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The Future of Mobile Payments in a Post-COVID-19 World – ReadWrite

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The Future of Mobile Payments in a Post-COVID-19 World - ReadWrite


The payments sector has been remarkably dynamic for some years now: dizzying valuations, double-digit growth rates, and an ever-increasing speed of technology advancement on a scale barely experienced in any other industry. We have seen the coronavirus fully transform consumers’ shopping habits, drive retailers to the verge of bankruptcy, and shine a spotlight on the value of digital capabilities, all of which have served as an enormous catalyst in an already fast-moving payment industry.

The Future of Mobile Payments in a Post-COVID-19 World

Many people think that everything is now changed — but we have no reason to think that this new normal is here to stay. However, the changes will only advance further, with far-reaching implications on business strategy for players along the entire payments value chain.

Consumer payment methods are evolving at a rapid pace, reshaping payments all over the world.

This has been particularly evident during the COVID-19 pandemic, as transactions have gradually moved online as stores have been forced to close. Overall, the ways we pay are affected by our cultures, habits, innovations, and the technology available to us.

Digital Payments

In the light of the COVID-19 pandemic, the digital payment industry is booming and fundamentally changing. The crisis has changed people’s views of payments and financial services, with cash use decreasing and contactless adoption promoted by several countries. This shift to a cashless society affects all aspects: retailers, merchants, consumers, governments, financial institutions, and service providers.

As per Market Research Future (MRFR), the global mobile payments market is anticipated to reach USD 3,300 billion at a CAGR of 32% from 2017 to 2023 (forecast period). In today’s market, the mobile payments market is predicted to have a high growth potential.

For day-to-day transactions, mobile payments are a cashless medium.

A technology that allows users to make instant cashless payments using their smartphones. According to the study, the significant driving factor for the mobile payments market is the technological advancements that are occurring in today’s world. The adoption of advanced technologies such as near field communications (NFC) is increasing its popularity.

NFC allows users to connect two electronic devices, such as smartphones, by simply bringing them close to each other. Furthermore, other driving factors include the ease of use, secure approach, speed, and offers associated with it.

According to the Worldpay Global Payments Study, the growth of mobile payments will continue to be the biggest factor in consumer payment in 2020, making shopping simpler than ever and already leading e-commerce payment preferences with 42% of spending in 2019—up from 36% in 2018.

Personalized Service for Customers

As we all know, in addition to innovation, the commerce and banking industries are working hard to have a plethora of payment methods that are customized based on the needs of the consumers, both online and in-store.

Will cash continue?

Although Deutsche Bank assumes that cash will continue, the next decade will see rapid growth in mobile payments, leading to a decrease in the use of plastic cards. Over the next five years, mobile payments are projected to account for two-fifths of in-store transactions in the United States, quadrupling the current amount.

Mobile payments, which range from retailer-specific applications to wallets provided by financial institutions, device manufacturers, and technology platforms, deliver convenience and protection to customers and businesses worldwide. In 2020 alone, over one billion shoppers used mobile payments.

Similar growth is anticipated in other developing countries; however, different countries will experience varying cash and plastic card shrinkage levels. In emerging markets, the impact can be felt much earlier. Many consumers in these countries are making the switch from cash to mobile payments without ever having used a plastic card.

Generation-Z – today’s children and young adults – would also have a huge effect on the future of payments.

This technology-savvy generation, born and brought up in a mobile-first world, accounts for nearly 26% of the global population. Learning how to navigate the world in the age of “fake news” and getting their digital lives bombarded with messages of dubious quality and authenticity, Gen-Z wants more personalization, better quality, and greater performance from businesses.

Brands that want to win over Gen-Z must also appeal to their digital, flexible, and mobile-focused payment preferences. The ubiquitous smartphone is quickly becoming the new wallet of choice for this generation. Many customers opt to store their favorite cards in their phones rather than carrying physical cards. This is causing major shifts in global point-of-sale payment acceptance, which has risen from 16% in 2018 to 22% in 2019.

 China is the Market Leader in Digital Wallets

We can learn a lot about the future of payments (particularly during the pandemic) from developments in China, which is building a world-class mobile payment infrastructure. There, the value of online payments accounts for nearly three-quarters of GDP (71%), nearly double the proportion in 2012. Today, just under half of all in-store transactions in China are made using a mobile phone, far above levels seen in other developed markets (25% in Germany and 24% in the U.S.).

Mobile payments now account for 22% of global point-of-sale spend in 2019 and are predicted to account for nearly a third (30%) of customer payments over the next five years. The increasing share of mobile payments adoption will be driven primarily by the steady decline in the physical usage of credit cards, debit cards, and charge/deferred debit.

 Impact of COVID-19 Pandemic

COVID-19 is projected to have a major impact on the mobile payments industry. Contactless payments are thought to be more hygienic and safer. This trend is being driven by players in the commerce ecosystem who claim that contactless transactions improve safety and health. Compared to pre-COVID-19 projections, global contactless adoption was expected to rise by 6% to 8%, with an additional 110 million contactless payment cards expected to be released in 2020.

Mastercard’s global transactional data

Furthermore, Mastercard’s global transaction data and market analysis show a substantial rise in the use of mobile payments. As per the poll results, the number of mobile payments at supermarkets, groceries, and pharmacies during the March 2020 lockdown as a proportion of all face-to-face card payments rose by 25% compared to the previous year.

It’s cleaner to use contactless — that’s evident

Mobile payments are now used by 79% of people worldwide and 91% in the Asia Pacific, citing protection and cleanliness. The data reinforces how people search for alternatives in stores, choosing a secure and fast tap to check out over dealing with cash, pens, and keypads.

Even now that the coronavirus pandemic is beginning to abate — contactless cards and mobile payments are increasing in the United States and Canada, according to the results of an April 2020 survey.

During the pandemic, almost one-third of US customers used mobile payments for the first time, and the majority intend to continue using mobile payments after COVID-19. Mobile payments in the United States are predicted to more than double between 2020 and 2024, and contactless card payments are also rising.

Conclusion

The COVID-19 pandemic has had a huge effect on our social and economic well-being. Nevertheless, it is also true that it has been one of the most powerful forces of global digitalization.

Digital payments, particularly mobile payments, have risen as a reliable way for businesses and enterprises to operate in the post-COVID-19 new normal.

After discussing the effect of COVID-19 on all payment industries, one thing is clear: if any company wants to survive the pandemic — and all of the other “things” that may come down on “human-existence-pipeline —  it must use mobile payment methods.

All companies must provide their customers with easy, convenient, and socially distancing-friendly forms of payments.

Image Credit: tim doublas; pexels; thank you!

Politics

Fintech Kennek raises $12.5M seed round to digitize lending

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Google eyed for $2 billion Anthropic deal after major Amazon play


London-based fintech startup Kennek has raised $12.5 million in seed funding to expand its lending operating system.

According to an Oct. 10 tech.eu report, the round was led by HV Capital and included participation from Dutch Founders Fund, AlbionVC, FFVC, Plug & Play Ventures, and Syndicate One. Kennek offers software-as-a-service tools to help non-bank lenders streamline their operations using open banking, open finance, and payments.

The platform aims to automate time-consuming manual tasks and consolidate fragmented data to simplify lending. Xavier De Pauw, founder of Kennek said:

“Until kennek, lenders had to devote countless hours to menial operational tasks and deal with jumbled and hard-coded data – which makes every other part of lending a headache. As former lenders ourselves, we lived and breathed these frustrations, and built kennek to make them a thing of the past.”

The company said the latest funding round was oversubscribed and closed quickly despite the challenging fundraising environment. The new capital will be used to expand Kennek’s engineering team and strengthen its market position in the UK while exploring expansion into other European markets. Barbod Namini, Partner at lead investor HV Capital, commented on the investment:

“Kennek has developed an ambitious and genuinely unique proposition which we think can be the foundation of the entire alternative lending space. […] It is a complicated market and a solution that brings together all information and stakeholders onto a single platform is highly compelling for both lenders & the ecosystem as a whole.”

The fintech lending space has grown rapidly in recent years, but many lenders still rely on legacy systems and manual processes that limit efficiency and scalability. Kennek aims to leverage open banking and data integration to provide lenders with a more streamlined, automated lending experience.

The seed funding will allow the London-based startup to continue developing its platform and expanding its team to meet demand from non-bank lenders looking to digitize operations. Kennek’s focus on the UK and Europe also comes amid rising adoption of open banking and open finance in the regions.

Featured Image Credit: Photo from Kennek.io; Thank you!

Radek Zielinski

Radek Zielinski is an experienced technology and financial journalist with a passion for cybersecurity and futurology.

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Fortune 500’s race for generative AI breakthroughs

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Deanna Ritchie


As excitement around generative AI grows, Fortune 500 companies, including Goldman Sachs, are carefully examining the possible applications of this technology. A recent survey of U.S. executives indicated that 60% believe generative AI will substantially impact their businesses in the long term. However, they anticipate a one to two-year timeframe before implementing their initial solutions. This optimism stems from the potential of generative AI to revolutionize various aspects of businesses, from enhancing customer experiences to optimizing internal processes. In the short term, companies will likely focus on pilot projects and experimentation, gradually integrating generative AI into their operations as they witness its positive influence on efficiency and profitability.

Goldman Sachs’ Cautious Approach to Implementing Generative AI

In a recent interview, Goldman Sachs CIO Marco Argenti revealed that the firm has not yet implemented any generative AI use cases. Instead, the company focuses on experimentation and setting high standards before adopting the technology. Argenti recognized the desire for outcomes in areas like developer and operational efficiency but emphasized ensuring precision before putting experimental AI use cases into production.

According to Argenti, striking the right balance between driving innovation and maintaining accuracy is crucial for successfully integrating generative AI within the firm. Goldman Sachs intends to continue exploring this emerging technology’s potential benefits and applications while diligently assessing risks to ensure it meets the company’s stringent quality standards.

One possible application for Goldman Sachs is in software development, where the company has observed a 20-40% productivity increase during its trials. The goal is for 1,000 developers to utilize generative AI tools by year’s end. However, Argenti emphasized that a well-defined expectation of return on investment is necessary before fully integrating generative AI into production.

To achieve this, the company plans to implement a systematic and strategic approach to adopting generative AI, ensuring that it complements and enhances the skills of its developers. Additionally, Goldman Sachs intends to evaluate the long-term impact of generative AI on their software development processes and the overall quality of the applications being developed.

Goldman Sachs’ approach to AI implementation goes beyond merely executing models. The firm has created a platform encompassing technical, legal, and compliance assessments to filter out improper content and keep track of all interactions. This comprehensive system ensures seamless integration of artificial intelligence in operations while adhering to regulatory standards and maintaining client confidentiality. Moreover, the platform continuously improves and adapts its algorithms, allowing Goldman Sachs to stay at the forefront of technology and offer its clients the most efficient and secure services.

Featured Image Credit: Photo by Google DeepMind; Pexels; Thank you!

Deanna Ritchie

Managing Editor at ReadWrite

Deanna is the Managing Editor at ReadWrite. Previously she worked as the Editor in Chief for Startup Grind and has over 20+ years of experience in content management and content development.

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Politics

UK seizes web3 opportunity simplifying crypto regulations

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Deanna Ritchie


As Web3 companies increasingly consider leaving the United States due to regulatory ambiguity, the United Kingdom must simplify its cryptocurrency regulations to attract these businesses. The conservative think tank Policy Exchange recently released a report detailing ten suggestions for improving Web3 regulation in the country. Among the recommendations are reducing liability for token holders in decentralized autonomous organizations (DAOs) and encouraging the Financial Conduct Authority (FCA) to adopt alternative Know Your Customer (KYC) methodologies, such as digital identities and blockchain analytics tools. These suggestions aim to position the UK as a hub for Web3 innovation and attract blockchain-based businesses looking for a more conducive regulatory environment.

Streamlining Cryptocurrency Regulations for Innovation

To make it easier for emerging Web3 companies to navigate existing legal frameworks and contribute to the UK’s digital economy growth, the government must streamline cryptocurrency regulations and adopt forward-looking approaches. By making the regulatory landscape clear and straightforward, the UK can create an environment that fosters innovation, growth, and competitiveness in the global fintech industry.

The Policy Exchange report also recommends not weakening self-hosted wallets or treating proof-of-stake (PoS) services as financial services. This approach aims to protect the fundamental principles of decentralization and user autonomy while strongly emphasizing security and regulatory compliance. By doing so, the UK can nurture an environment that encourages innovation and the continued growth of blockchain technology.

Despite recent strict measures by UK authorities, such as His Majesty’s Treasury and the FCA, toward the digital assets sector, the proposed changes in the Policy Exchange report strive to make the UK a more attractive location for Web3 enterprises. By adopting these suggestions, the UK can demonstrate its commitment to fostering innovation in the rapidly evolving blockchain and cryptocurrency industries while ensuring a robust and transparent regulatory environment.

The ongoing uncertainty surrounding cryptocurrency regulations in various countries has prompted Web3 companies to explore alternative jurisdictions with more precise legal frameworks. As the United States grapples with regulatory ambiguity, the United Kingdom can position itself as a hub for Web3 innovation by simplifying and streamlining its cryptocurrency regulations.

Featured Image Credit: Photo by Jonathan Borba; Pexels; Thank you!

Deanna Ritchie

Managing Editor at ReadWrite

Deanna is the Managing Editor at ReadWrite. Previously she worked as the Editor in Chief for Startup Grind and has over 20+ years of experience in content management and content development.

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