Alternative payment methods are becoming more and more popular with consumers because of their simple, efficient and secure payment methods. Mobile payments, peer-to-peer payments and digital wallets are just a few of the many alternative payment methods consumers are choosing besides credit cards and cash.
In a recent PaymentsJournal podcast, Matt NilesSenior Director, Global Products and Solutions, Euronet Worldwide, and Brian ReillyDirector of Credit/Co-Head of Payments, Javelin Strategy & Research, discusses the disruptive shifts taking place in the banking industry, particularly when it comes to alternative payment methods.
Alternative payment methods forcing banks to adopt and innovate
payment journal Alternative payment methods forcing banks to adopt and innovate
Banks, credit unions, and fintech companies would benefit from understanding the latest trends, such as contactless payments, peer-to-peer money transfers (P2P), the rise of e-commerce transactions, and the importance of adopting these solutions to stay competitive. Finally, listeners will learn about Euronet’s Ren Payments platform, which enables banks to easily and securely integrate these alternative payment methods.
Why Alternative Payment Methods Are Becoming Popular
Consumers are increasingly looking for ways to simplify payments and transactions.In a more digital age, contactless payments, mobile payments and digital wallets have undoubtedly become published About speed and security. These alternative payment methods are convenient and eliminate the need to carry a credit card or cash wallet.
“We (consumers) care about convenience more than ever,” Niles said. “We care more about security and speed than ever before, and that has really fueled the payment methods that have emerged over the past few years. We’ve seen this The growth of real-time payments worldwide. It’s a trend that isn’t going away anytime soon.
“We’re using digital wallets more than ever. Of course, contactless payments have become the norm during and after the pandemic. All of this has driven our desire for faster, more secure payments.”
Clearly, the drive to move to alternative payments comes directly from the customers themselves, not the companies.
“A lot of it has to do with consumer preference,” Riley said. “It’s not just payment card companies pushing ‘This is what we have.'” Voices on the consumer side say we want more of these types of innovative transactions. “
Challenges facing traditional banks and solutions to stay competitive
Traditional banks are still lagging behind in adopting alternative payment methods. This can be traced back to many reasons. According to Nilles, banks face problems on three fronts: first, legacy solutions and the difficulty of introducing new functionality through them. The second is to adhere to compliance and regulatory requirements. The third is bringing solutions to market without losing quality control.
“We want to help banks really put together the right product mix, introduce those products to customers, and create not only immediate value for customers, but a great experience for customers,” Niels said.
“It’s a balance between meeting consumer demand quickly and managing product supply. That’s what we’re trying to achieve with a solution called Ren, which is to bridge the gap between a future legacy solution and the bank’s current needs, and keep that solution compliant no matter where in the world it may land.
“In the end, manage that product so that it’s cohesive and seamless as customers interact with the merchant or the bank itself.”
In fact, compliance is a significant issue that must be handled carefully in a rapidly evolving regulation, especially in a reactive way to certain events.
“The compliance issue is really a big one,” Riley said. “If you look at some of the things that have happened recently in the peer-to-peer payments space, consumers don’t really understand that payments are irreversible once they’ve gone through the process, and the regulations to protect consumers haven’t kept up with what’s happening. This has led to a lot of financial institutions creating their own rules around this.”
How the Ren Payments Platform Helps Banks Integrate Alternative Payment Solutions
The innovation journey can be challenging for any organization poised to adopt the latest technology solutions. And, success is not guaranteed. However, the rewards can be immeasurable. The Ren payment platform strives to overcome these barriers.
“Ren was created not only to meet our internal needs, but also to meet the needs of our customers in the form of a microservices-based architecture,” Nilles said.
“This greatly simplifies the implementation process between us and our customers, while also allowing our customers to move forward in their innovation journey at their own pace. We call this an incremental innovation path, the way our products are built.
“It allows you to control the pace of your innovation journey while also choosing which parts of the solution you want to use.”
An example of how it works: Let’s say a company wants to adopt FedNow within its organization. The next day, the organization hopes to launch a digital wallet for its current customer base. Ren can help at your business’ own pace.
You can liken it to putting on the brakes when introducing a new solution so that it doesn’t get overwhelmed by the surging tide of implementation. With the Ren Payments platform, organizations can introduce new solutions without negatively impacting their operations.
Additionally, the Ren Payments platform aims to remove disruption from product roadmaps and day-to-day operations. It simplifies the path to innovation and gives organizations full control over the pace of innovation.
Alternative payment methods are here to stay. These dramatic shifts are largely driven by consumer demands for speed, security, and convenience. The pandemic has spurred the development of contactless payments such as mobile wallets. With FedNow debuting in the U.S. this month, more consumers will enjoy the faster payment method.
Through all of these innovations, banks, fintechs, and credit unions must be prepared to do the important work of modernizing their legacy systems, complying with the changing regulatory environment, and deploying these solutions without impacting their operations. To do this, it is imperative to implement the right solutions that can address all these challenges, solutions that can successfully navigate the payments ecosystem of the future.