The PayTech innovations that are on the money in 2023

From making payment (sound)waves to connected cars buying groceries and paying tolls, and who remembers BlackBerry? Well it’s back – the latest instalment in our industry spotlight series explores the new payment frontier of PayTech.

As a marcoms agency with clients at the forefront of tech developments, we are privileged to see at first-hand some of the very latest technology transforming business and life which have inspired our ongoing series of Industry Spotlights. Since the start of 2019, due in large part to the Covid pandemic, offline transactions decreased by a staggering 60% as the payments industry underwent a quiet revolution. PayTech, the intersection of payment and technology, is at the center of this transformation and includes everything from the Internet of Things to contactless transactions and eWallet transfers.

Payments used to be defined by the exchange of physical money, but now PayTech has spawned innovations in embedded finance and digital payment methods, and transactions are now the norm. According to the FIS Global Payments Report 2022, ongoing and rapid digitalization of the international economy is set to drive down physical cash use to a 9.8% share by 2025.

The arrival of ISO 20022, the emerging global standard for payments messaging, has completely transformed the speed and transparency of the payments industry – we know a little about this having drafted a thought leadership article on this very topic for one of our clients that’s right on the money here with its technology. PayTechs, a market now valued at over $2.17tn, have exploded into the market as companies begin to recognize that fast, frictionless, and embedded payments offer a distinct competitive advantage.

So, without further ado, let’s take a look at the latest innovations set to disrupt the traditional payments ecosystem in 2023!

  1. Authentication through the ‘touch’ of a fingerprint

Ease, convenience, security, and inclusion are just a few of the factors accelerating our shift towards a cashless society. Globally, contactless payment transaction values are set to surpass US$10tn by 2027 as more customers begin to switch seamlessly between the online and offline world. Developments in biometric authentication technologies are largely behind this transition. After over a decade of biometric integration on smartphones, many users are already familiar with using their fingerprint to authenticate themselves for mobile payments and banking apps – a familiarity that seamlessly translates to user adoption of biometric payment cards.

Visa has already rolled out a pilot for an on-card biometric sensor for contactless payments across the U.S. and Europe. The biometric card tests the use of fingerprint recognition as an alternative to PIN or signature to authenticate the cardholder during a transaction. This PayTech is designed to be compatible with existing payment terminals that accept contactless- or chip-based payments around the world but if the take-up is high, it could solve the security issue faced by many victims of fraud.

It’s still early days for biometric authentication technology but widespread adoption could bring new opportunities to pay with intelligent protection in the future, so watch this space! Already a company called Walletmor claims to be the first to offer a payment chip which can be implanted into a human hand, making payment possible from a Purewrist wallet app – whatever will they think of next!

  1. Banking on voice

The power of voice earns a rightful place in the payments ecosystem and it’s great to see our automotive client right at the center of developments, investigating a technology that would allow payments to be sent over sound waves (something which hasn’t gone unnoticed by a recent Wall Street Journal feature opportunity!) This cutting-edge technology, which is already in use by militaries, involves encoding data into sound waves and then sending it to another device via speaker to initiate payments. Our client hopes this PayTech will improve the in store payment process for customers, offering the type of seamless experience that customers are used to when shopping online.

But the potential of voice-based payments doesn’t stop there. Voice recognition technology is being used for authentication purposes, simplifying login processes, and improving security by making accounts more difficult to hack. NatWest uses voice biometrics as an alternative to security mechanisms based on passwords to other static identifiers, which can be stolen or forgotten. The bank deploys a voice biometric solution from AI-based speech recognition firm Nuance, which screens incoming calls and compares voice characteristics – including pitch, cadence, and accent – to a digital library of voices associated with fraud against the bank. The software quickly flags suspicious calls and alerts the call center agent to potential fraud attempts.

  1. Digital cockpits bring in-vehicle payments into full view

As automotive technology advances, the future of digital payments could see drivers paying for groceries and settling parking fines from the comfort of their car seats – and it’s all thanks to onboard interfaces. The growth in potential for in-vehicle payments has been pioneered by electric car makers who, tasked with the challenge of redesigning traditional car models, were able to completely reinvent some of the onboard systems and replicate the success of smartphone makers in understanding users and user habits.

So who remembers the BlackBerry? The word was synonymous with a mobile – anyone who was anyone had a BlackBerry. But along came Ericsson, Nokia, Apple iPhones, Androids, and that was the end of the BlackBerry as we knew it. But now, leading this new payments frontier is a re-invented BlackBerry. The company showcased an embedded vehicle wallet at the 2023 Consumer Electronics Show, with plans to roll out the software in May. The technology, co-developed with Amazon Web Services (AWS), offers auto manufacturers an integrated artificial intelligence solution for digital cockpits.

Among the features available as part of BlackBerry IVY is an in-vehicle digital wallet. This innovation, developed in partnership with Car IQ, embeds payments directly in the car, allowing drivers to pay for fuel, electric vehicle charging, tolls, and parking. The joint venture aims to offer a simpler payment experience that will allow drivers to connect their vehicles directly to their bank accounts and automatically pay for services without needing to add a credit card.

Say hello to your new electronic wallet!

  1. Buy now pay later (BNPL) models shift focus onto value-added services

As cash and disposable income become tighter, BNPL has become one of the fastest growing embedded finance model, which helps users better manage their finances without switching between several apps or websites. According to a WorldPay data report, BNPL schemes will account for 10% of all ecommerce sales by 2024, amounting to a total worth of £264bn. This demand has inevitably brought new competition into the BNPL space and many companies are moving beyond flexible payment schemes to gain a competitive advantage.

In November 2022, Klarna, one of the leading players in the BNPL industry, launched a search and compare tool within its app for consumers in the U.S., UK,  Sweden, and Denmark. The search and compare add-on feature will allow consumers to look out for the best deals when shopping online, saving money and time. Klarna’s new search and compare tool does the hard work for consumers and compares thousands of websites in real-time to ensure they have all the information they need to make informed and confident purchase decisions.

Klarna is now a one stop shop where consumers can search and discover, find the best prices and deals, and most importantly, pay how they prefer, and enjoy post-purchase perks like delivery tracking, digital receipts, and seamless returns – as if we need any more incentive to treat ourselves to some retail therapy!

PayTech makes it rain across the entire payments ecosystem

Today’s stakeholders and customers require tailored services to suit their individual needs – and this is where PayTech comes of age.

Digital cockpits might be further down the line but there’s no doubt that recent tech innovations will usher in a new era of digital payments. Years of innovation were consolidated into a very narrow timeframe during the pandemic, but companies are now ready to offer new ways of managing finances and making payments – and ultimately changing how money is handled – oops did I just say handled, perhaps scanned would be more apt!

Hannah Watson is PR Executive at IBA International.

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