4 Digital Payment Predictions for 2021

Financial institutions had to accelerate the transition to digital when the global pandemic hit this year. Banks were forced to find innovative ways to allow customers to continue going about their business, while the decline of cash was expedited. 

There have been significant changes to the payment industry in what has been a tumultuous and unprecedented year. As it nears its end, let’s have a look at what transformations we can further expect over the next 12 months.

Facebook’s Libra Launch

Facebook’s Libra digital currency, which was announced in May 2019, looks like it will finally launch in January, albeit significantly scaled down from the original proposal.  

The Financial Times reported in November that Libra, which has since been renamed ‘Diem,’ is close to getting regulatory approval for launch. The initial plan for multiple single-currency stablecoins have been shelved and instead will be backed one-for-one by the US dollar.

More Neobanks Will Emerge

Neobanks are wholly digital fintech firms. They have no physical branch network and therefore handle all of their business through mobile apps and other online platforms.

Neobanks such as Monzo and Revolut offer more attractive rates than traditional banks and a digital-first experience. These digital banks have become extremely popular, especially with professional Millennials, who are their primary target. Conventional banks need to be very wary of the role neobanks will play moving forward as we enter the second year of the pandemic and the clear need for comprehensive digital-banking.

Use of Blockchain by Payment Giants

The world's two largest payment processors, Visa and Mastercard, are making waves for blockchain adoption. Both payment giants have announced collaborations in recent months that will drive the normalisation of cryptocurrencies, even though these firms aren’t planning to launch their own tokens – they’re simply experimenting with the underlying tech. 

This shift in perception of crypto on behalf of the traditional payment companies is exciting for the future of the industry. Visa and Mastercard are already expanding their current network-of-networks in support of the technology, which is powering today's global commerce. 

Meanwhile, major crypto exchanges such as Binance and Coinbase are already using Visa or Mastercard for their crypto debit card services, and the payment rails of these financial titans have already begun to power numerous service providers and platforms within the crypto realm.

5G Will Take Customer Experiences to a New Level

With the introduction of 5G networks, millions of people and businesses worldwide have precise location sensing, more data capacity, lower latency and faster speeds at their fingertips. 

Customer preferences are critical to competitive success, and 5G will be a game-changer to delivering customer service. Retailers currently strategise with a combination of Bluetooth, Wi-Fi, radio frequency identification and near-field communication, but faster, device-inclusive connectivity has arrived. Everything, from, point of sale right back to merchandising is going to change in the future with the advancements 5G connectivity provides.

In 2021, the world will become fully digital and payments will become streamlined and integrated into everything. Just watch this space.