9 areas overdue for payments innovation

  • February 24 2017, 10:41am EST

The payments industry has been overrun with innovation in mobile, wearable and cloud-based digital payments. But many niches are years — if not decades — behind this trend.

Show business

Paper and processing complications are still a heavy part of payments to film stars and crew. Because of the complexity of these payments, transactions are still mostly check-based and manually processed.

City National Bank is working with Exactuals to modernize this market with a software-as-a-service platform for complex payments.

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Health care

Medical payments are notoriously complicated, with many hospitals and clinics stuck using older methods for handling payments among patients, doctors and insurance providers.

Among the companies attempting to disrupt this market are PNC and First Data, which last year made a $31 million investment in CareCloud, a Miami-based company that digitizes health care processes such as payments and records management.


Legalized marijuana dispensaries are in a tough spot. Because of their high-risk and politically charged status, many payment companies refuse to do business with them.

For this market, the need for innovation is less about payment acceptance and more about compliance and transparency. Companies like Tokken and Galen Diligence are focused on KYC compliance, due diligence and other needs of companies active in or investing in the cannabis industry.


Some payment brands are global; others don't venture far from home. China's travelers are seen as a ripe opportunity, particularly since many global brands have not been able to establish a presence in the country due to its regulatory structure.

Chinese brands like UnionPay and Alipay are working harder than ever to follow their customers whenever they venture beyond China's borders.

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Mobile ordering

Mobile "order ahead" apps are relatively new, but they are far from perfect. Starbucks, a well-known innovator in mobile payments, has been suffering from its order-ahead app's popularity and has had issues with overcrowding at its stores.

Other companies have experienced similar problems: Chick-fil-A, for example, has adapted by offering curbside pickup of mobile orders at a third of its locations; TGI Friday's, which had issues with mixing up its digital orders, added a full-time staffer at each location to manage mobile meals; and Chipotle Mexican Grill reduced wait times by letting customers schedule when they want their food to arrive.

Clothing stores

Buying clothes can be a tedious process of waiting in lines to get into the dressing room, and then waiting in line again to make a purchase. As it turns out, eliminating the second half of this process can also reduce the first half.

The San Francisco startup Oak Labs developed a smart mirror for dressing rooms, with built-in Near Field Communication technology to accept payments from within each booth. In addition to handling payments, the mirror can also allow shoppers to pick different sizes and styles, just as they would be able to when shopping online; the system can then signal the shopper's choice to a store associate.

In doing so, Oak Mirror reduces the average time spent in a fitting room by 40%, cutting overall waiting time for fitting rooms.


Germany is far more attached to cash than most other Western countries. This is a challenge for digital payment companies, especially those from outside its borders.

Klarna, of Sweden, is making some headway by buying up German payment companies such as BillPay, Cookies and Sofort.

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Business to business

The payments technology revolution of the past few years has given consumers myriad new ways to shop across different channels. Business payments have not enjoyed the same level of attention.

Citi Ventures is working to change this with recent investments such as participating in a $49 million Series D round in BlueVine, a startup that powers digital invoicing; an undisclosed investment in Feedzai, a risk management play; and FastPay, a B-to-B payments platform that focuses on transactions for media content.

Person to person

Person-to-person payments have been a notoriously difficult market to innovate in, and one of the few recent success stories is PayPal's Venmo, which won over millennials by building an interface that looked more like Twitter than a banking app. But is Venmo's way the only way?

The banks behind Zelle (a rebranding of clearXchange) are going a different route, placing less emphasis on social interaction so as not to alienate an older audience that may not care for social media.