The Evolution of Payments: Trends and Innovations in Fintech Payment Solutions

Whether making everyday purchases or receiving and sending funds, paying for goods and services is increasingly migrating to digital methods, with convenience among the top factors consumers consider when choosing how to pay. Below are some emerging fintech trends in payment technology.

Going Cashless

Cash transactions at point-of-sale (POS) in the United States have decreased by 13% since 2018 and are being replaced by cashless payment methods. Digital wallets like Apple Pay and Google Wallet store payment information on electronic devices such as smartphones and smartwatches. Using near field communication (NFC), when the mobile device is held close to the payment reader, the two communicate via a specific radio frequency that allows the transaction to take place.

Contactless credit and debit cards (aka “tap-and-go” cards) also use NFC. While not a reality yet, the “multi-purpose tap” may soon blend several POS steps into one: for instance, one tap might make the purchase, earn loyalty points, send a digital receipt, and verify age for the purchase of products such as alcohol.

Because NFC is an encrypted two-way technology, contactless payments are very secure. And with our smartphones always in hand (and 94% of them NFC-enabled), digital wallets are highly convenient. As digital wallets become more popular, however, tracking the quality of digital wallet applications will be of utmost importance, especially for cybersecurity reasons. Biometrics such as fingerprints and facial recognition offer a robust layer of security that is extremely difficult to breach.?

Real-Time Payments

Called RTP for short, real-time payments are digital transactions that allow transferred funds to immediately reflect on the sender’s and recipient’s accounts. In our fast-paced society, the instant availability of funds allows businesses and individuals seamless management of their finances. This keeps accounts up to date, enabling businesses that use the service to have better manage cash flow and operational expenses.

RTP also allows for more financial transparency; if a problem with the payment were to occur, it can quickly be identified and rectified, thereby helping maintain positive vendor relations.

The newest major RTP platform is FedNow. Developed by the Federal Reserve and launched in 2023, FedNow is unique in that any financial institution in the U.S., big or small, can join the platform. This differs from other RTP services, such as the private company Zelle, which require financial institutions to undergo an application process before they can partner with the company.

RTP transactions in the U.S. totaled a modest $3.5 billion in 2023. However, RTP in the U.S. is expected to grow at a compound?annual?growth rate?of 31.7% between 2023 and 2028.

Time is money—and conveniently spending, sending and receiving it is of increasing importance in the Digital Age. Whether it’s a digital wallet, a contactless credit card or a real-time payment, we can expect the future of payment technology to evolve quickly with our fast-paced economy.