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Evolution or Revolution? Three Payments Trends to Watch in 2017

There can be little doubt that the Fintech revolution is driving major changes in the ways consumers pay and businesses get paid, but can it be called a revolution if it seems to be moving in slow motion? According to Accenture, Fintech investment grew 44 percent in 2015 to nearly $15 billion, yet that’s cold comfort to consumers or businesses: The payments ecosphere has become so fractured that it’s currently impossible for consumers or businesses to move forward with one, single mobile payments system.

As the field inevitably narrows in the coming years through consolidation and attrition (driven by consumer and business selection), a handful of players will win out. Maybe only then will widespread adoption of new technologies take hold. But what can we expect for 2017? To find out, Sage Payment Solutions surveyed 1,110 U.S. business decision makers and 1,062 U.S. consumers. Following are three key trends we expect to see play out this year. (Download Sage’s exclusive 2017 Payments Landscape Report for the full story.)

Consumer-driven change is coming—but slowly
In 2017, as in 2016 and in previous years, consumers will continue to drive the adoption of new payment technologies. It’s clear we’re on the cusp of change, but old ways persist: We continue to see growth around credit and debit cards; 89 percent of respondents to our survey say they regularly carry cash; and 20 percent carry checks (more than the 15 percent who use Apple Pay).

The transition from cash and cards to smartphone apps and transactions is likely to be slow and gradual. By 2020, Sage research indicates a significant faction of consumers fully expect to be using their smartphones much more when buying goods: 35 percent of consumers expect Apple Pay to be the most popular way to pay three years from now; and 28 percent think Samsung Pay will be the favored way to make purchases. A larger group, however, think plastic cards will continue to be widely held in the future, with nearly half of the people we surveyed saying that credit cards will be most popular in 2020, and 37 percent citing debit cards.

There is, however, a word of caution for merchants: Given the slow rates of adoption outlined above, businesses could easily think there’s no penalty for waiting to offer their customers new ways to pay. However, our research shows that with consumers, perceptions do matter: 87 percent of the consumers we surveyed said having a range of ways to receive money was important in making a business seem up to date.

New ways to pay ramp up security concerns
Americans lost $16.3 billion in fraudulent credit card transactions in 2015, according to payment industry publication the Nilson Report, and this figure is projected to more than double to $35 billion in 2020. According to Sage’s research, 78 percent of consumers have concerns about fraud when paying for goods or services online—topping concerns about cost, convenience and speed.

We’re seeing small and medium businesses increasingly focus on security, with the average amount spent on fraud prevention (almost $20,000 annually) outstripping the average amount lost ($16,557 a year). Nearly two-thirds (65 percent) of businesses are worried about cyber security. Getting the balance right between how much a business spends to protect itself versus the amount invested in growth is an increasingly difficult decision for businesses.

With technology and new ways to pay on the increase, fraud prevention will continue to be paramount. Consumer perceptions of security—whether accurate or inaccurate—also matter in helping businesses choose new payment technologies. According to Sage research, PayPal, pre-paid cards and gift vouchers are seen by consumers as the most secure methods of payment. Peer-to-peer mobile payments are seen as one of the least safe ways to pay: 58 percent of people rate them as somewhat or highly insecure. People also seem to have little trust in making payments within apps, with 41 percent rating them as insecure. Many people are also unsure about Apple Pay and Samsung Pay, with 34 percent saying they are insecure.

Accelerating payments, cash flow, alternative funding grow in importance
Making sure small and medium businesses can get paid, make payments and manage money is crucial to their survival, and to that of the wider U.S. economy. Two-thirds of the business owners we surveyed said that accelerating payments in and out is a priority, with many (29 percent) saying it’s a high priority. In 2017 and beyond, any operating model, technology, or innovation that can help businesses get paid more quickly is absolutely critical.

Closely related is the way a business is financed. Of the businesses we surveyed, 62 percent cited their bank as a source of finance over the last year; however, different types of crowdfunding are also becoming popular, with 53 percent saying that they would consider alternative funding in the future. Indeed, 34 percent say banks aren’t doing enough to make capital available to them and 36 percent want the government to put more pressure on banks to lend. The most popular type of crowdfunding is incentive-based, where those who invest do so for a reward, such as early access to the product or invitations to meet other investors. In fact, 14 percent of businesses we surveyed have used this type of crowdfunding over the past 12 months, with 11 percent using equity crowdfunding.


In sum, the fintech revolution is driving serious change in how consumers expect and prefer to make and receive payments. It’s clear there’s no single payments solution that can support all of these changes. Yet, as we look to the future, consumer-driven changes, security concerns and accelerated cash flow will be top priorities. Watching these trends will be critical for businesses looking to stay ahead of change.

About Paul Bridgewater
Paul Bridgewater serves as chief executive officer for Sage Payment Solutions, the payments division for Sage North America. He has nearly 20 years of experience and achievement in the international payments industry, spanning Europe and the Americas.

Prior to joining Sage in 2015, Paul was the group executive and general manager of global product and innovation for TSYS. He started his career working as an engineer in the United Kingdom, before joining Anker Data, where he held positions in product management and field service engineering. He then worked for the international merchant services business at NatWest Group.
Later, Paul joined Citibank and worked across Europe with roles in business development, product management, sales, and distribution. After five years at Citibank, he moved to the U.S. to serve as the senior vice president of global payment services for Digital River.

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