Deborah Traversa, Marketing Director SIA discusses with Douglas Blakey and Evie Rusman the prospects for the cards and payments sector in 2021
Instant payments accelerate
2020 was expected to be the year of instant payments and digital innovation and it turned out to be also the contactless payments year, due to the pandemic outbreak we are facing.
Instant payments are picking up speed slowly but surely. For example, the volume processed via the pan-European instant payment system RT1, designed and managed by SIA on behalf of EBA Clearing, confirms a strong growth in 2020 reaching a new milestone of more than 250 million transactions.
In July the increase of the limit to 100,000 euros supported the boost of business-to-business payments as well. The factors that in the past slowed down the process of adoption are now being addressed more and more. New mobile apps are designed to make instant payments accessible to consumers with value added services competitive with card usage.
2021 forecasts: an alternative European payment scheme?
Retailers can offer a P2B instant payments service, such as SIA’s Jiffy solution. The launch of the Request to Pay scheme in 2021 would also help to generate new use cases, especially for direct debits. Moreover, instant payments along with open banking, could be one of the building blocks for an alternative European payment scheme to the existing international payment rails.
There is a clear evolution of the payment customer journey with the expectation of being able to pay everywhere, immediately, always and safely that drives the digital innovation. Banks could get back in the driving seat of the payment business with investment in new technology, leveraging for instance on open banking and cross-account services to develop new B2B and B2C real-time payment use cases.
They are increasingly working on investigating whether changes in the way consumers move money, use cards or visit the branch can transform payments from a standard transaction to a distinctive element that can push the customer engagement. Traditional players are competing, but thanks to the open banking paradigm they are often also collaborating with Fintech new entrants to create a privileged relationship with the client and with corporates with large client bases (such as utilities, large retailers, telco and petrol) to offer simple, integrated payment journeys capable of bringing new value to the end customer. A concrete example could be Enel X Financial Services’ recent debut in the digital payments market that targets to launch new and more innovative B2B and B2C services based on payment accounts, for example the option of paying bills.
2021 forecasts SIA: SoftPOS a key element in contactless
“SoftPOS” represents a key element of the revolution in contactless payments. Through an App, smartphones and other devices can be transformed into a POS able to accept digital payments with no additional hardware required. This solution perfectly fulfils the needs of those business segments, such as professionals, artisans and freelancers that still rely on cash in their day-to-day operations. In 2022, it is forecast that more than 15% of POS will be mobile and about 50% of payment cards transactions on these devices will be processed via App.
This is mainly due to the increasing spread of innovative devices, reliable connections, user friendliness and security aspects. Mobility is another area where the evolution of the user experience is driven by contactless payments and 2020 has confirmed that Italy drives this digital transformation.
After the big cities – Milan, Rome, Venice, Naples, Turin – also Bari, Brescia and Bologna joined the group of cities allowing travellers to use their contactless credit or debit cards, even those virtualised on smartphones or wearable devices, at the turnstile readers, automatically charging the best travel fare based on the number of journeys made. That’s just an Italian taste. More to come internationally as well.