Paytech trends to watch as we move into a new decade
Central bank digital currency trials, open banking and automotive in-car payments have the potential to revolutionise payments this year
Central bank digital currency trials
In the most recently reported trial the Australian Reserve Bank tested the use of a CBDC in a wholesale payments system to see whether banks can settle customer payments between themselves using a permissioned Ethereum-based network. While the central banks of China, Sweden and Turkey are also considering CBDCs the president of the European Central Bank, Christine Lagarde, is supporting the bank’s development of a digital currency for faster and cheaper cross-border payments. In the light of Facebook’s Libra a first-mover advantage will likely be a motivation for central banks to not only create new market opportunities but to also support the global monetary system. Cyptocurrencies such as Bitcoin are not yet seen by central banks as an alternative to traditional money though they are looking to the value of blockchain and their own digital currencies.Open banking
By using the EU’s PSD2 regulation for banks to provide APIs, third parties can initiate payments on behalf of consumers as an alternative to card transactions. Customers can select the open banking payment alternative during an online checkout process. This redirects them to their bank’s online environment which can be embedded into the merchant’s platform to securely complete the transaction. Open banking payments are authenticated directly between consumers and their banks which means that unlike with direct debit transactions merchants can avoid chargebacks. Dutch airline KLM is one of the first big brands to use this method with payments company Adyen. Myles Dawson, UK MD, Adyen, said: “Bank transfers between consumers and merchants are already extremely popular in mainland Europe because they offer greater fraud protection without adding friction to the payment process. “We are excited to be the first payments provider to offer a fully-compliant, direct payment solution in the UK and it has been great to work with the Open Banking Implementation Entity to bring these benefits to consumers and merchants.”Automotive
The use cases of the motorist wanting to pay for things while on route are numerous and card and paytech companies have not been slow to initiate deals with fuel stations and car manufacturers. Lowering the friction when paying for fuel is only the beginning as restaurants, cafes, stores and parking are now looking to integrate into the automotive payment ecosystem. Most modern cars are now equipped with new-gen in-vehicle infotainment (IVI) systems that are now using licenced operating systems such as Linux and Windows making it easier for automotive paytech innovators to build on. The continued development of in-car digital wallets to securely store payments details will also increase adoption and customer experience. Connected car commerce is worth USD 230 billion opportunity. In the US 135 million people spend 51 minutes in their cars travelling to work with 73% connected to the internet while driving while 65% use a voice assistant provided by auto manufacturers. To drive the next generation of connected vehicles Mastercard and HERE Technologies agreed to a joint venture. The partnership is part of Mastercard’s work in partnering with car manufacturers and other mobility providers. Also in 2019 Honda launched Honda Dream Drive, the automotive industry’s ‘first integrated driver and passenger infotainment, commerce, services, and rewards dashboard.’ The unique payment environment that vehicles provide will test the ability of providers to consider the safety aspect of using new functionality while on-route.Join FINTECH Circle, Wiley, Co-authors and Editors on 17 February in London for the official PAYTECH Book launch event!
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