The payments sector is on the brink of many exciting developments, from contactless payments to crypto, software point of sale (SoftPoS), and the growing application marketplace.
Now it’s time to look at 2022 and what’s in store for the payments industry.
The Application Marketplace Will Take Off
The expectations of what a business will look like in 2022 have changed fundamentally. With the rise of ‘covidpreneurs’ over the last 18 months, there’s been a global surge in sole traders who are choosing more fulfilling employment over a steady paycheck.
This shift in the makeup of the global economy is driving the rise of an ‘application marketplace’, whereby business functions are increasingly moving onto the mobile devices of business owners. Meaning, these new market entrepreneurs are increasingly running their business out of a tablet or mobile device, rather than traditional PCs and other legacy systems.
A series of mobile devices will become the core hardware estate for businesses across a range of verticals. For example, in the transport sector, taxis are now using tablets to run in-ride advertisements as well as accept contactless payments. These all-in-one solutions are powered by SoftPoS technology, streamlining hardware estate to deliver more functions on fewer devices. This reduces costs for merchants by helping them sell more while also offering a cheaper alternative to traditional payment terminals.
iOS Adoption Set to Drive SoftPoS Growth
One of the biggest challenges to the widespread adoption of SoftPoS, the technology that enables merchants to accept card payments directly on their phone or mobile device, is that it’s not currently supported by iOS operating systems.
However, Apple’s acquisition of SoftPoS startup Mobeewave in 2020 signals that the tech giant is aware of the growing requirement for this technology and is actively looking at how to address this demand in the market. This appetite is only going to grow as consumers continue to turn their back on cash in favour of contactless payments. It’s likely we’ll hear more on Apple’s plans in 2022 and this could open the floodgates to the SoftPoS opportunity over the next 12 months, with wide ranging implications for merchants, banks and their customers.
The Proliferation of Crypto
The acceptance of cryptocurrencies will become easier and more widespread than ever in 2022, as merchants seek to capitalise on the crypto boom.
We’ve already seen countries like Venezuela and El Salvador move to adopt crypto as legal tender. Meanwhile, in the US, there are signs that regulators are becoming more comfortable with digital currencies, as they rapidly begin to establish an oversight framework. If a leading world government, like the US, came out in favour of crypto adoption, it could pave the way for widespread acceptance and, with the technology to support this already freely available, this should be incredibly straightforward. Therefore, with the mobile infrastructure becoming more prevalent in the market, it makes the acceptance of crypto much easier. Whereas, this would be much more difficult to implement on a traditional terminal hardware estate.
As with every year, it’s vital that merchants stay ahead of the curve by enabling customers to purchase goods and services via the payment options they want to use. Most recently, the focus has been on e-commerce with firms racing to adopt new settlement options, from online payment platforms to Buy Now Pay Later. Likewise, merchants have worked to grow their customer base by developing cross-border capabilities, enabling them to accept payments from key international growth markets – especially in the Asia Pacific. Crypto is the next frontier in this trend and will be a key differentiator for merchants over the next 12 months.
Growth in Contactless Payments
The rise in the UK’s contactless spending limit to £100 in October shows the shift to a cashless society isn’t slowing down anytime soon. When regulatory changes like this come into effect, they quickly accelerate widespread behaviour change among consumers. As people begin to get more comfortable using contactless for high value transactions, traditional methods like chip and pin will soon be replaced. Likewise, consumers may be encouraged to make bank transfers for larger purchases to receive banking benefits and promotions.
While the new regulation has sparked concerns around payment security, increasing the contactless limit is unlikely to materially change the risk of fraud. Fraudulent activity tends to occur at a much lower transaction level, before ramping up to higher levels, to avoid detection. If consumers want to protect themselves, the most important thing they can do is pay close attention to their bank statements and regularly monitor for suspicious activity.
Moreover, consumer protection against fraud is particularly robust as liabilities sit with the banks and card schemes, ensuring the customer’s transactions are always secure.
The pandemic has had a significant impact on the fintech industry. As the global economy goes into a recovery phase next year, the innovative fintech sector will continue to evolve and adapt to any market pressures that may arise in 2022.
By Brad Hyett, CEO of phos.