Social and live commerce: See now, buy now
The appeal of social and live commerce for consumers is the ability to buy a product as soon as they see it. To make it even easier to buy, a growing number of businesses are embedding payment links and QR codes directly into social media posts and live commerce streams.
According to Antonio Gagliardi, SVP, acquiring partners, product and strategy, merchant services US, American Express, “Embedding payments is another trend that will continue to grow at a rapid pace. That's what social and live commerce are starting to do well. It helps your customer enjoy a frictionless experience without ever having to leave the platform.”8
The technology that fuels these social and live commerce experiences is embedded payment links. They allow businesses to integrate payments directly into posts and ads across social platforms. Businesses can also integrate these links into other channels that didn't previously enable commerce, like WhatsApp and text messages.
It’s important to manage your social media platforms to connect with your customer,” said Konrad Chan, president of Asia Pacific, Global Payments.
It’s smart to be thinking about it for every size business. There’s revenue opportunity at stake
Moving into 2023, consider embedding pay-by-link capabilities directly into social platforms. It will make payments seamless and effortless for your customers
One of the most exciting things about the social commerce sector is that it brings to market the right technology and modern financial tools to fit consumer needs,” says Ruben Salazar, global head, Visa Direct. “Where there’s commerce, payments need to follow.”
Blockchain
Blockchain is revolutionizing every industry—from art to agriculture.
Blockchain is a public, decentralized, distributed ledger, meaning that no one person or business owns the system of record. Because of that, anyone within a blockchain network can verify transactions or the ownership of an asset for themselves. It has broad applications across many industries, including real estate, banking and financial, legal and payments. Blockchain technology also offers some exciting benefits. It solves record-keeping problems and provides a public audit trail for all types of transactions. It will be used in payments in several ways:
Thanks to its agile, decentralized structure, blockchain technology increases the pace of payment processing with real-time verification of transactions without needing intermediaries.
Many digital currencies run on blockchain technology, where a decentralized system verifies and maintains transactions and records rather than a central authority.
P2P payments are payments made between two individuals. Blockchain’s global reach and decentralized nature mean that it can rapidly and affordably facilitate P2P transactions across borders.
Tech innovation: Blockchain, real-time payments and open banking take center stage
With the merging of physical, digital and virtual worlds, tech innovation accelerates to meet customer expectations.
As they shop, consumers are jumping between physical, digital and now virtual worlds. And they expect technology to keep up with their omnichannel habits, enabling a seamless, integrated, nearly invisible payment experience across channels. Payment providers and financial institutions are innovating to meet their needs.
“The pace and the desire of payment companies to modernize their payment platforms and applications is growing,” said Mark Smith, head of payments—market development, Amazon Web Services. “Companies that are focused on their customer and the payment experiences they desire and have the technology to deliver on those experiences will be well suited for the future.”12
Real-time payments
A blend of new technology, regulatory pressure and customer expectation is driving the growth of real-time payments.15
Instead of the traditional process where transactions are batched, sent to a merchant’s bank and processed at scheduled intervals, real-time payments process and, in many cases, settle instantly. Cogent Bank, for instance, has launched TassatPay, to allow its B2B clients to make real-time payments to other Cogent Bank clients enrolled in TassatPay.16
As the demand for real-time payments increases, payment rails are working to quicken the pace of money movement. Settlement will also need to evolve from batch to real-time processing.
Open banking
Another evolving technology, open banking, opens more doors of opportunity for financial innovation. In 2016, European regulators proposed the opening up of consumers’ financial data to third parties upon consent. From there, the Second Payment Services Directive (PSD2) legislation was introduced, prompting the UK to create an open-banking standard.
Today, open banking—one form of real-time payments—enables third-party payment and financial services providers to access consumer banking information. This includes transactions and payment history, with and when the consumer consents to this access.
Experts expect the open banking market to exceed $116 billion by 2026.20 The transformation in structures and relationships is already beginning to change how banks relate to their customers while creating new services.
The demand for real-time payments is pushing industries and governments to innovate.
In the summer of 2020, at the height of the pandemic, small businesses were operating with fewer than 15 days in buffer cash.17 In a challenging economic landscape, the speed at which a business gets paid can mean the difference between success and failure. For many small businesses, cash reserves are shallower than those of their larger counterparts. It matters to a small- or mid-sized business to get that money at four o’clock in the afternoon versus four o’clock the next morning,” said Bob Cortopassi, president, international merchant solutions and vertical markets, Global Payments.18 Governments are also aware of the need for real-time payments. FedNow, for example, is a new instant payment service by the Federal Reserve, the central banking system of the US, enabling financial institutions with real-time payments.19 Through FedNow, financial institutions can now rely on around-the-clock funding availability where payments clear and settle in real time
Opportunities without bounds
Innovations built on open banking are evolving daily to provide better experiences to customers. For example, a company leveraging open banking can aggregate a customer's bank account balances from all of her banks onto one screen and let her transfer money between them, even across different banks. This experience eliminates the hassle of manually having to transfer money between different banks and gives her better visibility into her whole financial picture. Governments are also using open banking to allow citizens to pay taxes and other duties. For example, HM Revenue & Customs (HMRC), the UK's tax, payments and customs authority, allowed taxpayers to pay their self-assessment payments through open banking services during the 2021 UK tax season. Many of these taxpayers received their refunds in record time, while HMRC reduced costs and streamlined its payment process.