Last editedMar 20222 min read
In a world that seems perpetually on the cusp of the next big breakthrough, it can seem daunting to keep on top of the latest payment solutions. But for businesses of all sizes, it’s paramount that people remain educated on next-generation payment solutions and trends.
What are next-generation payment solutions?
The days of consumers having to carry heavy wallets full of cash are behind us. Debit and credit cards surpassed cash as the most popular payment solutions years ago and the pandemic has further solidified the trend. Cash is no longer king and credit cards might soon follow suit.
Next-generation payment technology allows users and banks greater transparency and a larger array of options. Better yet, much of it can be controlled and monitored directly from our mobile phones.
Next-generation payment trends
The latest payment processing technologies don’t just allow for more convenient transactions. They are infinitely more secure and flexible.
EMV and RFID cards
Colloquially known as chip and PIN cards, EMV credit cards use a digital chip to store a unique cryptogram that can be unblocked via a unique PIN code. These more modern cards also often utilise RFID technology, which lets passive radio frequency identification scan terminals for contactless payments.
Mobile has become the new standard for purchases thanks to its ease of use and the proliferation of smartphones in the UK. The mobile payment market was already ahead of the game before the pandemic but Covid-19 has further accelerated its widespread adoption.
While mobile or digital wallets might be seen by many as a relatively new technology, they have actually been used in Japan since 2004. Today, both Apple and Android (Google) phones have the capability to use NFC technology so that a smartphone with the right apps installed can be used in a similar manner to a contactless card.
The BitCoin bubble isn’t even close to bursting and has changed the way cryptocurrencies are perceived as a whole. The decentralised payment technology is a more secure and stable alternative to traditional currencies and is a payment solution that could end up defining the early 21st century.
Payment services directive two (PSD2) is a piece of legislation that took effect in the UK at the beginning of 2018. In short, it’s a directive that not only forces payment service providers to improve their authentication processes but also allows financial institutions to share customer data.
It’s a move commonly referred to as open banking, as it means third parties can simply tap into a bank’s API and have access to information that will allow them to create more personalised services for customers. While this might sound frightening on the surface, what it means in practice is that we are benefitted from a raft of new financial services making our lives easier.
Instant bank transfers, for example, are now possible thanks to open banking and the painfully long clearance cycles of the past have largely disappeared. GoCardless uses open banking to offer Instant Bank Pay (in the UK and Germany) and allow merchants to send links to customers and request instant one-off payments.
This means it’s never been easier to get paid and is one of the reasons why open banking sits at the nexus of all next-generation payment solutions.
We can help
If you’re interested in finding out more about next-generation payment solutions, or any other aspect of your finances, then get in touch with our financial experts at GoCardless. Find out how GoCardless can help you with ad hoc payments or recurring payments.