COVID-19 to accelerate use of digital payment technology
The global shift towards digital and cashless payments has increased over recent years.
For example, investments in payments related fintechs has been double that of other technology investments across the financial services space.
However, according to a new report by the Emerging Payments Association (EPA EU), The European Payments Landscape in Perspective: 2020 Report , this trend will be accelerated as a result of the COVID-19 pandemic.
The report, which was commissioned by Luxembourg for Finance, finds that the pandemic will accelerate the pace of change in the structure of the industry.
For example, it suggests that the changes that have resulted from the spread of coronavirus are pushing what were once powerful disruptors, such as credit or debit cards, to become disrupted.
This is amplified by new solutions, such as digital wallets, gaining traction worldwide, particularly with a younger demographic.
However, says the EPA, while this will bring undoubted change, it will also present challenges for financial services providers.
For example, it argues that global providers must place greater emphasis on the use, and protection of personal data.
So too must they ensure an effective and robust cross-border interoperability is in place.
In the report, the EPA claims that “change - in financial services generally, and payments in particular - is happening so fast, there are no guarantees as to what the future will look like.”
It explains that COVID-19 will hasten the shift from card payments at POS to contactless digital wallets, both in-store and online.
It also points to the broader disruption faced by incumbents and other institutions.
This includes, for example, being under threat from digital only or neobanks such as Monzo, Revolut and N26, and the changing, customer-centric approach that is bringing success to such businesses.
Some of the report’s key findings include that the European picture is fragmented. Debit cards are still the preferred method of payment in Europe for all age groups, says the EPA.
If this is to change, local networks and solutions need to be interoperable and frictionless across the EU.
In the US, the report points to the rise of services such as Apple Pay, suggesting that more traditional credit and debit providers are under attack from big tech and nimble digital players.
It claims that Apple Pay, for example, is now accepted by 60% of US retail locations and the digital account-to-account payment scheme, Trustly, saw a US growth of approximately 600% last year.
CEO of Luxembourg for Finance, Nicolas Mackel said: “The switch to digital payments looks set to happen much quicker than the shift to cards did in the past.
“The method of payment is becoming less important than the platform used, to the extent of becoming invisible. This report highlights the countries that have been early movers and are demonstrating best practice in the payments space.”
Tink partners with Novalnet AG for open banking payments
The Munich-based fintech Novalnet AG, which was founded in 2007 and is one of Europe’s leadingfintech companies, has announced a new partnership with Tink, the Swedish open banking platform currently connected to more than 3,400 European banks.
Novalnet AG delivers payment solutions and fully automated services, from checkout to debt collection. Its solutions are also available worldwide.
According to reports, the fintech company plans to launch a real-time payments feature for merchants across Europe, to expand its current services and enhance the transaction experience it operates through its platform.
The new feature, says Novalnet, will revolutionise payments for ecommerce with transactions being credited to merchant’s accounts almost instantly.
Novalnet partnership with Tink
By partnering with Tink for payment initiation services (PIS) technology, Novalnet will take previous region-specific payment methods and offer a new unified digital payments service to its merchants across Europe.
The fintech’s real-time merchant payments feature, which will be launched initially in Germany and the United Kingdom, will then be integrated across other European markets during 2021.
Speaking about the new collaboration, Emmanuel Kirse, COO of Novalnet, explained, "We expect great things from our strategic partnership with Tink, which is a significant development for both parties.
“With Tink, Novalnet can offer a new set of open banking-related solutions in Europe. The new opportunities offered by this partnership will help both Tink and Novalnet grow together, along with our merchants."
Cyrosch Kalateh, Regional Director for the DACH region at Tink said, “Our partnership with Novalnet is a big step for Tink in the German market, and we are excited to work together to bring new, innovative payments services to merchants across Europe.”
He added, “At the end of 2020 Tink committed to expanding its payment initiation services from five to 10 markets, fuelled by an €85mn investment round. We are proud to add Germany to this list by announcing we have now fully launched Tink’s PIS services in this market.”
Image credit: Novalnet AG