SAN FRANCISCO–Companies that are investing in certain key themes are taking the lead in the payments industry, according to a new analysis.
“Disruptive solutions such as blockchain, artificial intelligence (AI) and cloud technology are creating new growth opportunities in the payments industry for companies that can capitalize on these trends,” GlobalData said. “However, current economic market conditions such as inflation, high interest rate and cost of living will also present some challenges for the payments industry, especially for fintech companies that are dependent on funding from investors.”
Investors are likely to be more risk-averse and shift their investments towards more secure ones, GlobalData added.
‘March Toward Digitization’
“The payments industry is continuing its march towards further digitization, preparing for an eventual cashless economy in the future,” said Chris Dinga, Payment Analyst at GlobalData. “As more payments are completed digitally, consumers will soon have plenty of options to complete their transactions as payment companies and merchants adopt multiple payments to ensure that they can remain competitive in the payments ecosystem and meet consumers’ needs.
“The emergence of alternative payments solutions like real-time payments, Buy Now Pay Later and blockchain networks are challenging traditional payments infrastructure by taking transactions away from them,” Dinga continued. “Incumbent companies are entering those new, innovative areas in payments either by developing their own solutions or acquiring fintechs with these capabilities.”
10 Key Themes
GlobalData’s report, “Payments Sector Scorecard – Thematic Intelligence,” identifies AI as one of 10 key themes that are driving changes in the payments industry.
“AI and machine learning are being adopted in the payments industry as key solutions for cybersecurity and developing innovative fraud prevention solutions,” GlobalData said. “They can be used to develop algorithms that monitor consumer behavior and identify any suspicious patterns that can be linked to fraudulent behavior.
“AI is also being used to offer a personalized online experience to consumers based on their tastes and their shopping behaviors. The more personalized the shopping experience a merchant can provide, the more likely they are to generate sales and retain consumer engagement in the long run,” the company continued. “Payment and technology companies will focus on developing solutions that will streamline mobile payment options and further integrate them within online point of sales.”
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