The Future of Credit Card Processing: What Businesses Can Expect

It’s time to look into the future of credit card processing. As the world becomes more cashless, card payments become the preferred option. According to the Federal Reserve Bank Diary of Consumer Payment Choice, consumers increased credit card usage in 2022. In fact, credit cards were the number one payment type, followed by debit cards and cash. 

In a credit card world, what can businesses expect in the year ahead for credit card processing? Let’s review five trends.

Mobile-Based Payments Increase

Mobile shopping is now the norm for many. Mobile commerce sales reached $415.93 billion in 2022 and will continue to rise. As a result, mobile-based payments are increasing, too. Many consumers are using digital wallets to make this easy, and mobile technology is a priority for payment technology providers.

This shift can be more challenging for small businesses. It's important to adopt the right technology that makes this seamless and offers convenience to customers.

Buy Now Pay Later Is Growing with Pros and Cons for Merchants

Buy now pay later (BNPL) is the modern approach to layaway. It splits purchases into interest-free, incremental payments. A recent consumer survey found that 10% of holiday shoppers plan to use it in 2023.

BNPL has pros and cons for businesses. You want to offer it since it’s growing in popularity and may be a deciding factor for where consumers spend their money. Its benefits include:

• Increased cash flow and sales by offering this payment option
• Larger order values since consumers can afford more with the payment plan
• Reduction of fraud risk and chargebacks, as BPNL providers are responsible for this 

Integrated Payments Improve Operational Efficiency and Insights

The next topic on the future of credit card processing is integrated payments, which connect payment and POS (point of sale) solutions. You should be able to reconcile payment data with ease and have the ability to automate transactions. An integrated solution also offers visibility into customer payments and operations so you can identify actionable insights.

A payment processor and POS platform is also critical for online payments.

More Robust Security and Fraud Prevention Are In Motion

Security and fraud concerns will always be a trend in credit card processing. Some new measures are improving the landscape, including:

• Tokenization: It’s a form of security that encrypts credit card information, so terminals receive a random set of numbers, which is the “token” rather than the card numbers.
• Biometric authentication: Card networks and financial institutions want to establish new authentication options to mitigate fraud risk. Biometric methods use fingerprints or facial recognition for authentication.
• Artificial intelligence: The financial industry is making good use of AI to identify and regulate fraud. These systems need less human monitoring and can detect fraud early.

Open Banking Enables New Payment Methods

Open Banking describes a process where consumers consent to share their banking data and transactions with third parties. Its advantages include faster, more secure transactions through APIs (application programming interfaces). In October, the Consumer Financial Protection Bureau (CFPB) proposed a rule to accelerate open banking in the U.S. It puts consumers in control over their financial data and how it’s shared.

With this ability comes new ways to pay and more personalized banking and fintech products.

The Future of Credit Card Processing Is Technology-Driven

All the big trends around credit cards focus on innovative ways to use technology. As you prepare for what’s next, you’ll need a forward-thinking partner to meet your needs for today and tomorrow.

Learn more about how Pinpoint Payments can deliver the technology you need.