Looking Back to Move Forward: Key Takeaways from Money20/20 Vegas
As the industry comes back together after the pandemic and prepares for the start of 2022, we look back on key drivers of the continuously evolving fintech industry. In this article, we reflect on key learnings from Money 2020 Vegas, the industry’s most influential fintech event:
Changing Consumer Demands are Fueling Adoption of Alternative Payment Methods
According to the WorldPay Global Payments report, consumer payment trends will shift—more consumers will turn to digital/mobile wallets and less will turn to credit cards. Online Banking Payments or Bank Transfers will also continue to grow and are projected to become more popular than debit cards by 2023. This rise in Alternative Payment Methods (APMs), or any form of payment which isn’t cash, or a credit/debit card issued by a major bank, was a huge theme of Money 20/20 this year.
The rise in popularity of APMs can be attributed to higher conversion rates during checkout in comparison to cards. Research by Baynard suggests that APMs are preferable because many consumers abandon their cart due to frustrations with the checkout process including a process that is too long/complicated, the necessity of account creation, a lack of trust, and more.
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Open Banking Meets the Needs of Merchants and Consumers
One thing is certain: consumers are the main character. Consumers are becoming more and more debt-averse and demanding access to better financial products and services. Open Banking is a banking practice that provides third-party financial service providers open access to consumer banking, transaction, and other financial data from banks and non-bank financial institutions through the use of application programming interfaces (APIs). In doing so, consumers are more in control of their financial data. What’s more, the checkout process is smoother, requires no signup, no card or account numbers, and no billing/shipping forms.
For merchants, Open Banking Payments and Data help improve checkout economics by guaranteeing ACH payments at a cost well-below credit cards. At Money20/20 Open Banking was a continuously reiterated topic, both because of its appeal to merchants and for its unprecedented growth globally. Even more, Open Banking Data opens the door to innovation in the financial landscape, including Pay Later options and underwriting technologies.
New Industries and Revenue Models Require New Payment Strategies
The creator’s economy, or the economy built by content creators including social media influencers, bloggers and videographers has exploded in recent years. The Influencer Marketing Factory estimates that the market size is valued at $104.2 billion and increasing daily. These creators are looking for software and solutions that meet their needs. Financially, they want payment options that aren’t going to break the bank and they desire flexibility and configurability when adopting new technologies.
Similarly, the increasingly popular subscription-based revenue model requires payment options that are affordable, sustainable, and risk-mitigating. However, traditional subscription-based payment models are at high risk due to negative option billing, higher chargeback ratios, and higher rates of decline. Additionally, higher risks increase the possibility of the consumer having a negative experience with the merchant. By investing in payment infrastructure, merchants reduce chargebacks and lessen risk. Open Banking Payments, therefore, are a great alternative for merchants looking to grow or sustain their subscription-based revenue models.
If you are convinced and agree with our perspective or simply want to learn more about what Open Banking and Trustly can do for your business, don’t hesitate to continue the conversation and chat with our team.
