Daniela Mielke, CEO of RS2 Software, writes for PaymentExpert on how preferences and personalisation among consumers is driving the way that payment companies innovate and evolve the sector.  

The evolution of payments has focused on eliminating barriers for both consumers and merchants, with the main priority to reduce transaction times — something that benefits both sides. But the current digital disruption in the payments space revolves mostly around new payment methods and currencies. While consumers are exploring and adopting new methods, this adds more complexity to the merchant side. 

Our new report, “Outlook 2020 The Rise of the New: Alternative Payments and Currencies,” takes a look at how these disruptions are benefiting consumers by adding convenience and speeding up wait times, but merchants find themselves struggling to adopt these new technologies at the same pace, and in some cases, are unsure how to identify which methods to support.

In the coming decade, we’ll see more innovation — as well as disruption — in the payments space. Here is a look at how consumer preferences will continue to be a key driver in the evolution of the payments industry, specifically for merchants. 

Consumers will drive payment evolution

This migration to digital transactions is unsurprising, as the customer experience continues to be a major driver in the evolution of payments. For example, the Diner’s Club Card was introduced after its founder forgot his wallet during a business dinner and PayPal was founded in 1998 to reduce the friction of paying online. 

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Additionally, 50 percent of consumers consider the term “real-time” in financial transactions to mean immediately. A prime example is Uber, which embedded the transaction so seamlessly that it’s processed, without effort, once the rider reaches their destination. The growing expectation of having payment transactions that are fast and embedded will undoubtedly impact merchants, bank corporations and the payments industry at large. 

For payments, diversity won’t mean elimination
In some industries, innovation can often lead to an incumbent’s slow demise. Think of how Uber forever changed the taxi industry or how streaming services have caused a rift for cable companies. But for the payments industry, innovation leads to diversity, not elimination. The credit and debit card haven’t killed physical currency, and mobile payments haven’t killed the credit and debit card.

With the tech industry’s focus on the payments industry being sharper than ever before, we’ll no doubt see more innovative, seamless payment options. Consumers are hungry for more options that can make payments frictionless, but this doesn’t necessarily lead to the elimination of old favorites. 

New currencies add unexpected complexity

It’s been more than ten years since Bitcoin launched, and to this day, many consumers question its value, not to mention the low acceptance rate by a large majority of merchants. In fact, the buzz around blockchain and cryptocurrency is slowing down; some speculate it has to do with the lack of current real-world application.

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While consumer interest and government intervention might delay the rollout of a mainstream global cryptocurrency for the time being, it’s an uncharted area that will usher in unexpected complexity for merchants. 

New solutions for merchants 

It’s clear that consumers are adopting, or at least experimenting with, new and alternative payment methods faster than ever before. 

As more and more alternative payment methods and other non-traditional currencies enter the market, merchants need to decide whether or not to accept these methods. Unfortunately, the burden is placed mostly on the merchant who has been required to make the investment in new hardware and software. The alternative is not adapting to these consumer demands and missing out on revenue.

Despite the potential added convenience for consumers, this accelerated rate of change will disrupt the traditional adoption process for merchants who typically wait until consumer demand reaches a threshold before implementing and accepting new payment methods. With uncertainty among merchants, clunky and time-consuming implementation processes, and weak consumer demand, merchants are often at times skeptical of investing in new POS equipment to enable the technology. 

To address the rise of new alternative payment methods and currencies, merchants need a single, global payments platform that embeds payments at the system level to ensure acceptance at every customer touchpoint and allows merchants to keep the focus on their business.