Financial technology (fintech) has emerged as an interesting industry to watch, as more startups aim to become the next unicorn of financial services. And they may be on to something: If there’s one aspect of money that has noticeably changed over the past decades, it’s how we spend and pay for purchases.
Making cash obsolete has been a trend since the introduction of debit and credit cards systems. A TSYS survey in 2014 showed that just 9 percent of Americans surveyed preferred paying in cash. The majority preferred cards. This makes the cashless payments arena an exciting sector to watch in fintech.
So, whether you are planning to launch a startup or invest in an existing one, or simply deploying fintech technology as part of your business or for personal, you’ll find interesting trends you can capitalize on. Here are a few.
1. There is still room for growth in ‘digital wallet’ utilization.
The peer-to-peer (P2P) payments company PayPal pioneered online money transfers between users, which served as alternatives to checks and money orders. In 2015 alone, transactions using the platform totaled $282 billion, though the brand faces challenges today with the rise of alternatives such as Bitcoin-powered payment gateways, now considered cheaper and more scal.
Smartphone apps are also enabling payments, both online and at physical stores, using Bluetooth and near-field communication (NFC) technologies. Bank account or credit card credentials are linked to a digital wallet, and the mobile device is used to complete the transaction at a merchant’s terminal.
Android and Apple, meanwhile, are providing digital wallet technologies through Android Pay and Apple Pay, respectively. Adoption of digital wallets is also rising, but its potential has yet to be realized, as fewer than 10 percent of consumers surveyed by McKinsey have ever made such payments.
2. Cultural nuances matter — with room for other players across international markets.
Local and regional behaviors may also have to be considered in the development of these technologies. Europe’s non-cash payment rate is rising, with credit cards accounting for…