2021 Payment Trends Every Developer and ISO Should Know

The rate of change in the payments space has increased over the past decade – and the coronavirus pandemic has accelerated those changes even more. As a point of sale (POS) software developer or independent sales organization (ISO), it’s vital to your business to monitor payment trends and ensure the solutions and services you provide align with merchants’ and consumers’ demands. Here are a dozen payment trends that are impacting the way people do business and the technology they need to support it:

1. Consumers’ appetite for contactless payments is increasing.

The pandemic has driven greater awareness among consumers about behaviors that could increase their risk of contracting COVID-19. One of those behaviors is touching devices that other people have used – including PIN pads. As a result, more people are choosing contactless payment. A recent National Retail Federation (NRF) survey found that 69 percent of retailers saw an increase in contactless payments in 2020.

Historically, a country or region saw an increase in contactless payments after consumers had a nudge to try it. For example, the beginning of widespread adoption in the UK followed commuters using contactless payments for London Transport System fares, and in India, adoption followed using contactless cards to make purchases from vending machines. Now that U.S. consumers have discovered the ease and convenience of contactless payments, all signs point to continued adoption and use, with tap on phone technology to closely follow.

2. Digital wallets and loyalty apps gain popularity.

Contactless payments include mobile wallets and payments through loyalty apps, as well as using contactless payment cards. Mobile wallets and apps, however, also give consumers added functionality, such as storing additional information, engaging with merchants, and earning rewards.

NMI research found that, in the early months of the pandemic, consumer preference for mobile wallets increased 3 percent. NMI also found that a merchant’s ability to accept mobile payments could impact their revenues. Our research found that 43 percent of consumers avoid doing business with merchants that can’t accept contactless payments.

3. QR codes find new uses.

Consumers are familiar with scanning a QR code to join a loyalty program, access product information or download a coupon. Consumers’ demand for touchless payment experiences also revived QR codes as a payment trend. Instead of using a PIN pad or paying with cash, consumers can scan QR codes that take them to online payments pages, enabling a touchless experience. With QR codes, there’s nothing for the consumer to download, and merchants that can accept online payments can deploy the system without a costly investment in new point of sale (POS) software or hardware.

Merchants can also embed QR codes in online ads or social media posts for a “buy now” experience.

4. PIN on glass rolls out.

Solutions are now available that allow merchants to download apps onto any mobile device, including smartphones, and accept payments. PIN on glass technology enables card-present EMV payments via touchscreen – the solution gives the merchant a virtual PIN pad on their mobile devices that they can use to enter payment information.

PIN on glass is an especially valuable tool for small and medium-sized (SMB) businesses that need the ability to accept secure digital payments but don’t have the budget to deploy traditional systems.

5. Biometric authorization becomes more common.

Many consumers who make purchases on their smartphones or use mobile wallets are accustomed to authorizing that payment with their thumbprint. The use of biometric technology is poised to expand, with facial recognition, voice matching, or other forms of biometric authentication introduced to verify the cardholder’s identity and prevent fraud.

6. Shoppers opt for frictionless checkout.

A SOTI survey in 2019 found that 73 percent of shoppers say they’d rather use self-checkout than engage with store associates. Now, with health safety concerns at the forefront, consumers are even more motivated to keep their distance from others.

Although every merchant isn’t prepared to launch an Amazon Go-like system of totally frictionless payment that leverages smart cameras, Internet of Things (IoT) and artificial intelligence (AI), merchants can deploy self-checkout and payment kiosks to provide their customers with the safe, socially distanced options they demand today.

7. Small banks get more involved in fintech.

Another 2021 payment trend to watch is small banks’ response to industry changes.

Without new technology, the community bank or credit union could fall behind large competitors with expanded resources from acquisitions and tech investments or new entrants disrupting the banking space with innovative payment platforms, including payday apps, person-to-person payment and loan approval options.

The community bank is fighting back by partnering with fintech innovators to provide the products and services that their customers demand and keep them in the game.

8. Cloud adoption continues.

One option for small banks – or any financial institution – is to use a cloud platform to innovate and create unique payment platforms tailored to their customers. For example, a white-labeled solution can bring together customer support, customer relationship management (CRM) and payment processing, including mobile or unattended payments, with minimal coding.

9. The unified commerce journey continues.

Not so far in the past, merchants had disparate solutions that enabled card-present or card-not-present payments, stand-alone gift and loyalty, and separate unattended payment systems. This inefficient approach with disjointed systems and experiences cannot meet today’s consumer expectations – or enable efficient operations in the COVID-19 world of online ordering, curbside pickup, and self-service. Unified commerce empowers merchants with one platform from which they can manage all payment types on all channels, efficiently and accurately, and minimize the time it takes to get funds from digital payments into their accounts.

10. Real-Time Payments gain traction.

Real-Time Payments® is a network that enables immediate fund transfers, driven by the increase in digital commerce. However, RTP isn’t only for person-to-person payments. The network is designed for all segments, including B2B, B2C, government, and more. For merchants, Real-Time Payments can improve cash flow, getting funds from digital payments into their accounts without delay.

11. AI powers BI for valuable data insights.

Unified commerce platforms generate terabytes of data on merchants’ customers, their behaviors, and their businesses. However, the value of that data can remain trapped in data lakes due to the inability of business intelligence (BI) solutions to analyze data from all sources and deliver timely insights. AI-powered BI platforms are changing that with a greater ability to process high volumes of data in just seconds. AI can finally provide the insights merchants need, when they need them, providing real data ROI.

12. White label payment solutions.

One payment trend impacting developers and ISOs directly is offering white-label payment processing services under their own brands. This option gives you more control over the experiences you provide to your clients, and it also eliminates confusion over who your clients’ primary contact should be.

A New Payment Trend for 2021

The 12 payment trends listed shouldn’t come as a surprise – they have been picking up momentum for some time. However, one trend has emerged in the past year – merchants looking for strong technology partners to help them recover from the impact of the pandemic on their businesses.

Use your knowledge of the vertical markets you serve, POS and payments technology, and the information on how a robust and flexible payments platform can play a role in your clients’ recovery.

Stepping up as a trusted business advisor, as well as ensuring you are helping your clients address significant payment trends, will strengthen your business relationships and your own competitive position.

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