The Future of Payment: Upcoming Trends

A recent report by Mastercard Signals, a series of insight reports from global technology payment company Mastercard, has identified the nine payment consumer behavior trends for the next five to seven years. The nine trends are segmented into three different categories including reimagining money (tokenization, programmable payments and ubiquitous wallets), intelligent experiences (connected finance, borderless rails and unleashing acceptance) and sustainable futures (inclusive credit, conscious consumerism and embedded trust).

The company’s first major trend within the reimagining money category, tokenization, looks at how money is being considered today. The usage of non-traditional assets, cryptocurrency, digital goods, NFTs, loyalty points and more has shown a shift in how consumers value new currencies. Asset tokenization looks at promoting trust and security with the exchange.

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Consumers today use fiat money or various forms of credit for purchasing or the exchange of assets. And, moreover, they can use loyalty points for rewards platforms or digital currencies in gaming environments. But, according to Mastercard’s report, there are issues when these exchanges are made between the digital and physical worlds. A solution to this friction-riddled transaction is leveraging new types of tokens used in the future for assets such as stocks, bonds, real estate, digital assets and currencies.

Another trend is programmable payments. Artificial intelligence, application programming interface and smart contracts will enable business logic, which is normally executed before or after the payment to be coded into the payment itself. These programmable payments allow for efficiency and deliver heightened consumer experiences.

Looking to create intelligent experiences, the report cites connected finance as a trend to create more personalized and tailored consumer experiences. Through open banking, shoppers use third-party financial institutions and other trusted entities for new banking and payment solutions such as the buy now, pay later model of Klarna, alongside accounting programs including Intuit, QuickBooks and Mint. Notably, messaging platforms such as WhatsApp are tapping into the peer-to-peer payment market.

One more way that the future will have intelligent experiences is through the trend of borderless rails. Payment rails, which enable the movement of money, are sent to break the barriers that limit the exchange of goods, services and data across geographic borders. Government jurisdictions are restricting the free-flowing movement of capital across countries, a process that continues to pose a challenge for banks and commercial entities. Emerging financial technology companies such as Wise and Revolut are looking at solving this cash flow and commerce issue.

In its report, Mastercard Signals additionally looks at how societal and environmental issues will impact the way companies are viewed by consumers and their shareholders finding that the implementation of environmental, social and governance strategies will be key. One way to do this, said the authors of the report, is through inclusive credit solutions with emerging technologies providing solutions for communities who have historically been underbanked and aid in financial literacy – especially for those who own and operate an SMB.

The goal is to empower those who have not had access to proper financial means or understanding of interest rates and mortgage loans by including virtual financial advisors within banking apps. For examples, Mastercard Signals points to companies such as Experian Boost, Nova Credit and TomoCredit who are leveraging the concept of open banking and enabling the rise of credit scores.

Conscious consumerism is another major trend that has already taken a foothold within the larger conversation of sustainable futures. Companies are rewarded for making the tangible effort to be socially, environmentally and ethically conscious. This has become to be a huge selling point for consumers, specifically with Generation Z and Millennials cohorts.

The practice of “voting with your wallet” is a consumer behavior that continues to influence the upcoming generations and as per a previous report by WWD, Gen Z and Millennials expect brands to be just as purpose-driven and driving change alongside them.

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