Full speed ahead: predicting payments innovation in 2017
2016 culminated a period of fast-paced fintech progress. Whereas previous years saw significant strides in the fields of mobile payments, cryptocurrency and cross-border transacting, 2016 was a year for taking stock of past developments, consumer expectations, market demands and future requirements.
If 2016 was the year we checked the pulse of the e-commerce and payments spaces, 2017 will be a year where the industry sprints ahead at record-breaking speeds.
We can expect to see advancements in 2017 in three major areas where payment technology has been lagging behind merchant needs in 2016
Updating outdated infrastructure
In the past few years, existing payment technologies have successfully kept pace with the evolution of consumer demands and needs merely by appending older infrastructure with newer capabilities. This has enabled fintech providers to respond to specific demands but has not addressed broader inadequacies.
For most merchants, it is no longer enough to have a payment solution that can process payments via a single acquirer, optimize routing and generate data reports. Businesses need more advanced payment capabilities if they really want to scale and efficiently manage their payment operations.
Moving into 2017, technology will offer more sophisticated features, such as machine learning and automation. By enabling merchants to leverage their granular payments data, machine learning technology will provide merchants with the tools to create business rules to automate payment processes and correct flow inefficiencies.
Data and regulatory requirements
While these new data-driven capabilities can cut merchants’ IT investments and integration resources and enable greater processing efficiency, the utilization of data is still restricted by the lack of data transparency in existing payment solutions.
New technologies in 2017 will provide greater payment data visibility and use it to power in-depth analysis capabilities. An advanced payment platform can use data for routing cross-border transactions. For instance, the technology can dynamically analyze that a payment has been made with a Chinese issued credit card on a Canadian website, determine that routing the payment to an acquirer in China will yield a better chance of payment acceptance and decrease processing fees, and then route the transaction to the optimal provider.
These data-driven capabilities are crucial for accepting payments efficiently and cost-effectively in 2017; however, having data visibility from cross-border transactions necessitates both knowledge and compliance with international data privacy regulations. A major focus this year will be providing technology solutions that comply with evolving international regulations and laws.
Forming strategic partnerships
Today, the merchant’s ability to gain a competitive edge necessitates the use of increasingly efficient solutions for reaching new markets and driving payment acceptance.
I believe the key to resolving this in 2017 will be strategic partnerships and joint undertakings between service providers. To date, the onus was on the merchant to open new entities in every region and connect to local providers independently, but now payment platforms are enabling merchants to onboard multiple providers via a single integration.
In 2017, the industry must take this strategy one step further and build joint offerings with third-party providers, for example, partnerships between payment processors and innovative fraud solutions. All businesses require payment acceptance and fraud prevention solutions, but a joint effort between fintech and emerging fraud prevention technology could yield significant results for merchants and providers alike, including enhanced fraud screening, fewer false positives and more robust machine learning capabilities informed by granular data from multiple sources.
In the race to meet market demand, the amalgamation of different technologies promises to be a leading tactic this coming year. It will be interesting to see what direction these innovations will take and how they integrate into the existing marketplace.
This article by Oren Levy originally appeared in Mobile Marketing & Technology.