The payments industry in 2018
The world of payments has experienced rapid and dramatic change over recent years – affecting merchants, providers, and consumers alike.
Technology has fundamentally altered the shopping experience: cash is being phased out in favour of cards; mobile technology is presenting an alternative to physical cards; and e-commerce has become so common that it’s now almost unthinkable for a business not to be online. In fact, annual international card transactions are expected to reach almost 500bn in volume by 2022.
While the speed of technology is accelerating, traditional financial service providers aren’t necessarily keeping up. And as they lag behind, the younger competition is nipping at their heels – offering attractive alternatives to a market that’s hungry for something different. I’m confident that 2018 will be a particularly important year for the payments and tech industries. Here are three reasons why.
Mobile payments will become the default
Last year, I went to a basketball game at the TD Garden in Boston: a 20,000 seat venue filled with a wide range of attendees of all different ages, ethnicities, and economic backgrounds. In the entire stadium, there was only one place where you could pay for food and drink with cash. Meanwhile, other payment options – and particularly mobile based ones, were everywhere.
This is symbolic of a broader market trend – one where cash has moved from the default payment option to one among many, and an unpopular one at that. Technological advances have made mobile payments smarter and more convenient, and they’re getting better all the time. Since the introduction of Apple Pay in 2014 – and the competing Android Pay in 2015 – contactless mobile transactions have become the norm. Even if they haven’t displaced physical cards yet, the technology is iterating and improving at a rapid pace: in 2017, the iPhone X introduced Face ID – which allows the user to pay just by looking at their device. Now, the iPhone X is currently the premium model, but it’s likely that this technology will enjoy a wider rollout in the near future.
Digital currency will achieve mainstream legitimacy
In 2017, cryptocurrency took the world by storm: by December, the price of Bitcoin reached an all-time high of $17,900. In 2018, the story so far has been a little different. Prices have tumbled and there has been talk of the cryptocurrency ‘bubble’ bursting.
However, the view of cryptocurrency as a ‘bubble’ may prove to be short-sighted. Prices of individual coins may decline, but the development and adoption of blockchain technologies will bring regulatory scrutiny, and increased acceptance.
So it’s still worth betting on cryptocurrency in 2018. The months ahead may yet see Bitcoin and high-profile altcoins get their foot in the door and achieve mainstream legitimacy.