Just when you were starting to get comfortable with the idea of mobile payments like Apple Pay and Samsung Pay there’s a whole new set of developments on the way that could change the way we make our purchases and interact with our banks.
Executives from companies including PayPal, Google,Bank of America , American Express, Visa , Discover and MasterCard are presenting their ideas and new payment products this week at Money 20/20, a conference in Las Vegas about payment technology organized by a group of technology and retail executives.
Mobile payment adoption rates are slow. Despite the rise in popularity of debit and credit cards and mobile payments, in terms of frequency, cash is still used for about 85% of transactions worldwide, according to research from MasterCard and consulting firm McKinsey.
And although 56% of consumers in the U.S. and Canada are familiar with the concept of mobile payments, just 19% actually use them regularly, according to research from the consulting firm Accenture.
That said, here’s what’s coming up in the world of payment technology:
Get ready, because the bots are coming
Numerous executives at Money 20/20 mentioned the potential they see for “chat bots,” or messaging platforms (often using artificial intelligence) to interact with consumers, from answering questions about their bank account balance to helping them make purchases.
The theory behind this feature: Consumers are familiar with messaging.
Facebook announced in September it was in the early stages of allowing businesses to accept payments directly in Facebook Messenger. The company’s chief executive, Mark Zuckerberg, when originally discussing the technology in April, said, “You’ll never have to call 1-800-Flowers again.”
MasterCard announced this week that it is in the testing stage for its own chat bots for banks and merchants within Facebook Messenger. When those bots are available to consumers in early 2017, they will be able to ask questions about their MasterCard transactions, as well as make purchases through Messenger.
Bank of America also announced this week its plans to release its mobile “virtual assistant” named “Erica.” She will be available in late 2017, a company spokeswoman said.
Peer-to-peer money transfer
Transferring money digitally may become even more mainstream.
When consumers today want to send money to one another digitally, they may do it through their bank’s website or mobile app (on services like Chase QuickPay) or through the popular app Venmo, which is owned by PayPal.
(Venmo has grown quickly; it reached a milestone in January 2016, when it processed more than $1 billion in transactions that month alone.)
Now, a new competitor is trying to get in on the peer-to-peer money transfer game.
Several banks, which have been working together as part of an organization called Early Warning, announced at Money 20/20 that they would be debuting “Zelle,” a peer-to-peer money transfer service in 2017. (The Wall Street Journal reported the service’s name in August.
When it launches, dozens of banks will allow consumers to transfer money through Zelle.
Although many banks already had a feature similar to Zelle, the new name is a way of rebranding the product so it’s recognizable, similar to the way Venmo is recognizable by name, as separate from its parent company PayPal, said Robert Flynn, the managing director for Accenture Payment Services in North America.
Companies will better understand the emotions behind financial decisions
Financial services companies need to have more empathy for their consumers, said Josh Reich, the chief executive of the online bank Simple. “For better or worse, there are a lot of emotions tied into people’s finances,” he said at Money 20/20.
The company developed new products, including a combined checking account that allows couples to have more honest conversations about their finances that the company announced in September, he said. (It’s still in its testing stage and not yet available to consumers.)
Simple isn’t the only company using that approach.
PayPal created an installment payment plan called Easy Payments specifically with millennials in mind after data showed that consumers of that generation were reluctant to open credit cards, yet made pricey one-off purchases, including Vitamix blenders worth hundreds of dollars, said the general manager of the company’s credit division, Kathleen Pierce-Gilmore. It became available in 2015.
More companies will likely use similar data to change what products they offer, she said.
Learning from China
The financial technology that has been successful in China today like peer-to-peer online payments may be a good indication of what could be popular in the U.S. tomorrow, said Chris Skinner, a financial technology commentator and the author of the book “Digital Bank,” during a panel on digital banking.
The latest trend to hit the U.S. involves mobile messaging services integrating online payments and peer-to-peer payments. Tencent owns the messaging service WeChat, which allows consumers to pay one another with the service WeChatPay.
Companies in the U.S. that are focused on delivering financial services to underserved customers may follow in their footsteps, in terms of what services they’ll provide, Skinner said.