By Oren Levy
Zooz Inc.
There is a tendency to avoid making forecasts about upcoming fintech trends, which have often defied prophecies and expectations. Nevertheless, various processes and developments in the payments industry today will almost certainly reach maturity in 2017. The greatest motivation for fintech innovation and change in 2016 has been a growing demand on the part of merchants and consumers alike to create greater immediacy and ease in payments, solutions and technologies. Everyone involved in ecommerce and retail wants to see consolidation of the wide assortment of payment offerings that have flooded the industry in recent years. Payment process components that were regarded as vital linchpins in the West have been omitted in emerging markets like India and Africa. Superfluous stages are also being eliminated in the West, reflecting a desire to consolidate the payment process. In this article, I will examine the processes that I believe will come to a head in 2017 around the globe.
As globalization continues, cross-border e-commerce will increase exponentially. Unlike in the past, many ecommerce retailers on the verge of international expansion are already aware of the range of challenges they must face: local taxes and high currency conversion rates, downtimes, costly transaction routing, low conversion rates and more. They are coming to understand that success in foreign markets depends on the ability to connect with multiple third-party providers including banks, acquirers and fraud detectors in each location.
Prediction: In 2017, merchants will seek advanced technologies that provide them with the edge they need to improve their payment efficiencies. They will become increasingly aware of the crucial need for payment solutions that resolve many challenges connected to expansion in different locations.
Due to increasing awareness of the restrictions of legacy payment solutions, online retailers will make the transition from siloed systems to smart payment technologies that provide vital data about an enterprise's payment processes and customer preferences. While much has already been said about the importance of big data, next year more merchants will grasp how insightful data drawn from this type of system can significantly contribute to an enterprise's return on investment and create lasting customer loyalty.
Prediction: In 2017, ecommerce retailers will realize that their legacy payment solutions can no longer meet their dynamic payment needs. The use of smart payment technologies will become more widespread due to their ability to provide deeper insight into consumers' preferred shopping experiences, analysis of payment anomalies and inefficiencies, and resultant optimization of key payment process components among third-party providers.
The proliferation of electronic payment methods that have popped up in recent years – including Apple Pay, Android Pay and several other e-wallets – should undergo consolidation. Payment suppliers are beginning to understand that both merchants and customers are confused and frustrated by the many solutions, leading them to stick to old, proven payment methods: credit cards, debit cards, cash on delivery and others. Customers do not want to reach checkout only to discover that their e-wallet cannot be processed on a merchant's POS terminal.
Prediction: Payment providers would do well to focus on third-party technology that enables the acceptance of multiple payment options so consumers and merchants alike are less confused and can enjoy the value of these alternative solutions.
Consolidated payment terminals capable of processing a range of payment methods, similar to the concept of single terminals that process payments from assorted credit card schemes, should be a key issue under consideration in the coming year. Ultimately, a uniform processing solution will benefit all parties involved: the payment provider, the merchant and the customer.
In previous years, some experts predicted customers would opt for online and mobile payments, and completely abandon the in-store shopping option. But this forecast proved to be wrong – many consumers still enjoy the in-store shopping experience even when it's just for browsing and price comparison purposes. Nevertheless, customers are demanding a faster, seamless payment stage at every shopping channel, and in-store is no exception.
Prediction: Virtual payments in physical stores will become more popular, enabling customers to skip the physical checkout process by paying with virtual wallets. A case in point is Starbucks' highly successful closed-loop payment app that supports all major e-wallets and credit/debit cards, enabling buyers to complete transactions instantaneously after initial activation. Orders can be made and paid for in advance with easy pickups and no lines. The app also offers an attractive rewards program that incentivizes customers to pay using the app.
Alipay and other payment methods that were previously used only online will also become more widespread and may well end up as popular as veteran and widely used credit card schemes in physical stores.
In a bid to facilitate payments at every shopping channel, new online payment offerings are expected to be launched before the upcoming holiday season. Apple stated that it will be bringing Apple Pay to mobile websites. This means that customers won't need to enter their credit card details or fill out checkout pages, thereby eliminating tedious stages of the payment process and boosting conversions. Other mobile payment providers like Google also have plans to bring payment options like Android Pay to websites.
Prediction: The introduction of electronic wallets on mobile and online websites is part of the overall effort to meet merchant and consumer demands to simplify payment processes at every shopping channel. In 2017, there is good reason to think retailers and consumers alike will adopt mobile payments online to shorten the standard payment experience.
In 2016, we have witnessed the increasing popularity of person-to-person (P2P) payments worldwide. One of the most innovative offshoots of P2P has been the creation of new payment equations that incorporate a range of apps within them in the form of "an app within an app." In China, the WeChat messaging platform eliminates the need to download individual apps by incorporating 10 million third-party apps. WeChat users can utilize a single platform to set up appointments, pay bills, order food, buy concert tickets and socialize with friends.
Facebook messaging bots are expected to become increasingly popular and more sophisticated during 2017, enabling merchants to craft personalized payment messages for shoppers while providing them an enjoyable shopping experience without the checkout and payment stages. In addition, Facebook is expected to further improve the system by circumventing the need to download numerous apps.
Prediction: Merchants are constantly seeking ways to facilitate payment processes. In 2017, the use of messaging as a sales platform will enable them to address customers individually and allow users to "leapfrog" over standard components such as registering credit card details and separate checkout. This payment paradigm can be expected to become increasingly popular as performance improves.
Emerging markets like China, India and Africa are impacting consumer behavior worldwide by creating new payment paradigms. While in the West online payments preceded mobile payments, some countries have already transitioned directly to mobile payments and new payment paradigms such as Union Pay and WeChat. In unbanked countries like Africa and India, mobile phones have become the main channel for money transfers.
Prediction: The rise of mobile payments among populations distrustful of banking systems (such as China and the Russian Federation) as well as consumers in unbanked countries (like Africa and India) will grow as consumers who had no access to or have refrained from making payments via banks or credit card schemes find more efficient ways to pay. We may even see more branchless bank payment options in the West as digital banks become increasingly popular. 2017 may also be the year when more innovative credit card payment schemes similar to Union Pay will emerge, changing the face of payments.
Security strikes terror in the hearts of both merchants and consumers. Merchants fear cyber-attacks that can cripple their enterprises; buyers worry that their credit card details will be hacked and cloned for false shopping sprees. In 2016, we have witnessed the slow but steadily rising adoption of EMV (Europay, Mastercard and Visa) in the United States, which promises to boost payment security.
U.S. retailers taking part in the ongoing EMV incorporation process are now obligated by credit card schemes to support P2PE, a Payment Card Industry Data Security Standard-certified card reading technology situated at the merchant location or POS that converts confidential credit card data into indecipherable code to prevent hacking and fraud. Retailers who have not made the transition to EMV are now more vulnerable than before.
Prediction: Industry experts believe EMV adoption will reach a 90 percent threshold in 2017, thereby providing significantly enhanced security for merchants and consumers.
In 2017, a growing understanding of fraud and hacking risks will boost awareness of the need for merchants to maintain vigilance in upgrading to new versions of EMV and PCI standards when they are announced. Increased awareness of security threats will also galvanize merchants to update payment terminals in 2017, even when using an external payment processor.
While I have provided my forecast regarding payments industry developments in the coming year, as anyone familiar with the industry knows, unexpected developments and surprise dynamics are part and parcel of the fintech roller coaster. So hold on to your hats; 2017 promises to be an exciting year for everyone involved. 
Oren Levy is an experienced professional with over 15 years' experience in payments, commerce and global business. Prior to Zooz, Oren was an executive director at Brookline (USA) for 11 years, managing its worldwide sales efforts and strategic partnerships initiatives. Before Brookline, Oren held marketing, business development and technical positions at BATM, Fundtech and L.G.E.S. oren@zooz.com
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