The future of payments: 6 predictions

Industry experts share their thoughts on how payment technology will evolve – and how these changes will improve the customer experience
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If you ever ran a lemonade stand when you were a kid, you know that its success depended on three things:

  • Traffic
  • People who want to buy
  • Cash on hand

(I’d also add price point, but have you ever said no to a kid selling lemonade because it was too pricey?)

These days, cash on hand is no longer a requirement, and I’d argue that traffic isn’t either – just post online, and people worldwide can buy “virtual” lemonade. In today’s world, cash is rarely required, and credit cards are becoming less so as more people pay with their phone, watch, or Venmo. I ponder how far off we are from biometric payments: Place items in your cart, a quick face scan, and you’re on your way.

As payment technologies continue to evolve, new entrants will be eager to get in. So we asked former bankers for insight on what they believe the future of payments entails. Here’s what they had to say:

1. Near complete digitalization

Steps will be simplified and verification instant. If there’s a need for human invention, it will be seamless; no need to sign three times, fax, and verify transmission. Paper money will still exist, but its use will be significantly reduced.

[ Also read Digital transformation: How to guide innovation leaders. ]

“Digital wallets and invisible payments will permeate all levels of modern society for day-to-day transactions and major operations,” says Ramon Villarreal, chief technologist, payments at Red Hat, “but traditional payments and money in hand will still exist in the long term.”

2. Open choice

Customers will be able to choose what payment method is best for them: Tap, biometric, chip, scan, or send. This opens a vast array of potential partnerships between retailers and firms. Additionally, corporations can choose standard processing time or real-time, and banks can create revenue streams from those choices.

3. Real-time insight

Consumers can have instant up-to-date access – no more “pending.” This will help customers on a budget – and wealthy clients get an accurate view of their portfolio in real-time.

4. Freedom from geographical boundaries

With immediate access to funds, you can plan without fearing shifting exchange rates. You’ll know precisely how much you are spending and can plan more accurately.

“Breaking down all geographic boundaries, the differences in exchange rates and having it process the moment you need it to removes real or perceived barriers and provides a better customer experience,” says Peter Magnaye, financial services solution architect at Red Hat.

5. Single validation, globally

"There should be one data point to validate my identity and available funds and to complete the payment. It shouldn’t matter where I am in the world."

Lose your card while on the road? Simply log into your account, get validated quickly, and get a new card or access to funds immediately. “There should be one data point to validate my identity and available funds and to complete the payment,” says Cynthia Devaraj, financial solutions architect at Red Hat. “It shouldn’t matter where I am in the world.”

6. Transparency

Think of the electricity in your home – you probably don’t care how it’s distributed as long as it’s safe and available when needed. The same applies to money: the easier you can access it, the better. You might not even know which bank is providing the services.

“Consumers will be further removed from the active thought process of making a payment,” explains Eric Marts, industry principal of banking and payments at Red Hat. “Get what you need, hit accept, and be on your way.”

Few of us love paying bills, yet doing so is an essential part of life. This is why hotels allow you to charge things to your room – frictionless transactions lead to more money spent and happier customers (at least until the bill comes due). The more invisible the payments, the more you can delight your customers.

4 key questions

As you plan for a digital future, ask yourself and your teams these questions:

  • What choices do you want your customers to have?
  • What do you think the future of payments should look like? Look for interesting insights and explore how they might apply.
  • What options would be most helpful for the next generation of customers?
  • Do you have the right people in the right roles to make that happen?

[ Want insights on talent and innovation from former financial services IT leaders? Get the ebook: Meet the Bankers.]

Emily Curley
Emily Curley is the director of financial services programs at Red Hat. Emily has spent over 10 years helping launch cloud technologies, building the Red Hat Developer program, and growing the financial services vertical. Emily is known for creating innovative programs, pushing the status quo, and piloting new ideas to benefit customers and stakeholders.