How the payment industry can assist in digital innovation

Past generations couldn’t imagine their lives without cash, despite having both debit cards and credit cards.

They also couldn’t imagine that someday they’d be buying groceries, clothes, and paying their bills with their phones…

… but here we are.

Slowly but surely, we’re headed to a cashless future. Paper money may still not be obsolete but 47% of customers now prefer digital payment options.

Can we even live in a cashless society? What’s the reason for so many changes in the payment industry anyway? Better yet, who are some of the players driving these payment industry innovations?

These are the questions we aim to answer in this article.

Before we discuss the impact of companies like Robinhood, Stripe, Primer and MellonCards, let’s see how our society would respond to the digital-payments-only world…

Can a Cashless Economy Work?

While some people are still pondering this question, in reality, we already have an answer. Yes, a modern society can function normally in a cashless economy.

How do we know this? Well, the answer to that is quite obvious.

The COVID-19 outbreak has kept millions of people inside their home for weeks – in some cases even months – and forced them to live off credit cards and payment services.

When the outbreak first started, the World Health Organization even asked consumers around the world to use contactless tech to pay for their goods. That’s because, during that time, scientists weren’t sure whether the coronavirus could be spread through money.

Those who stayed quarantined were forced to use their MasterCard and Visa cards or PayPal accounts to pay for food and beverages.

In some countries, the quarantine lasted for months, and during that time, people lived completely without paper money. In China, for example, a staggering 97% of people were making digital transactions during the lockdown, according to research from Swedish scientists.

During the same period, less than 2% of people used cash.

In countries like Italy, France, and Germany, the situation was pretty similar. In Europe, almost 70% of transactions were cashless. But will the situation stay the same once the outbreak is over?

An even better question is…

What Drives Payment Innovations in 2020?

As you might’ve imagined, COVID-19 isn’t the only reason why so many people are using digital payments. After all, even before most of us knew anything about the coronavirus, experts were predicting that eCommerce sales wouldtop $4 trillion by the end of this year.

People are now more accustomed to purchasing things on the go.

Visa mobile sales, for instance, have grown 53% faster than desktop sales last year. As mobile sales keep growing, so does the need for innovation in the payment industry. Although making a mobile purchase is easy and doesn’t take too much time, it can be even easier and quicker.

If people feel something can be improved, businesses will improve it.

But the customers aren’t the only ones pushing for innovations in the global payment industry — governments are also chiming in. Across the pond, for example, the European Union has put a new regulatory requirement in place, that will make Internet transactions more secure for both the businesses and their customers.

The regulation is called the Strong Customer Authentication – or SCA for short – and it requires payment services to perform a multi-factor authentication for every transaction, greatly reducing fraud and increasing payment security. Companies across Europe have until December 31st, 2020 to address any issues they might have with their security. If they fail to do so, they will be forced to pay huge fines.

8 Startups That are Changing the Payment Industry Right Now

No matter how much the customers and even government officials push for innovation, the payment industry would stagnate without new and exciting startups.

These days, fintech startups pop up from every corner of the world, to push the industry forward and change the way we do business online.

Let’s look at some of the startups that are changing the payment industry in front of our eyes.

Robinhood: Investing Remotely for Free

This California-based startup allows experienced and aspiring investors alike to purchase and sell stocks from their mobile devices. But Robinhood doesn’t just make stock trading convenient. It also makes trading more affordable.

For starters, the company doesn’t require you to visit a physical location to make a trade. Secondly, the users manage their investment accounts all on their own.

This lowers the costs significantly and allows Robinhood to have significantly lower fees than a traditional brokerage. Robinhood is huge in the US and Canada, but also growing in European countries like Sweden and Norway.

My Voice: Enabling Voice-Mediated Payments

In 2020, everyone from small e-merchants to large corporations strives to improve the experience of their customers to the best of their abilities.

A good way of improving customer experience is through voice assistants. In the United States alone, almost 112 million people use voice assistants every month, according to eMarketer research.

That’s why startups like My Voice are trying to leverage the power of machine learning. The UK startup allows users to authorize payments using nothing but their voice.

MellonCards: Pushing for Limitless Gift Card Payments

Since we’ll have enough US-based companies on the list, let’s make sure we also include a European brand. MellonCards is a Spanish gift card company, operating out of Barcelona.

The company allows customers to make cross-border payments through gift cards. You can find iTunes, Netflix, and Amazon gift cards on Mellon Cards’ official website, which allows you to safely buy digital products for you, your family, and friends.

For the very first purchase, every customer gets a 10% discount.

Cashlez: Introducing POS Into the World of Mobile

You’ve surely heard about Point-of-Sale systems, but what do you know about mobile POS? By definition, this is a piece of software that performs the same function as a digital POS terminal or a cash register.

Mobile POS can help companies save a lot of money and allow consumers to make their purchases more quickly.

Hailing from Indonesia, Cashlez is a mobile POS provider that’s there to help small businesses process digital payment, reduce fraud and overall streamline the entire purchasing process.

Currencycloud: Driving Cross-Border Transactions

Launched more than 8 years ago, Currencycloud is the oldest startup on our list. From the very start, Currencycloud aimed to create a solution that will allow customers and companies worldwide to do business, no matter where they’re located. From India, Australia, the United States, Brazil, the EU and beyond, Currencycloud is omnipresent and growing.

Thanks to its API, companies like Starling Bank and Vise can now offer cross-border payments to their clients.

Early in 2020, Currencycloud managed to raise more than $80 million in Series E funding.

Stripe: Managing Online Payments Easily

While PayPal has stayed the most popular payment processing platform on the web, it has competition. In the last year or so, Stripe has shown itself as a worthy contender to the throne.

At the moment, Stripe has more than 1.8 million users worldwide.

Not only that, but 14% of the top 10,000 websites use Stripe to process their payments – ensuring that Stripe and its customers will show up as a charge on a lot of consumer bank statements. Some of Stripe’s more famous users include Pinterest, Shopify, National Geography, and Kickstarter.

Primer: Trying to Solve All of the Merchants’ Problems

Speaking of PayPal, the next startup we have on the list was founded by a couple of Braintree employees.

Gabriel Le Roux and Paul Anthony, the founders of Primer are trying to make life easier for online merchants by helping them accept payments across multiple geographies and methods, all while having next-level anti-fraud protection.

Just a few months ago, the startup has managed to raise more than $4 million from multiple investors, led by TransferWise founder Taavet Hinrikus.

United Better (“UniBet”): Bringing Charity Into the 21st Century

Almost 2/3 of consumers around the world like to work with purpose driven-brands. They don’t want to work with brands that just take away; they want brands that give back.

That’s why the last payment industry innovator we have helps companies show they are more humane. United Better- or simply UniBet – is a Japanese initiative, focused on doing good in the world of payments.

UniBet allows online e-commerce customers to donate a given percentage of their overall revenue to a pre-selected list of qualified charities. At the moment, UniBet is in startup stealth mode in their home town of Tokyo, Japan, and little is known about the technical solution and how it will work. However, their public offering and open payment API should be available by the end of the year.

Can a Cashless Economy Work?

What can we take away from all of this? While there’s no way of knowing exactly what will happen in the future, there are some things we can bet our money on.

Here are three safe bets:

  • If tomorrow we needed to get rid of cash, the world would still function normally
  • Bot consumers and governments are also asking for improvement in the industry
  • With companies like Stripe, Robinhood, Currencycloud and MellonCards out there, pushing the envelope, the future looks bright

And there you have it: those are a few of things you need to know about the progress in the payment industry.

A move to online solutions seems inevitable at this point, so businesses and enterprises around the globe should do everything in their power to prepare themselves.