As the end of the year approaches, after a tumultuous, pandemic-fueled 10 months, publisher Doug Hall and managing editor Jeff Domansky reached out to payments industry leaders for their perspectives and predictions for the industry in 2021.
These industry leaders have pivoted and innovated throughout the worst of the pandemic. They’ve supported their clients, helped their employees work remotely, and still managed to grow their businesses despite enormous challenges. We recognize their extraordinary efforts, their industry leadership, and their many contributions to the payment industry during this challenging year.
SCA coming fast, card not present fraud increasing, fintech evolving
“First, I’m pleased to thank these industry leaders for their predictions for the year ahead and to add my perspective. The SCA deadline is coming fast, after a fifteen-month extension under PSD2 Guidelines. The payment industry is still struggling and looking for solutions as it moves towards compliance. Look for some new and innovative solutions to emerge early in the New Year.”
“Card Not Present (CNP) Fraud has continued to rise alarmingly with the dramatic increase in online transactions as a result of COVID-19. In addition, Account Takeovers (ATO) are up over 200% in 2020. New solutions will be implemented that will accentuate stronger cardholder authentication at the time of the transaction, embracing the latest digital identity offerings, making transactions frictionless and secure.”
“The payments industry will continue to evolve with new technologies and closer collaboration with Financial Institutions (FI’s) who will integrate digital technology to enable an increase in their digital capabilities and adoption of emerging digital products and services for their clients.”
~ Douglas Hall, entrepreneur & Publisher, PaymentsNEXT
Banks will leverage fintech solutions and use them for post-COVID recovery
“Payments as a service will become the norm in 2021. While businesses will remain with their banks for core banking, they will increasingly leverage fintech solutions for other services, such as making payments or securing loans, due to their increased credibility and recognition. AI-driven payment intelligence is making business payments easier than ever before. Using a combination of data science and pattern recognition, these smart products can recommend how best to make a payment (ACH, credit card, etc.) based on the payment type and amount of cash a business has on hand.”
“This is especially important for small companies watching their cash flow who don’t have the expertise to manage it themselves. Fintech solutions will also be key in helping businesses recover post-COVID by helping companies get back on track and become more consistent with their capital management and payments so they can grow faster and access working capital.” ~ Sameer Gulati, President & COO, Plastiq
Embedded Payments Become Ubiquitous
“Payments are typically distinct motions for B2B buyers and sellers, requiring separate actions by both to complete a transaction. But in 2021 and beyond, we see B2B payments increasingly becoming an invisible part of the customer experience; part of a larger trend of embedding payments into software to minimize friction at the point of sale to enhance customer engagement.”
“Ride-sharing is a familiar example, but not entirely relevant for “traditional” businesses. However, there are many ways these organizations are embedding finance into existing business processes. Whether it’s B2B sellers using AI to automate the offer of flexible credit terms to customers at the point of sale, or embedding preferred payment channels to streamline the invoicing and AR process with international customers, or many other examples, you will see payments become a less visible part of business transactions.” ~ Ryan Frere, EVP, Global Payments, Flywire
Fintech and banks are better together
“We’ve heard so much about fintechs disrupting the incumbents over the years. It sounds interesting and provocative, but the reality is we need each other. There has been a slow awakening in the fintech community that we will be more successful by collaborating vs competing. Incumbents like banks, card schemes, and payment processors offer scale while fintechs offer speed and innovation. ”
“We all just need to adjust our attitudes, or to paraphrase another executive: “reconcile our cultural differences on things like appetite for risk. The reality is very little money moves without the involvement of the big incumbents. Together, we have a much better shot at improving the way finance works. I expect to see a lot more collaboration in 2021, to enhance the digital services incumbents can offer to customers, and to extend the reach of fintechs.” ~ Vijay Ramnathan, President, MineralTree
Watch for seamless B2B payments and automation to grow
“B2C payments have evolved much more rapidly than B2B payments over the years. Two key factors are in play: one, the rapid growth of B2C e-commerce, and two, the added complexity of the B2B marketing, selling, and payment process. The pandemic has forced every B2B merchant to reassess their commitment to e-commerce and to overcome the complexities inherent to their business.”
“In 2021, we expect merchants to focus on making the B2B commerce process as seamless and differentiating as it is in B2C. This will entail making customer payments and financing seamless, not only at checkout but across the entire online shopping experience. Expect to see big investments in automating the offering of net terms and financing at the point-of-sale and streamlining revenue reconciliation on the backend. These changes will enhance customer loyalty, increase Average Order Value, improve cash flow, and create important operational efficiencies for B2B merchants.” ~ Rob Rosenblatt, CEO, Behalf
More payment choices, integration & mobile commerce ahead
“This year, we’ve seen COVID-19 galvanize unprecedented US growth in e-commerce, culminating in record Black Friday online sales, and an arguable tipping point for in-store contactless card payments, tailed by a significant uptick in mobile wallet transactions. With the pandemic likely stabilizing in 2021, consumers, who have experienced the convenience and speed of online shopping, will engage in e-commerce and m-commerce, alongside – rather than instead of – in-store shopping.
Retailers and other in-store businesses can prepare for this omnichannel future by enhancing their card-present payment offerings – accepting contactless card and mobile wallet payments should be a given – and by strengthening their online presence. Stores will need to go further than just having a website with a robust online checkout supporting card payments. Their checkout should support every way that consumers want to pay – integrating alternative payment methods such as digital wallets and online cash, among others.
Our Q2 research reveals that 36% of Americans are using a digital wallet at least monthly, while eCash usage is also significant, with the 14% of consumers using it regularly in 2020 likely to rise, as appetite for online shopping grows among Americans favoring cash. Payment methods that are currently on the fringes such as cryptocurrency are set to become more mainstream, so forward-thinking merchants will add these online now. Overall, the future will belong to retailers with payment offerings that are as comprehensive as possible – both online and in store. ~ Afshin Yazdian, CEO US Acquiring, Paysafe
Digital banking, payment technology and the rise of B2B solutions
“The payments sector is undergoing a revolution following rapid shifts in economic, regulatory and tech landscapes. We have witnessed trends such as AI/ML, real-time payments, digital wallets, rapid rise of e-commerce (leading to increased demand in digital payments and frictionless experiences) gain real momentum. While these all will remain in focus, there are three fintech areas that will continue to evolve as we head into 2021: digital banking, payment technology and the rise of B2B solutions.”
“Digital banks have been in the market for some time and can no longer play the ‘startup’ card alone. Starling has thrown down the gauntlet of profitability; can Monzo and Revolut follow? Will consumers have anything to worry about if they can’t? Large consumer brands may also start capitalizing on their networks and ‘cut out’ legacy banks creating further disruption for traditional high street.”
“Inertia in consumer-facing payment systems mixed with rapidly decreasing cost of transactions will be prominent, creating wins for consumers and merchants, so long as merchants can effectively capitalize. The unbanked and underbanked will also begin to benefit from these trends. Compounding payment vendor fragmentation trends will generate further demand for B2B propositions to simplify merchant payment solutions as the single-vendor strategy struggles. Merchants will be focused on regaining agility and interoperability, while the ocean of choice continues to expand.” ~ Rob Lincolne, Founder & CEO, Paydock
Marketplaces and sellers will create better B2B online payment experiences
“The effects of COVID-19 have accelerated the adoption of B2B e-commerce, molding a new generation of B2B buyers with high expectations of purchasing online. B2B businesses selling through e-commerce and marketplaces channels will be looking to provide customers with transparent and consistent purchasing experience, including onboarding, invoicing, and preferred pricing across all sales channels. “
“Many merchants will face hurdles while creating a seamless purchasing experience that can be supported by their internal stakeholders. Disconnected and inflexible legacy systems, limited budgets, cash flow constraints, and limited A/R innovation are a few of the challenges that will need to be addressed to create seller-driven processes supporting a buyer-driven experience. “
“In June, Alibaba announced its Alibaba.com Payment Terms, a first-ever trade financing solution embedded directly into a cross-border B2B ecommerce marketplace, allowing qualified buyers to order goods and pay for them up to 60 days after they are shipped. This is just one example of marketplaces creating value added services for its merchants through better payment experiences, which results in loyal, repeat customers. Additionally, the public sector is demonstrating a shift in increasingly relying on marketplaces for the procurement of goods and services into 2021 and beyond. Government entities like the GSA have begun to take advantage of these channels, highlighting the need for swift and efficient online payment options in order to fast-track purchases.”
Businesses must update A/R processes to comply with quickly advancing A/P technologies
“The pandemic has molded not only new customer expectations but also forced many companies to conduct business remotely and, in turn, overhaul their payment processes into 2021. Accounts payable teams are automating rapidly, and accounts receivable departments must comply and adapt to new technologies and processes dictated by their clients. MSTS released a report over the summer, and 27% of B2B companies surveyed reported that over half of their customer invoicing and billing requirements are unique. Manual invoice data, entry processes, and unique billing requirements can cause invoicing mistakes and further payment delays. Most distributors and manufacturers realized their payments needed an overhaul pre-pandemic, but the recent climate has made compliant, automated A/P and A/R processes essential.” ~ Brandon Spear, CEO, MSTS
Greater flexibility with consumer payments & consolidation in ARM industry
“Contactless payments were already becoming a priority before COVID-19, but the pandemic has accelerated adoption across various industries. Moving into 2021, payments companies will work more closely with credit card brands and issuers to expand payment options for consumers. Product enhancements in B2C payments technology will ensure that payments can happen any time, any way, and anywhere.”
“ARM agencies have learned that it’s more cost-effective to let agents work from home. Productivity applications are driving more value as they reduce the cost to collect. As more medical debt and student debt drops into collections, ARM agencies will consolidate so they can pursue more lucrative partnerships with health systems and government lenders.”
~ Jaeme Adams, VP, Ontario Systems
Machine learning, AI & voice will improve authentication and attack synthetic identity fraud
“One of the trends we’ll see across banks and financial institutions in the coming year is a massive transformation occur across digital and mobile channels in how artificial intelligence is used to engage with customers. We’ll see banks continue to combine machine learning (ML) with other forms of authentication technology such as biometrics to replace passwords. One example we’re already seeing is banks using ML to detect and read physical passports, which allow for ID scanning.”
“This all occurs using customers’ smartphones to scan a government-issued ID and then take a selfie. Banks leverage biometric facial comparison technologies with liveness detection to verify that ID is authentic and confirm the customer’s identity in a seamless and secure experience.”
“We also expect to see synthetic identity fraud skyrocket in the coming year as bad actors continue to leverage stolen identities to open fake bank accounts. As the government rolls out the next COVID relief stimulus package in the coming months, banks and financial institutions are preparing to protect customers against another wave of synthetic identity fraud targeting new and existing accounts.”
“More banks and financial institutions will leverage voice authentication in 2021. We expect to see an increase in attempts to hack the voice-capturing devices that use microphones to record users’ authentication information. Financial institutions using this information will be especially susceptible to attacks due to the sensitive nature of the information, such as account numbers, social security numbers, and other personally identifiable information.” ~ Benoit Grangé, Chief Technology Evangelist, OneSpan
BOPIS becomes one of the fastest-growing fraud types
“BOPIS (Buy Online Pickup In-Store) was growing in popularity before COVID among larger retailers like Gap and Walmart, BOPIS has boomed due to the pandemic. Shoppers are prioritizing getting in and out of physical stores as quickly as possible. A related flavor of BOPIS, curbside pickup, has, at times, been the only way to purchase from stores in many parts of the US and around the world. “
“Fraudsters have recognized the value of combining account takeover (ATO) attacks with BOPIS to quickly, and sometimes continuously, milk compromised accounts for goods or services. For merchants dealing with the rapid increase in all types of online purchases, BOPIS throws a new wrinkle into application security and fraud.”
“Beyond ATO, BOPIS also piggybacks on the growth of e-gift card cracking and carding attacks focused on loyalty accounts where gift card balances are stored. E-gift card usage is soaring as more people elect to give them as presents during the pandemic and purchase them for their own personal use. A convenient and easy way to take value out of e-gift card accounts hacked via card cracking attacks is to use the accounts for BOPIS purchases. Gift cards tend to be harder to protect than actual accounts. BOPIS allows cybercriminals or their surrogates to pick up loot immediately and with minimal scrutiny. This lack of certainty makes it even harder for stores to verify that someone picking up an order is not a fraudster. For food delivery apps, which are all natively mobile, mobile app security to prevent BOPIS is paramount.” ~ Ido Safruti, Founder & CTO, PerimeterX
Look for increased, more complex ransomware attacks
“Ransomware attacks will continue to escalate, and threat actors will introduce new twists such as innovative phishing and malware dropper techniques, and stealing data before they encrypt it, to further increase the effectiveness and urgency of their extortion campaigns.”
“This “business model expansion” and evolution will also see cybercriminals target a broader range of industries including organizations outside the top five: Financial Services, Government, Healthcare, Higher Education, or the Energy sector. Expect to see more targeted attacks against companies and industries that had not previously thought themselves to be prime targets for cybercriminals.” ~ Saryu Nayyar, CEO, Gurucul
New focus on more effective cybersecurity talent recruitment driven by 2020 attacks
“The passage of the IoT Cybersecurity Improvement Act mandates that all government agencies procuring IoT devices operate Vulnerability Disclosure Programs (VDPs). It’s a clear signal that private sector entities transacting with government agencies will soon be required to implement similar programs. Vulnerability disclosure policies are essentially an agreement that an organization will work in alliance with independent security researchers to strengthen the organization’s cybersecurity defenses.”
“More financial services companies will implement VDPs and will more closely partner with the cybersecurity community. These programs will ultimately become the norm, especially in the financial services sector which has been so consistently a prime target of threat actors. Also, due to the number of breaches that have occurred, the sector will implement cybersecurity attack playbooks. Given the rise in demand for cybersecurity talent over 2020, the financial services sector will adopt more rapid and effective ways for recruiting the security and technology professionals it needs, using Capture the Flag (CTFs) and pentest challenges to pre-screen talent. ~ Chloe Messdaghi, VP of Strategy, Point3 Security
2021 will bring more advancements to security portfolios
“As cloud consumption continues to rise, so do the demands on security, networks, and the operations personnel that manage and tune them. In 2021, I expect to see a greater focus on three specific areas: continued advances in tools that support operational feasibility; more effective integrations between technologies; and increased IT operational efficiency in the face of the cybersecurity labor shortage.”
“As the process of ensuring an end-to-end optimized experience has grown considerably more complex, more organizations will make investments in products and solutions based on which provide the best insight and capability to both manage and deliver the best customer and business experience. This will save operationally as it eases deployment and tuning and will ensure that staffing can meet an organization’s needs based on management visibility of the services and solutions. This is clearly a huge priority for several industries , and I believe it’ll launch some portfolios well ahead of others as we look to “tomorrow’s” secure service infrastructure. ~ Mike Spanbauer, Security Evangelist, Juniper Networks
LATAM market changing rapidly and innovating due to the pandemic
“Payments are changing rapidly in Latin America, and the focus has been on financial inclusion, digitalization, and cost optimization. The newest partnership between EBANX and Uber represents this new trend, and by launching PIX payments (Brazil’s newest instant payment solution) to Uber customers, EBANX is providing a product that allows consumers and companies to make money transfers 24/7, without requiring debit or credit cards.”
“The pandemic forced many businesses to go online, and many people to shop online for the first time. This rapid shift speeded up the engines of the payments industry in LATAM, so it could provide even better payment experiences for all consumers. In 2021, we should see a continuous increase of digital payment options grabbing a substantial amount of market share and providing better and cheaper options to LATAM customers, especially the under and unbanked ones.” ~ Paulo Shargorodsky, VP of Strategic Accounts, EBANX
Good bots defeat bad bots; consumers care where products are made
“More retailers will start leveraging bot technology for good, particularly to combat bad bots that are being used to snap up the supply of a hot new product and then sell it on secondary markets at huge markup. NVIDIA recently made headlines when its highly anticipated Ampere GPU was sold out almost immediately after its launch online, with scalpers using bots to purchase the GPUs in mass then re-sell them on sites like eBay at outrageous prices. The same problem has plagued the concert and shoe industries for years. It’s terrible for customers, which also makes it bad for retailers.
“But these retailers are learning that they can train their own bots to recognize the malicious bots that are buying their products online and prevent them from completing the transactions. As shoppers become increasingly socially conscious, they will start to care more about where products are manufactured, guided by sustainability concerns and a desire to support local economies. E-commerce platforms can leverage these preferences to further personalize their experience and shape their recommendations.” ~ James Brear, CEO, Zycada
Admiration & inspiration
“If I had to pick two words to describe the payment industry during this past year, they would be admiration and inspiration. There are so many businesses and leaders to admire for their efforts to maintain services and go the extra mile on behalf of their customers, consumers, and employees. There is also deep admiration for the innovations that continued in the face of some of the biggest challenges of our industry. We wish our industry leaders and colleagues, their employees, and customers a strong recovery and renewed success in the year ahead. It will be hard-earned and well-deserved.” ~ Jeff Domansky, Managing Editor, PaymentsNEXT
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