Payments 2020 – It’s All About the Consumer


Ron Mazursky

Founder and Board Member of NYPAY

Payments are all about change. No doubt about it. Advances in technology and the prevalence of new form factors are making those changes happen even easier and faster. Consumers, however, don’t change so much. They are pretty easy to figure out. Eliminate payment friction, make it easier for consumers to do the things they need to do – and there’s the answer. Consumers will accept change if it makes their lives easier. So what’s coming in payments that will be acceptable to the consumer? Is innovation really about merchants, banks and the government and regulators – or is it really all about the consumer need – what problem is being solved that will make her world an easier one.

Mine is not the first “2020 Vision” for payments, and it most likely will not be the last. The intent here is to focus on the technology applications that support payments processing and how — by focusing on these applications — we can chart a course for 2020 that helps us better serve our customers and constituents, as well as manage our businesses.We’ve seen form factors, payment products and benefits come and go. What will capture the attention of the consumer? What needs can be better met? Today we are grappling with security issues (EMV, tokenization, authentication, card controls), mobile and online payments, loyalty and rewards, and integration issues with merchants and other bank services. We can envision a progression of different payment devices and acceptance devices that will make the consumer better off. Are payments going to be more digitally-based or remain card-based? By 2020 it will be more mobile (in app) or online, but cards will still be prevalent. That is becoming clearer as time moves on. Will mobile in-app and online be the dominant way payments will occur? Nope. It will take more time than that (2020) for consumer and merchant adoption. Just the changeover to EMV in the U.S. will take another 5-10 years based on adoption in other markets. Tokenization (important for mobile payments) is in its early stages and consumer and merchant adoption will take some time.

Mobile payments will grow in importance, but will be just one of several options. Cash will remain important, especially in certain consumer markets and for lower dollar transactions. Same day ACH and other modes of faster payments will be implemented, and will grow in volume, but will still be only a small portion of the total payments. Checks – yup – will continue to decline in importance and volume. More and more of those payments will move to ACH and faster payment alternatives, mostly tied to mobile P2P. Online payments will grow as more and more consumers will shop remotely from stores. Merchants shouldn’t be afraid. Consumers will still stop in to retail stores. There will still be the need for instant gratification and immediate purchases.

Finally, the shopping experience and payment experience are becoming more and more blended in the digital world (look at Uber and Lyft, or Amazon One-Click). The buying experience integrates with the payment experience. The consumer never needs to pull out her plastic or cash to make her payment. Merchants don’t want to be bankers; bankers don’t want to be merchants. The constant – the consumer, will continue to want to buy a product or service – and payments are the final stage of the buying experience. Some form of digital payment is needed and the banking industry has an upper hand in delivering this solution. But banks can’t work alone. Bankers must envision a partnership with the merchant.

Ultimately, merchants AND bankers need to remember that the consumer answers to herself. If she isn’t happy with the shopping experience – wherever and whenever she wants it….she can almost always go somewhere else – to shop and to make a payment. So, don’t force our issues on her.

So, what’s your take on payments in 2020? Let’s hear more from my colleagues about your vision of the future of payments in 2020.

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