Borderless payments, sustainability and inclusion, as well as the exponential increase in payment options, are just three of the trends defining the upcoming economy, which will be more technologically advanced, practical, and responsible.
Mastercard recently released its latest Signals report, “The Future of Payments,” which unveils nine innovative trends reshaping the future of payments by creating faster and more flexible payment options, while also providing security and convenience for consumers.
“The Future of Payments” report focuses on an inclusive future without exclusions and is structured around the same three pillars that underpin Mastercard’s research and innovation, enabling predictions of developments in the economy over the next five to seven years.
These areas include the inclusion of non-traditional assets as payment methods (reimagining money), enhancing customer experiences by combining elements of the physical and virtual worlds (immersive commerce), and a sustainable future (sustainable future), highlighting nine trends shaping the future of payments.
The nine innovative trends include the digitisation of almost all forms of assets – from real estate to personal data – which will make their value accessible and exchangeable, creating new forms of money.
The digitisation of assets will allow people to use, combine, and exchange new forms of value, freeing up capital and enabling new business models.
The expansion of tokenisation technology to other physical assets beyond money is expected to change the way we perceive value and what we use for payments within the next five years.
Moreover, next-generation digital wallets will become a single point of reference where people can manage their personal documents, assets, and payments.
They are expected to have a prominent position in everyday life, enabling access to services and payments in any environment. Banks and digital players competing in this space will move forward with providing multi-purpose wallets, fulfilling the promise of a wallet that manages everything.
Programmable Payments, meanwhile, will be applied to complex, large-scale transactions, transforming supply chains, royalty payments, and more. These new ways of programming payment flows for large businesses, using automation, will bring greater efficiency to economies.
Additionally, the integration of messaging and other value-added services such as cybersecurity will lead to smarter payment choices.
What is more, the report made note of the trend of connected finance. Open banking and embedded finance will combine to create “connected finance” solutions that facilitate payments in physical, digital, and virtual environments. Emerging technologies will expand the ways and places we make payments, both in the physical and digital world.
The report also highlighted the rise of borderless rails. Commercial activity will surpass the obstacles that currently restrict the flow of money, data, goods, and services in both geographical and digital markets.
In addition, the customer experience will be enriched with new payment options that make the checkout process faster and more flexible.
In this context, merchants will have greater flexibility in accepting payments, and consumers will benefit from a highly upgraded payment experience.
Over the next two years, there is expected to be a multiplication of acceptance options and the addition of new interaction points that will enhance the payment experience for consumers.
At the same time, innovations in payment acceptance will provide an economically efficient way for merchants to unlock new revenue opportunities and meet consumer expectations for speed and convenience.
Furthermore, new credit scoring models and lending solutions will empower historically underfunded communities worldwide. Greater and inclusive access to credit will accelerate in the short term, potentially transforming the lives of these communities and fueling global economic growth.
Banks, fintechs, and other financial institutions will play a crucial role in expanding access to credit for underserved populations.
In terms of digital identity solutions, these are expected to play a crucial role in facilitating secure and trusted transactions in the digital realm. Advances in biometrics, blockchain, and decentralised identity systems will enhance identity verification processes and enable seamless and secure digital interactions.
Finally, there is the rise of the data economy. The data economy will continue to evolve, with individuals having greater control over their personal data and being able to monetise it. Data privacy regulations, such as the General Data Protection Regulation (GDPR), will shape the landscape of data usage and encourage transparency and consent-driven data practices.