, encryption, and meets PCI-DSS compliance. 

Having the right tech makes all the difference because a valid PCI-DSS council certificate significantly reduces the risk of a security breach. Read more about merchant fraud prevention in our helpful primer.

Going Omnichannel

Pivoting to omnichannel is one way many businesses found success during the pandemic. With brick-and-mortar locations suffering, ecommerce readily took center stage. Subscription services blossomed, creating recurring relationships. B2B branched out to B2C, and vice versa, and newer channels of sale like social media came into their own, offering entirely new ways to market and move a product.

As the world inches back toward normalcy, optimizing these new channels is key to keeping your digital presence profitable while brick-and-mortar takes back its piece of the pie.

Embedded Payments

With ecommerce emerging as the go-to way to shop for many Americans, the need for embedded banking and payments is on the rise. What separates merchants from financial service providers is becoming less defined. Merchants can now use digital platforms and marketplaces to offer their clients easy point-of-sale options without the need for a traditional merchant account. As a result, new businesses can start accepting electronic payments online and in-store almost instantly.

Financial service providers are changing with the times too. They’re making room for APIs and other financial technology (or fintech) designed to fit the modern business’s need for digital transactions, RTP payments, and financial interconnectivity without the traditional friction and pain points.

Peer-to-Peer (P2P) Payments

Replacing cash and check, instant transfers through providers like Zelle®, Venmo®, and others take the processing time—and potential health risks—out of sending and receiving payments. The money travels fast and doesn’t require any physical contact. Plus, these systems are easy to use and overcome some traditional banking barriers like complex bill pay systems and slow requests for payment. As these services look ahead, they may place even more emphasis on widening payment options beyond traditional credit, like investments, stocks, and cryptocurrency.

While peer-to-peer services for real-time payments have changed how individuals send money to each other, P2P payments haven’t quite reached maturity for business-to-consumer or business-to-business transactions. Some P2P services also charge transaction fees. While nominal, these fees add up, quickly eating into any business’s bottom line.

But P2P payments do present a risk to some business owners. By nature, they’re susceptible to fraud and human error. And because they’re unregulated, refunds aren’t guaranteed. Tax-related issues also present a problem. Business owners using P2P and avoiding a merchant service platform for taking payments may find it hard to track, export, and reconcile payment information at tax time.

Of all the things we’ve learned from living with and conducting business during a pandemic, one thing that we already knew stands out: change is the only constant. It’s the necessity to adapt and digital payments have emerged as a timely, one-size-fits-all boon to businesses big and small. Combined with proper use, careful management, and an effective merchant account, they can set you up for success while making your customers safer, happier, and more likely to return.

What happens when a major global event like the pandemic brings about a paradigm shift, transforming how people shop and what they shop for? For more information on what your business can do to get ahead of the digital payment wave, read our article, “Four Ways to Prepare Your Business for the Future of Digital Payments.”

Find out more about how KeyBank can help your business embrace the future of digital payments.

Interested in hearing more about the latest trends or additional services? Click here to have us call you.

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