Fintech and payments, what should we expect in 2019?
SumUp experts share their predictions for what 2019 will bring to the financial industry. From new players to M&As, move to cashless, expansion of product suites and emergence of new opportunities, you heard it here first.
Card is the new king
“2019 will be the year where the myth that ‘cash is king’ will finally be toppled. The swift movement of technology means that consumer habits are changing faster than ever before - where once accepting card was a convenience, it’s now developed into an expectation.” (SumUp Founder Marc-Alexander Christ)
What was once a new technology is quickly becoming commonplace. Some countries are moving quicker than others, like Sweden where only 15% of all payments involve cash. In the UK debit card payments have taken over cash, seeing a 14% rise in card use from the previous year, whilst cash fell 15%.
This was expected, but it came a little sooner as people really embraced contactless payments, and businesses small and large had more opportunities to cater for contactless payment. This isn't a common theme just in the west or in developed societies either, we are also seeing a rise in card payments in rural areas, from Brazil to Bulgaria.
Some places are even prioritising card over cash now, like in the Netherlands where in some towns if you want to use cash to buy your groceries you have to wait in long cash-only lines, while you watch those with a debit card or an NFC device pay quickly and move on.
Convenience is driving evolution
We have already seen that speed and ease of use are driving technological advancements across many industries, and the payment industry is no different.
Contactless payments in the UK have been the main reason that cards have overtaken cash for the first time. Challenger banks continue to grow and emerge, N26 now has over 2 million customers, and new players are always joining the market, like Revolut who just got their European banking license.
In China, convenience is going even further with payments becoming invisible–the first ‘autopay’ gas station by WeChat means that drivers don’t even need to get out of their car when filling up. The station recognises their license plate, an assistant fills up the car, then they drive away, and their card is charged without them having to do a thing. They are also leading the way when it comes to mobile payments with 68% of internet users opting for a mobile payment method, compared to just 15% in the US.
People are busy, and paying is just something that should be done, it certainly shouldn't inconvenience them.
And of course, Amazon is continuing to work on the ‘Go’ supermarket, Disney Smart Bands allow customers to simply tap their band all over the resort--never having to worry about cash or card.
The introduction and increased adoption of voice assistants is another example of convenience driving technology forward; now shoppers can make purchases using just their voice.
Somaliland (a self-declared republic in East Africa) is quickly becoming a cashless society because high inflation means that people would have to carry around huge amounts of cash in bags just to do the groceries. Instead, they opt for the more convenient method of mobile payments–with many vendors no longer accepting the local currency at all.
One-stop shops and full-service
As convenience continues to drive companies and industries, we believe that 2019 will see more and more fintech companies trying to become a one-stop shop for all things payment.
Customers don't have to go to different competitors for each of their needs
This is why Facebook integrated payments into Messenger; to keep people on their platform they need to increase its usefulness, reducing the likelihood that people will go somewhere else to do what they need to do.
TransferWise started as a way to send money abroad and to different accounts, but is growing its services for the benefit of the users. The introduction of their debit card creates a borderless bank, meaning that people who travel a lot or need money in more than one country, no longer need to deal with multiple accounts anymore.
Some of the larger and older players are looking to stay modern and add more services through acquisitions.
Mergers, acquisitions, IPOs.
Fintech as a whole industry is already a one-stop shop for all your payment needs, so mergers and acquisitions in the future will see a few big players becoming full service, and providing customers with everything they need in one place.
There are a lot of new players who have seen a rapid success, and with a great, popular product these companies are likely to be approached by the larger, more established ones, including classic financial institutions who are looking to improve on the technology front.
There is mixed opinion in terms of IPO for fintech companies. Many that already went public saw their share prices fall; Funding Circle, the peer-to-peer lending marketplace saw their trading price fall by as much as 24% below their initial public offering price. But there are others who could be ready in 2019, or at least begin the planning.
There will be a continued growth on the private market in general, with one or two companies potentially going public, and no doubt 2019 will continue to see new players and new technology joining the market.
So that’s a few thoughts on the fintech and payment landscape of 2019. We will continue to grow and provide more services for our small merchants, and our larger partners, whilst keeping an eye out for new and exciting opportunities.