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Five years ago we made 12 payment predictions for 2020. See how we did! January 2020

smart payment crystal ball web


Dear Colleagues,


Since the establishment of the SPA on 01 January 2005, the retail payments market has been in a continual state of evolution. We’ve seen the emergence of digital currencies, digital wallets, the entrance and growing influence of non-bank players across the ecosystem and much more.


As the trade body of the smart payments ecosystem, SPA and its members have played an important role – as technology innovators, regulatory influencers and, of course, as the publishers of the annual analysis of payment card trends.


In our fifteen years, we have also prided ourselves on our ability to identify emerging trends. As we enter this new decade, we thought we’d put that confidence to the test!


Five years ago this month we published a 12-point article predicting how we’ll be paying in 2020. Let’s pick up on some of the points to see how we did.


Prediction 1. Card-based technology will still be the dominant form factor for both fixed and mobile retail payment instruments. Even before 2015, many industry figures were predicting the dramatic decline of the physical payment card. We didn’t agree. While many regions of the world are heading towards a cashless future, this evolution seems to be driven by the card. The latest figures based on actual manufacturer sales data show continued year-on-year growth and record shipment numbers of smart payment cards. While Apple, Google and other device-based payment services are certainly popular, it appears the security, speed and convenience of contactless cards is keeping consumers reaching for their wallets before their phones.


Prediction 4. Non-bank entrants in the retail payments market will stay and consolidate, provided that access to payment infrastructures is enabled. In Europe especially, the evolution of the Payment Services Directive (PSD2) has done much to open the market to non-bank payment service providers since 2015, and indeed has enabled the expansion of payment instruments to include loyalty cards, mobile phone numbers and more. This is all about striking the right balance to deliver a secure, interoperable and convenient payment experience for consumers. While this may be the ultimate goal of PSD2 over RTS initiative, this experience already exists in the shape of the smart payment card. Read our latest article exploring open banking and the evolution of PSD2 – Do TPP Services Represent a Worrying Factor for The Retail Payments Market?


Prediction 10. Interoperable real-time payment infrastructures will be the rule, not the exception. While we recognized the appetite for instant payment, we also highlighted the considerable technical, financial and adoption barriers. In Europe at least, the market has certainly moved forward in the intervening years. We’ve seen the launch of the Euro Banking Association’s (EBA) real-time payment processing facility RT1, and more recently the TARGET Instant Payment Settlement (TIPS) from the European Central Bank. In the United States, instant payment-based apps such as Pay by Bank and Vipps are available, and instant payment services are a key part of the Federal Reserve’s strategy.


Back in 2015, we also touched on developing form factors and the potential of contactless payment in the wearable world. Certainly, NFC payment-enabled smart watches have been with us for some time. If the latest news coming out of CES 2020 is anything to go by, payment-ready wearables will be a major and growing strategic focus for customer and technology brands as we move forward.


Just as on the smart card, biometrics continues to play a powerful enabling role in the future of contactless payment security. This has always been a key area of study for SPA, having
pioneered biometrics with EMVCo since the mid-2010s. We’re pleased that EMVCo is now actively promoting the use of on-card biometrics to authenticate payment, while the EBA is recommending its inclusion into PSD2.


So, looking back, how did we do? We think…ok! Most of our predictions have come (or are coming) to fruition. There’s still work to do, of course. SPA will continue to collaborate with partners across the ecosystem to help it transform to address the needs of today’s stakeholders, regulators and consumers.


And what are our predications for next five years? You’ll have to wait a little while we consult our crystal ball!


As ever, you can discover our latest news and details of upcoming events by visiting the SPA website.


We’d like to wish you all a happy and prosperous New Year.


Yours sincerely

Andreas Strobel, President, Smart Payment Association