FinTech Trends Beyond Digital Payments

Central Bank of Ireland

The ability to pay for goods and services by tapping a smartphone on a point-of-sale receiver or tapping a ‘buy now’ button on an e-commerce app makes digital payments FinTech’s most recognizable segment. But digital payments alone don’t capture the full disruption happening at the intersection of technology and financial services. In this piece, we will discuss a few of the trends beyond digital payments that are powering Fintech’s long-term growth trajectory, including:

  • Buy Now Pay Later (BNPL) services putting a new spin on the old concept of paying in installments with enhanced benefits for merchants and consumers
  • Digital wallets providing access to cryptocurrencies.
  • Cloud enterprise solutions for financial firms provide reducing costs through automation, while allowing for effective and convenient client onboarding, and risk mitigation.

Early adoption of new trends like these may create opportunities for higher growth rates than some of the more known verticals in the FinTech ecosystem, like mobile payments.

The FinTech ecosystem is much broader and larger than just mobile payments

Buy Now Pay Later: Disrupting Credit Card Debt

Credit cards date back more than 100 years, but it wasn’t until the 1950s when credit card adoption began to rise. Since then, credit card networks have mastered facilitating payments in exchange for transaction fees and interest on credit balances. They give customers a loan to buy something on the promise that the customer pays back the debt over a period of time. The longer it takes the customer to pay, the more fees or interest that accrue.

BNPL services change the consumer credit paradigm by allowing consumers to purchase goods and services in pre-defined installments. For example, instead of paying upfront for a $100 product, consumers can acquire the item for an upfront payment of $25 and pay the remaining balance in installments over several weeks or months. Australian firm Afterpay, for example, let’s online shoppers break down payments in four installments due every two weeks.

In a dramatic contrast to credit card lending rates, BNPL often features 0% APR for consumers, which can make BNPL a good option for consumers with low or nonexistent credit. Consumers only incur fees if they’re late on their payment schedule. Late payments can hurt a consumer’s credit score or their chances of qualifying for another BNPL loan. For merchants, BNPL may lead to higher sales. Some studies show that half of consumers spend 10–40% more when they use a BNPL service instead of a credit card.1 American BNPL firm, Affirm, estimates that BNPL solutions increase by 20% conversion rates and 87% in average order value for retailers.2

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