Top digital payment trends of 2022
India is emerging as a leader in the digital payments market with maturing digital banking platforms and systems.
By Satyajit Kanekar
At times like these, it’s interesting to see what the future holds. In this article, we’ll take a closer look at the technological advancements likely to influence digital payments trends in 2022.
Artificial intelligence and machine learning
For effective threat detection and prevention in seconds, banks and financial institutions use ML. Eighty percent of fraud specialists using AI-based platforms believe the technology helps reduce payment fraud. AI and ML are better suited to interpret trend-based information and evolve as needed.
AI is a game-changer in the payments industry and we can expect more innovative uses of this technology, such as voice-activated payments. Bank of America already has a chatbot that provides report updates, balance notifications, customer services, and money-saving tips to its users. AI is also designed to play a huge role in RegTech.
Blockchain technology offers monumental value on a fast international ledger. The technology can be used to transfer person-to-person payments around the world. It is interoperable, affordable, accessible and efficient. The cost and time consumed are significantly less, making it an optimal solution for digital payments.
On the other hand, digital currencies such as cryptocurrencies are also gaining popularity around the world, especially among millennial investors. According to the Atlantic Council, 9 countries have already launched a CBDC (Central Bank Digital Currency) and about thirty are in the process of developing one.
This form of authentication includes methods such as fingerprint scanning, iris recognition, facial recognition, heartbeat analysis, etc. Biometrics is a unique way to ensure safety and security in the digital payments ecosystem. It is a highly secure technique that helps build customer trust and loyalty. With an increase in identity theft and payment fraud, biometric authentication is a great way to ensure the reliability and security of all online payments.
Buy now, pay later
BNPL has already taken the e-commerce industry by storm. Today, these processes are seamless and only take a few clicks. Consumers can now pay interest-free installments, making them more affordable. This trend will only escalate as more and more debt-averse Indian consumers focus on its benefits.
Tokenization involves replacing the actual card details with a unique alternative code, called a “token”. This will be specific to an individual’s details and only to one merchant at a time. Since the details are hidden, the possibilities for misuse and fraud are reduced. A tokenized card transaction is safer and more secure. For multiple cards, multiple tokenizations will be required.
According to Juniper Research, the number of digital wallet users will exceed 4.4 billion by 2025. By storing payment information for different payment methods, users can easily make purchases online. Digital wallets do not require a bank account with a physical bank and store all payment information securely and compactly. This is supported by Near Field Communication (NFC) technology which allows nearby devices to easily communicate with each other and share data. With an increase in contactless payments, NFC has become a popular term in digital payments.
Portable payment devices
This is another secure method for customers to purchase products and services. The technology is integrated into their smart watches, bracelets or smart rings and is a tap-and-go payment method. It’s a great way to ensure secure and error-free payments. In fact, according to research, the wearable technology market is expected to reach $1.37 trillion by 2027.
Primarily a cash economy, India has embraced digital payments at an unprecedented rate. The industry is booming and digital payments in India are expected to reach $1 trillion by 2026. India’s UPI (United Payments Interface) ended 2021 with a bang. According to data released by the National Payments Corporation of India (NPCI), in December, UPI recorded 4.56 billion transactions, worth Rs 8.27 trillion.
India’s journey requires collaboration between banks, fintechs, regulators and the government. NPCI continues to introduce different mechanisms to facilitate simple and transparent digital payments. Solutions like UPI will continue to drive the adoption of digital payments in the country. Additionally, as e-RUPI takes over, we may see increased innovation and usage of this payment solution for donations, gift certificates and government benefits. These initiatives are welcome as they improve financial inclusion in our country.
The future of payments is digital. The above-mentioned trends will play a major role in India’s vision of being a cashless economy.
(The author is co-founder and CEO of Mobileware Technologies. Opinions expressed are personal and not necessarily those of FinancialExpress.com)