As embedded payments become increasingly common worldwide, there’s an increasing expectation that smooth, immediate capital transfers are the new normal.
Just press a button on your phone, and you’ve paid your team on the other side of the world with full compliance in their host country.
Such transactions are becoming normalized, including tokenized real-world assets and smart contracts within the blockchain.
It took a lot of innovation and risk-taking to get to this point, but now that the world’s financial institutions and fintech vendors everywhere are adopting digital payment technology, many think we are past that proverbial point of no return. Tokenization simplifies data management and reduces the complexity of handling payment information, lowering these associated costs for businesses that process card payments.
Paymentology makes its mark in fintech and digital payments
Joining us on the Converge podcast is special guest and Paymentology CEO Jeff Parker. He talks about everything from changing customer loyalties to the future of payment cards.
“I think the more that we can embed these experiences, customers will actually become agnostic to who their financial service provider is,” Parker says. “I think the reality is that, increasingly, customers have an affinity and engagement with a brand, with an experience, with a service, and actually they don’t really care who’s providing that financial service.” Parker explores key innovations like digitalization, mobile wallets, and contactless payments, and explains how payment cards are central to enhancing customer experiences, loyalty, and engagement. He also addresses recent changes in fintech valuations and Paymentology’s commitment to expanding financial access and community support.
The power of payment cards and contactless payments
Regarding seamless customer experiences, Parker believes that digital payment cards are behind much of the technology consumers have grown to know and love over the past decade.
“I’ve been amazed at the level of innovation that exists. I think if you look at some of the key trends in the industry — the move to digitalization, mobile wallets, contactless payments — actually, if you unpeel or get underneath the surface, most of those are powered by cards,” Parker says. “And so I think it’s really cards that are allowing the significantly increased seamlessness and frictionless experiences and it’s really one of the key drivers behind embedded finance. [They’re] really powering a whole wave of both enhanced customer experiences, but also loyalty and rewards and engagement opportunity for brands and businesses out there.”
The rewards and resilience of modern fintech
For many of today’s premiere fintechs, the road to the top has not been a straight line. Obstacles during the pandemic were difficult to conquer, and many enterprises did not make it. The past couple of years have been rife with funding obstacles as well.
But for those that have broken out from the pack, Parker says they are starting to reap the rewards with massive profits and impressive valuations. Having deep local market knowledge allows fintechs to provide expert support and efficient processing tailored to specific markets.
“I think there’s been a flight to quality, and I think because there’s been more of a focus on businesses reaching profitability. There’s more focus for investors on how capital is being allocated and deployed,” Parker says. “I think it’s making sure that businesses are proven, that they have sustainable business models, and that they can succeed in this environment.”
He recommends that entrepreneurs take a “fail fast” mentality and utilize as much customer feedback as possible to position themselves for success.
Tokenization payments are critical
Tokenization has been one of the hottest topics in the fintech world for many years now, and with so many practical — and valuable — use cases developing, Parker says he’s been very encouraged by how it’s powered embedded payments.
At Paymentology, which has clients in 60 countries, he’s acquired a token company and developed the technology to merge it with payment cards. This technology helps streamline the management of customer payment information and enhances security. By replacing sensitive payment information with unique tokens, tokenization mitigates the risk of data breaches. Additionally, tokenization prevents fraudulent transactions and safeguards both customer information and business integrity.
“We can take a virtual card, and we can tokenize that and put it into Apple Pay, Google Pay, Samsung Pay, which … facilitates contactless payments, NFT payments, etc.” Parker says. “We also tokenize a number of the confidential, secure components of card numbers … which I think it is critical.” Businesses may rely on a payment processor for generating and securely storing tokens that represent original payment information.
Digital payment cards and mobile wallets are here to stay
As advanced as cross-border digital payments get, Parker says that use cases for digital payment cards will not fade away soon. Tokenization enhances the management of recurring payments and streamlines payment operations. Their integration of tokenization techniques for secure transactions reduces the risk of fraudulent activities and ensures security and dependability, producing positive customer experiences worldwide. Once those payment cards are trusted, their success will only grow.
“Ultimately, as a financial product, the No. 1 thing you need to gain from your customer is that they can trust (you), and the greater trust you have, the more experimental you can get with the use cases that you can support,” Parker says. “I think cards are here to stay, and actually the more we embed them into customer experiences, the harder they are to display.”
He added that established and emerging markets both need digital payment cards, but the degree to which the tech is embedded will depend on how advanced the regional infrastructure is and, ultimately, will determine how noticeable the technology is.
“I think maybe the physical card as we know it may, in developed markets like the UK and Europe, become less visible because it’s going to be embedded into these experiences,” Parker says. “But if you take the global view and you look at some of the emerging markets that still have the vast majority of their economies in cash … physical cards (are) still the natural entry point. So I think it depends on which market you are, which level of maturity cards. My overall view is cards are 100 percent here to stay, and actually I think are going to increase the pace of innovation.”
Want more insights on the topics shaping the future of cross-border payments? Tune in to Converge, with new episodes every Wednesday.
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