Over the last five years, the payment industry has been buzzing with innovative products and services across the world

Friday 18 April 2014, Amsterdam

Innovations in payment methods can be broadly classified under four categories:

•     Innovations in payment cards.
•     Online payments, including electronic bill presentation and payments,
•     Mobile payments
•     Developments in overall payment infrastructure and security.

Most markets view innovations differently; an innovation reported in one country may not be considered as such in another. However, there is a common trend among the reported innovations across the world: most focus on increasing the convenience and speed of payments. As a result, mobile payments have received significant attention in recent years.

While most payment innovations provide services to domestic markets, similar services such as P2P and P2B mobile payments, NFC and cloud technology-based mobile wallets, same-day electronic clearing, and check truncation have been developed around the world. Although innovations are focused around electronic payments, cash continues to be an important form of payment and is expected to remain so over the next five years. However, innovative payment instruments are gaining popularity, with demand for P2B, P2P and utility payments topping the list.

Over the last five years, the payment industry has been buzzing with innovative products and services across the world. The industry is dynamic in nature and innovative products and services have allowed non-bank companies, including technical giants such as Google and new market entrants such as Chirpify, to leave their mark in the payment ecosystem. Developments in technology, changing consumer tastes and preferences, and rising competition among various stakeholders in the payment value chain have been the key drivers of innovations in payments. However, the role of consumers has been one of the most important factors in driving payment innovation.

The success of any new product depends on its acceptance by consumers. For example, although mobile wallets offer several advantages to users, such as increased convenience, they can be difficult to mesh with current consumer profiles and, consequently, have expanded below expectations. However, mobile wallets are expected to gain strength over the next five years as consumers become more aware and confident about their use.

Businesses are increasingly focusing on key consumer drivers such as convenience, accessibility, security, speed and the cost of payments to increase acceptability of their products and services, and gain an advantage over their competitors. To target these consumer drivers, stakeholders in the payment value chain are primarily concentrating on digitalization of payments, i9ncreased interoperability, and the introduction of disruptive strategies to plug gaps in user demand and solutions offered by the industry.

Changing consumer behavior, such as increased use of media devices to manage day-to-day activities and the increasing use of social media, has attracted a number of organizations to build their business and product strategies around these platforms. Banking institutions as well as non-bank startups are increasingly targeting consumers with smartphone apps, which allow consumers to transfer funds and carry out a payment transaction at any time and place. The vast audiences of social media networks are being targeted by startups such as Chirpify by converting social accounts into payment tools.