Payment Revolution: How Will It Change The Customer Journey?

The Covid-19 pandemic fast-tracked growth in the fintech space as the need for digital payments soared. By the end of  2022, the total transaction value in the Digital Payments segment is projected to reach US$8.49tn. And the industry continues to change and snowball.

Payments are increasingly able to connect people and their devices across both physical and digital worlds and marketplaces. AI-based systems are automating payment processes. The ChatGPT API for SaaS helps providers boost their profits. Cryptocurrency is being seriously investigated as a means of payment. Cloud computing is making payments paperless. Machine learning and AI are revolutionizing the cybersecurity and fraud detection spaces. These and other technological advances in the payments industry collectively make up the payment revolution: a wide-reaching set of changes to how we conduct our transactions these days.

What Is the Payment Revolution?

The concept of payment revolution refers to a technology-led payment system with innovative features and tools meant to streamline financial operations.

As digital transformation is completely reshaping the world of eCommerce, SaaS and software businesses need to invest in value-added payment processing services with the ability to ensure the expected level of convenience, ease of use, and security.

Why Payment Processing Matters for SaaS Developers

Consumers have increasingly high expectations when paying for goods and services. Big-tech companies like Amazon and Uber have led the way in creating seamless, easy payment processing, and now customers are demanding it from their other businesses, too. Customers want to pay and get paid anywhere, anytime, and as quickly as possible. For SaaS developers, perfecting the payment process is vital for customer satisfaction and competition in their industries. Not only are cutting-edge payments a competitive advantage, but they have the power to turn your business into a global leader.

Payments as Part of the Customer Journey

The customer journey is the path the customer takes, from discovering your product to purchasing, receiving, and using it.

Each stage of the customer journey is evolving significantly. In the not-so-distant past, we would have become aware of a product through word of mouth, radio, television, or print advertisements. We also would have had far fewer avenues for research. When purchasing, we would visit a brick-and-mortar store and pay for a product via cash or credit card. We would take it home to test and tell others about it – in person – if we liked it.

Now, a customer could become aware of a product via social media, research it through reviews and blogs, purchase it online, receive the product digitally, and share the experience through social media and online reviews to people they don’t even know!.

While the payments stage of this journey is at the tail end of the process, it’s perhaps the most important because it’s where customers seal the deal or abandon their cart, leaving you to wonder why.

Integrated, Seamless, Frictionless Purchases

One of the significant trends of the payment revolution is integrated payments. Embedded payments are woven into other processes, so making a purchase automatically includes the payment within this path. From the user’s perspective, the payments are invisible, as they don’t have to think about it. The payment just happens as a part of their interaction.  

As a business, payments should be embedded in your existing software and integrated with all the critical software your business uses. Payments should be part of one unified system, feel seamless, integrated into daily life, and require little to no contact with banks. This gives successful businesses the edge - in short,  an easy, frictionless payment process that is still secure.

8 Innovative Payment Tools To Keep Track Of

Technological advances and competition drive innovation in payment processing services as they always have but at a much faster pace.  These are an essential part of the payment revolution. If you don’t want your business to get left behind, check out some tools and trends we’ve put together. Keeping payment services a key priority will help you meet customer demands and stay ahead of the curve.

Open Banking and Payment Networks

Open banking, though still in its infancy, is rapidly increasing in numbers. The number of open banking users worldwide is expected to grow at an average annual rate of nearly 50 percent between 2020 and 2024. As of 2020, 24.7 million people worldwide used open-banking services. Incredibly, this is forecast to reach 132.2 million by 2024! Open banking allows customers to use their banking service in the context of other fintech services. 

It refers to an ecosystem in which clients can control the sharing of their financial assets and personal data with third-party providers of their choosing. Banks are transparent and share their infrastructure and documentation with these third parties. This is often done through Application Programming Interfaces (APIs).

Primarily used in the UK and the EU regions for the time being, where PSD2 regulates it, open banking works to drive competition and innovation in the financial services sector. It’s helping to create better products and experiences for businesses and customers. This leads to a simpler, more efficient, and seamlessly integrated customer payment experience.

Region-Customized Cart Languages

All businesses dealing with consumers in different world areas must consider localization strategies. Localization is adapting your product, information, content, or marketing campaigns to suit customers' needs, preferences, interests, and context in a specific country, region, or foreign market. 

A key factor of localization is language. Top payment providers can fully customize a customer’s cart, taking the customer through the payment process in their region’s language. This makes the payment step of the customer journey not only user-friendly but, in many cases, possible since language barriers can prevent someone from completing the transaction if they cannot understand what they are reading.

Efficient Cross-Border Payments

Simply put, cross-border payments are transactions where the payer and the recipient are based in different countries. Making payments across countries has potential complications: high costs, slow transaction times, security issues, access problems, and lack of transparency. However, according to FedPayments Improvement, cross-border transactions could grow globally from $29 trillion in 2019 to around $39 trillion by 2022. Yes, we said trillion!

Businesses benefit greatly from these transformations, as digital innovation creates faster and safer transactions. For example, application programming interfaces (APIs) allow software applications to talk to each other. Payment APIs can process payments from credit cards, disburse mass payouts across borders, and process payments from debit cards and bank accounts. They provide convenience for customers who can choose the payment mode with which they’re most comfortable. APIs also help to track payment details, PCI compliance, and payment information, among many other things.

Gone are the days of only using complex wire payments for cross-border transactions. Nowadays, there is a move beyond traditional clearing rail advancements, utilizing technologies like SWIFT GPI, virtual account management, and API connectivity for a better customer experience. Senders can see FX rates before sending payment. And beneficiaries can track payments and receive updates as they happen, a huge advancement from the past when no one could predict precisely when these would be complete.

Virtual accounts are another innovation currently revolutionizing cross-border payments. They provide a central account structure that allows customers to manage their cash flow across different currencies rather than having money in other countries, currencies, and accounts.

Blockchain technology is also starting to have a tangible impact on international payments. It uses encrypted, distributed ledgers and gives trusted, real-time transaction verification without intermediaries like banks or other financial institutions.

One-Click Reference Charges

One-click payment processes are a convenient feature that allows businesses to give their customers the option to pay for a product/service simply by clicking on a single button. Technology makes the payment experience quick, frictionless, and more accessible than we imagined years ago.

In-App and In-Shopper Account Purchases

Globally, users are spending $380 billion on in-app purchases. In-app purchases occur when customers make payments within an app or shopper account. Large companies like WeChat and Uber offer customers in-app account purchases, and some grocery shopping apps work similarly. Customers choose their goods and pay for them within the app. 

In-app purchases are prevalent in games, with users buying game currency, new levels, and in-game items. These typically require only a few taps from the customer and some biometric authentication from the app. These payments will likely increase customer satisfaction and incentivize repeat payments as the process is simple and somewhat impulsive.

AI-Trained Payment Orchestrations

In the payments industry, cascading means taking a transaction and moving it to the relevant gateway or endpoint. It’s essentially the routing of payments based on multiple parameters such as customer location, language, payment method, and several others. This is increasingly being done by AI, which is training the cascade using logic and rules to decide, case-by-case, which route a transaction should take. This improves payment speed, efficiency, and accuracy for the business and the customer and decreases the number of erroneous declines.

Instant Payments

Instant payments are estimated to reach $27.7 trillion by 2026. With instant payment, electronic retail payments can be made and processed in real-time, 24 hours a day, 365 days a year. And even better, the funds are made available immediately for use by the recipient. This has revolutionized the speed at which payments occur and has opened unconstrained payment windows.

Frictionless Payments Authorization

Payment authorization can be a real headache for customers. People don’t want to spend time uploading documents or submitting complicated information before they can make a payment.  Almost unbelievably, new software technologies are developing authorization techniques requiring little human interaction. This includes technologies such as 3DS 2.0, mandatory within the EU region by the PSD2 agreement, biometrics, geolocation, and device fingerprinting, basically collecting information about a customer’s device, making the payment experience literally painless for the customer.

3 Trends For a Frictionless Customer Journey

Data Insights for Simplifying Payment Complexity

Companies are increasingly realizing how valuable the data they collect from payment tools is, and with the currently available technology, they can mine this data in real-time. Even more importantly, it can also guide them to take steps that will increase revenue and improve ROI. 

As you can imagine, data insights can work to simplify payment complexity in a big way! Payment environments now simultaneously run many systems and channels. There are also many operational tasks related to payments, such as the running of help desks which have changed drastically. Data can provide actionable insights on all these moving parts to help decision-making and risk management, improve customer experience, and minimize downtime.

Biometrics and Machine Learning for Fraud Prevention

With machine learning, computer algorithms examine large data sets to find patterns and gain insight. This means they can learn “normal behavior” when it comes to payments, and spot patterns of fraudulent transactions, often before the fraud has even been committed.

Machine learning is particularly effective in decreasing the incidence of false positives in fraud detection. Nowadays, cautious merchants often decline certain purchases for fear of fraud. Additionally, there are times when the system comes up with a false positive for fraud. 

A survey by Riskified found that roughly 42% of customers whose card was declined abandoned their carts. So obviously, this can be damaging to revenue in both the short and long term, as shoppers may never attempt to buy from that company again. Machine learning algorithms have the ability to adapt and change based on large volumes of data, so they can accurately verify and classify genuine and fraudulent payments. They learn over time without having to be reprogrammed.  

The biometrics field, too, is steadily growing in popularity. Why type in a long, complex password when you could just press your finger to your phone screen to authenticate a payment? A study by Fingerprint Cards found that 62% of consumers would switch banks to get a biometric card, and 42% are willing to pay an average of US$10.70 extra a year for a biometric card. Biometric technology tools constitute a solid alternative, making the payment process much more straightforward, creating an easier payment integration and a seamless user experience.

For more insights into the developments in AI, machine learning, and biometrics for fraud prevention, you might want to take a look at our blog post on payment trends for 2023 and how to spot and stop gaming fraud or reach out to us to see how we can help.

Democratization of Payments

According to the UNSGSA – a global voice on advancing universal access to safe and inclusive financial services – over 1.7 billion people cannot access financial services. Although digital payments are growing in popularity and transforming how we do business in many parts of the world, this option will never be thoroughly dominant until they can support all customers ‒ and this means customers in lower-tech locations, too. 

In the future, it’s possible regulators may require that new technological developments promote much more financial inclusion. One way to go about this would be through central bank digital currencies, which removes the need for complicated devices to convert currencies or when making a payment. Another could be using smartphones, which are more pervasive than other devices. In 2022, over 6.6 billion people own smartphones, which is roughly 83% of the world's population. Using smartphone software could significantly reduce the cost of transactions and make payments more available globally.

Benefits of a Seamless Payment Experience on the Customer Journey

Investing in an integrated and efficient payments system isn’t a nice-to-have, it’s truly become a must-have if you want to create a successful customer journey.

A good payment experience saves time and money and, in the long term, increases customer confidence, reduces risk, and increases the probability of repeat customer transactions. In a modern payment system, there should be payment flexibility for all buyers where transaction rates are cheaper and payments clear more quickly. Payments would also be more secure with AI and integrated systems and would then feel invisible, offering several payment options.

What’s clear is that a good payment experience can make a business stand out from its competitors.

How can PayPro Global Help?

Providing clients access to our all-in-one eCommerce platform, we bring forward value-added partnerships, fast-tracking your company’s global growth. With a portfolio of more than 70 payment methods and over 110 currencies, PayPro Global helps your SaaS business thrive globally through a local approach.

And that’s not all. Our solution equips businesses with flawless payment processing services, smart routing to recover lost payments,  in-app and in-shopper account purchases, and many more features to ensure that your customer has a rewarding journey. Choose our all-in-one platform to expand your SaaS sales worldwide and maintain its success.