7 key payment trends to watch in 2019

Nearly all new payments technologies strive to become as ubiquitous — and as secure — as possible. It's a goal that is harder than ever to achieve.

For years, this was a pretty cut-and-dried proposition. Cash, paper checks or payment cards were the go-to payment vehicles. But today's overwhelming mix of smartphone apps, virtual assistants and internet of things devices makes it harder than ever to ensure that a single payment instrument can work everywhere a consumer needs it to.

This complexity makes it difficult to predict what the next big thing may be in payments, especially because many of the ideas are competing as much with each other as they are with the older options they aim to replace.

Rise of the machines
David Limp, senior vice president of devices and services at Amazon.com Inc., speaks about the Alexa Hunches software.
David Limp, senior vice president of devices and services at Amazon.com Inc., speaks about the Alexa Hunches software during an unveiling event at the company's Spheres headquarters in Seattle, Washington, U.S., on Thursday, Sept. 20, 2018. Amazon.com Inc. unveiled its vision for smart homes powered by the Alexa voice assistant, with a dizzying array of new gadgets and features for almost every room in the house -- from a microwave oven to a security camera and wall clock. Photographer: Andrew Burton/Bloomberg
Nearly every major technology company is either dabbling with or making significant advancements with machine-to-machine or voice-activated communication. Within that landscape, payments are expected to take part in many of the tasks consumers wouldn't mind a machine or device handling for them.

It's clear that blockchain will have a growing role in this area, and could be the type of distributed ledger technology needed to securely keep track of transactions while keeping costs in line. Still, blockchain is not likely to become a ubiquitous concept or even a readily available choice for years to come.

The same could be said of virtual assistants. The technology is inching towards a future where consumers can tell Alexa or Siri to pay their bills, order and pay for a pizza and handle simple banking tasks. But the security isn't firmly in place.

Even further down the payments road, machine-to-machine advancements could bring a consumer's data into play as a valuable asset — even something to exchange as a currency. In some "smart cities" concepts, the ability to exchange data use for a service or product has become a common talking point.
A comeback for contactless
Contactless credit cards
If any facet of payments can expect to enjoy a new wave of consumer and merchant adoption in the U.S., it is contactless payment cards.

Visa CEO Alfred Kelly said up to 100 million contactless Visa cards could be issued by member banks in the U.S. in 2019. One of those issuers, JPMorgan Chase & Co., has already said it would roll out contactless chip cards for all of its new and replacement Visa credit cards in the first half of 2019 and debit cards later in the year.

At the same time, Mastercard plans to combine the potential of contactless with "at-home" biometric options when applying for those cards.
What about mobile wallets?
Apple pay sticker
A sign for the launch of the Apple pay system, from Apple.Inc is seen displayed at the entrance to a McDonald's Corp. restaurant in London, U.K., on Tuesday, July 14, 2015. Apple Inc. is making the U.K. the first market outside the U.S. for its digital-wallet system as the company fights for a place in the electronic-payments industry. Photographer: Chris Ratcliffe/Bloomberg
It's hard to project the growth of mobile wallet adoption amongst merchants and consumers, but it seems safe to say that the technology no longer has the "wow factor" it once relied upon for adoption.

Even if one were inclined to declare Apple Pay as the segment's leader — mainly because it has been around longer than most other wallet apps — it cannot be looked upon as a technology bolting to the forefront. The popularity of Apple Pay seems to go up and down, depending on how combative merchants and issuers get in each region of the world.

However, it seems many are starting to accept that Apple Pay is here to stay. Auriemma Consulting Group research late in 2018 indicated Apple Pay had become the go-to digital wallet for debit card users, reporting that 77 percent of mobile payments from debit card users were coming through Apple Pay.

Apple is not gaining significant traction over Samsung Pay, Google Pay, or especially PayPal. They are generally all in the same boat in that early adopters are fine with the technology, yet likely to stick with the wallet made available by their smartphone manufacturer. But the vast majority of others are just now getting around to trying mobile payments or may have already found the process no more appealing than pulling out a plastic card at the point of sale.
P2P's growing role in mobile payments
iphone 7 user
A customer holds a newly purchased iPhone 7 smartphone at an Apple Inc. in San Francisco, California, U.S., on Friday, Sept. 16, 2016. Shoppers looking to buy Apple Inc.'s new iPhone 7 smartphones on Friday better have ordered ahead. Brisk demand left some stores sold out, leaving those who purchased online with the best chance to get their hands on the latest models -- and some resorting to extreme measures. Photographer: Michael Short/Bloomberg
More importantly, the development of P2P options, such as PayPal's Venmo and the bank-supported Zelle, gives consumers the idea that money can be moved quickly from one phone's linked account to another. In that manner, Apple relies on Apple Cash P2P to also attract users to Apple Pay.

Retailers remain interested and even confident that their own wallets with branded closed-loop cards can trim costs and lure more transactions through attached rewards and deals. Kohl's Pay, Walmart Pay and Target Pay are increasingly appearing on shoppers' mobile devices and the stores can readily communicate with those shoppers once they enter or leave the physical store locations.
China's mobile wallet expansion
Alipay mobile app
The login page for Ant Financial Services Group's Alipay application, an affiliate of Alibaba Group Holding Ltd., is displayed on an Apple Inc. iPhone in an arranged photograph taken in Hong Kong, China, on Wednesday, July 26, 2017. Alibaba is scheduled to release second-quarter earnings figures on Aug 10. Photographer: Anthony Kwan/Bloomberg
If there is a wave building strength, it most definitely comes from China and its massive digital marketplace.

The numbers that Alipay, at more than 600 million users, and WeChat Pay, with 980 million users on the WeChat e-commerce platform, have amassed show that ubiquity is entirely possible in a mobile/digital world. And that probability is quickly expanding across the globe for these mobile wallets, even with an eye toward the U.S. and Canada.

"My main point about payments at this time would be to watch the invasion of the Chinese with Alipay, WeChat Pay, China UnionPay, and their QR codes and internet promotion savvy," said Steve Mott, principal of BetterBuyDesign, a Stamford, Conn.-based consulting firm.

It's bad news for the EMV and contactless NFC worlds because "they're conquering the world with QR codes," Mott said. "They have a better mousetrap for payments because every one of their billions of transactions are protected by tokens and their fraud is miniscule."

More and more, that consistent use of mobile payments is making its way to the U.S. because merchants need to serve Chinese tourists who want to use Alipay or WeChat Pay for transactions. In fact, China's "long game" for competing within the U.S. payments landscape could make 2019 a pivotal year and result in some "really intriguing partnerships launched," Mott added.
Getting technical
Credit card and computer keyboard
Close-up of a credit card resting on a computer keyboard. Shallow DOF, blue-toned. ***Image inspector: please note that the name and number have been digitally altered so that no real personal information is visible.***
Many payments executives will keep a close eye on the World Wide Web Consortium's work in developing browser payment security as a key advancement moving into next year.

W3C has spent a few years now building its Payment Request API for browser-based payments to strengthen security for initiating and accepting e-commerce payments.

Along with the Faster Identity Online Alliance and EMVCO's Secure Remote Commerce framework, W3C is quickly becoming a key cog in future payments security.

"The W3C payment platform is designed to accept any payment type and it’s possible, if not likely, that alternative payment platforms will capitalize on this," said Thad Peterson, senior analyst with Boston-based Aite Group. "The continued migration to faster payments also feeds into this."
Technology brings in the newcomers
EU flag
European Union (EU) flags fly outside the Berlaymont building, which houses the headquarters of the European Commission, in Brussels, Belgium. Photographer: Yuriko Nakao/Bloomberg
As much as any other type of technology advancement, payments are enjoying a renaissance of sorts with various new players entering the landscape. It's fueled, at least in part, by the growing number of open platforms for developers with card networks, payment processors and even government-backed initiatives like PSD2 from the European Union or the faster payments project from the U.S. Federal Reserve.

New players include payment facilitators, independent software vendors, value-added resellers, a new generation of independent sales organizations and acquirers, and numerous fintechs and startups.

When the smoke clears from the contributions of legacy and new-wave players in the coming years, some major changes will occur and some infrastructures will remain the same, while providing more and faster services with digital enhancements.

"The bottom line is the card networks will remain strong for the foreseeable future but competition is increasing fast and in some markets like EMEA and Southeast Asia it is entirely possible that the card-based networks will have limited opportunity to gain a foothold," Aite's Peterson said.

"Expanding on the concept of ‘people having lots of choices,’ the continued growth of non-card payments globally is changing the game and adding complexity to an already complex ecosystem," he added.