The Impact Payment Technology is Having on the Business of Finance
Payment technology has been around for many years but it looks set to transform how financial businesses operate.
Long gone are the days where banks and credit card companies controlled all major payment processes, with financial technology (fintech) revolutionizing how payments are being made around the world.
Mobile payments and blockchains are perhaps at the forefront of this revolution, with each type of payment technology receiving over $130 billion of investment in the past five years alone.
These fintech processes are removing our reliance on banks and credit cards, with people that traditionally avoid these financial companies now conducting more activity than ever thanks to payment technology.
Banks are no longer a requirement for many people. Both businesses and consumers have more options available thanks to fintech, with future generations likely using a variety of financial technology processes for their personal and business finances.
We don’t need to look to the future to see the impact of payment technology though – much of it can already be seen today!
A Massive Global Market
Financial businesses that aren’t focusing on payment technology are overlooking a global market worth $100 trillion. Consider all the businesses small and large that are using payment transactions to attract and retain their customers – it’s applicable to everything from e-commerce to cross border transactions.
This isn’t just startups developing innovative technologies, as big financial businesses like the Bank of America, Barclays, and MasterCard all vying for the giant that is the global payment technology market.
The Rise of Payment Companies
You don’t need to look for to see the impact that payment companies are having on traditional financial businesses. For instance, companies like PayPal and Stripe offer payment services that are much quicker and simpler than those offered by banks, helping them to take a huge chunk of the $4 billion annual revenue that banks make from payment transfer fees.
This is just a small sample of how payment technology is removing the need for a financial middle-men from banks, credit card companies, and other financial businesses.
These organizations continue to use outdated technologies that don’t speak to changing consumer habits, particularly amongst millennials and the ever-growing Generation Z demographic.
Even tech giants are taking advantage of the benefits of new payment technologies, with the likes of Apple and Google now offering payment solutions (such as mobile payments) that require no credit cards or cash at pay points.
Blockchain and Cross-Border Payments
Blockchain, the technology behind cryptocurrencies like Bitcoin, is changing the business of finance in unprecedented ways.
This payment technology has the potential to completely disrupt banks as the traditional method of cross border payments, namely because it allows the consumer to completely bypass any financial institutes
Removing the middle man and the technology’s paperless processes means that cross-border payments are much cheaper compared to other financial businesses. Payments can be completed in an instance rather than waiting days or weeks, offering consumers more convenience than anything else available.
Blockchain may force banks and other bodies to take action – and many are not waiting around. Some banks have already partnered with payment technology firms to try and integrate blockchain technology into their own global payment processes.
