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Five key trends shaping the payments revolution

flexible, configurable, extensible tech that allows them to
provide payments products based on consumer demands.
3. New innovators joining the fold

Along with product expansion, new entrants and
innovators are contributing to the evolution of the
By John Mitchell payments ecosystem. Cloud-native virtual banks and non-
Episode Six FIs are the industry’s biggest disruptors, and these are not
small-time players.
here’s no doubt the smartphone ushered in a
new wave of payments all those years ago, but By 2030, non-FIs will handle 80 percent of consumer
the past few years have brought about another payments through mobile and connected devices. That’s
T wave of change across the industry. We’ve seen not to say traditional FIs can’t remain in the race, but like
rapid adoption of contactless and real-time transactions, other payments companies, they need to invest in the
which together account for nearly 70 percent of all pay- latest technology to meet consumer demands well into the
ments in the United States, analysts have found. And future.
consumer payment preferences are evolving with the next 4. Regulatory changes reshaping the playing field
generation beginning to make financial decisions on their
own. The payments industry is redefining what constitutes
money, how money moves between parties, and what
As you might expect, the market is bursting with can be exchanged for purchase—and regulators and
innovation, from the integration of alternative currencies governments are starting to adapt to those changes. Open
to overall advancements in payments technology. While banking mandates in Europe have encouraged similar
the industry continues to evolve, five key trends are adoption in the United States, including a provision to
shaping the payments landscape for the rest of this year Dodd-Frank that would allow for data sharing, a crucial
and beyond. component of open banking.

1. Alternative currencies trending up In addition, central banks and national agencies are
Widespread acceptance of alternative currencies will be increasing regulation before the launch of CBDCs to
the prevailing trend in the payments industry in the next preserve consumer protection and the effectiveness of
few years. By 2030, 60 percent of global consumers will traditional monetary policy, according to the 2021 McKinsey
have made a purchase with a payment other than fiat Global Payments Report. Industry standardization is also
currency, according to an IDC info brief commissioned driving change, including the adoption of ISO 20022 this
by Episode Six. The industry is already making moves to year.
accommodate these newer currencies. 5. Technology creating new opportunities

According to S&P Global, merchant checkout, credit Technology is the backbone of payments industry
card companies and financial apps are all adding digital advancement—and new systems are emerging to support
currencies to the payments ecosystem to respond to fervent adoption of such features as crypto, real-time and cross-
customer demand. Adoption of alternative currencies is so border payments. Modern cloud-native core technology
important, S&P Global said, “any payments company that platforms, software-as-a-service, APIs, banking-as-a-
has not begun to take this market seriously by the end of service and the Internet of Payments are foundational to
the year is likely to be at a significant disadvantage”. meet consumer demand for new payments models.

2. Real-time, contactless taking center stage IDC expects that 60 percent of business-to-consumer
In the next five years, real-time and contactless payments ecommerce payments will be processed by a payments
will be central to the payments industry, accounting for facilitator by 2030. Today, one in 10 merchants are already
a quarter of all electronic payments globally, researchers using an integrated processing service with significant
have noted, while 95 percent of physical non-cash growth expected over the next 12 to 24 months.
payments will be contactless by 2030. John Mitchell is the CEO and co-founder of Episode Six, a company that
modernizes payment processing and banking infrastructure, removing
That future is rapidly approaching. Last year, global real- the constraints of legacy technology. He is an expert and recognized
time payments totaled 118.3 billion, up a staggering 65 leader in the global payments industry with decades of fintech and
percent from the previous year. However, the United States payments expertise in leading and growing companies and startups.
lags behind the rest of the world. To catch up, payments Connect with him via LinkedIn at https://www.linkedin.com/in/john-
companies must transform from legacy systems to more mitchell-atx/ or via email to e6@calibercorporate.com.
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