The Ultimate Guide to Credit Cards
Thursday, June 20, 2024

New Trends Advance Modern Payment Systems and Cryptocurrencies in the Digital World

New Payment Trends Lead Consumers Into A Digital World
Brandon Rossman

Written by: Brandon Rossman

Brandon Rossman
Brandon Rossman

Brandon has covered all corners of the finance industry as a multimedia reporter for news outlets such as WUFT and WINK News. Early in his television news career, Brandon developed a reputation for leading interviews with financial portfolio managers, investment bankers, and venture capitalists, among other industry leaders. He writes with a journalistic hunger for the truth.

See full bio »

Edited by: Lillian Guevara-Castro

Lillian Guevara-Castro
Lillian Guevara-Castro

Lillian Guevara-Castro brings more than 30 years of editing and journalism experience to the CardRates team. She has written and edited for major news organizations, including The Atlanta Journal-Constitution and the New York Times, and she previously served as an adjunct journalism instructor at the University of Florida. Today, Lillian edits all CardRates content for clarity, accuracy, and reader engagement.

See full bio »

Our experts and industry insiders blog the latest news, studies and current events from inside the credit card industry. Our articles follow strict editorial guidelines.

In a Nutshell: Payment processing continues to grow in the post-Covid pandemic world. Instead of relying on card-present transactions, merchants must now accept new methods of payment for their goods and services. Payment processing companies were prepared for the influx of digital payments when the pandemic struck, and now they are preparing for what’s next. The Electronic Transactions Association is pioneering the next generation of payment systems and cryptocurrencies to provide merchants with the most options when selling their product. The association researches new trends, continuously increases security across the industry, and educates its members and lawmakers on the latest technological advancements.

With every day that passes, our smartphones become a more integral part of our daily lives. Not only do we use them to talk to the people we know and love, we also use them to work, play, and as a wallet substitute in many use cases.

Many companies have taken advantage of the advances in technology available at our fingertips. While they are serving us a product, they are also making different aspects of our lives easier.

For merchants, phones opened a whole new set of opportunities. Merchants can now accept credit cards without bulky and expensive point-of-sale systems. All they need is a little device that plugs right into their smartphone.

Customers never have to worry about the nightmare of forgetting their wallets at home. They can pay for anything they buy through their smart wallet, and utilize tap-to-pay for a card-like experience.

Payment processing companies have been preparing for the digital world we find ourselves in. And when the pandemic struck, they not only rose to the occasion, but also provided better and more reliable services as a result.

Image of person entering credit card information into smartphone
Online payment systems had to account for large spikes in use during stay-at-home orders throughout the Covid pandemic.

The Electronic Transactions Association represents a majority of the payments industry actors today. The association is based in Washington, D.C., and focuses on credit cards, debit cards, prepaid cards, peer-to-peer payment services, and other business-related payments.

Its members account for $44 trillion in card and P2P payments worldwide. When stay-at-home orders came down, the ETA helped its members utilize the latest advancements in payment technology to stay afloat.

The association then used the massive amounts of new information it was receiving to update security measures to protect customers and merchants from fraud. The ETA helps educate its rich member base of merchants and policymakers to ensure the industry is always moving forward.

“Anticipating the needs of consumers and merchants is what we are trained to do,” said Scott Talbott, the ETA’s Senior Vice President of Government Relations. “We stay ahead of the curve to deploy new technologies that consumers and merchants need.”

Improvements in Finance Help the Underbanked

The payments industry did not have to create new technology in response to the massive influx of card-not-present transactions when the Covid pandemic kept us at home to protect ourselves and others.

The technology was already available, but the pandemic pushed the newest advancements to the spotlight. The ETA said credit, debit, and online purchases saw dramatic increases as expected, but contactless and tap-to-pay services were seeing their highest usage ever.

Scott Talbott, the ETA’s Senior Vice President of Government Relations
Scott Talbott, the ETA’s Senior Vice President of Government Relations

The massive adoption of the new technologies led to increases in financial inclusion. Middle-to-low-income families who did not have a bank account and were oblivious to modern payments were introduced to a new world.

More people opened bank accounts to receive their stimulus payments, and many who received payments on a prepaid debit card got their first exposure to a card product. Families now have the opportunity to explore banks and discover new and helpful products that can help them make ends meet.

The payments industry bolstered its services by building up its systems to support these new users. The Electronic Transactions Association’s main concern was continuing to provide fast and secure payments with increased volume.

“We had to increase our use of cloud computing and use of other measures to increase our resiliency,” Talbott said. “We wanted to make sure that we could handle the volume so that every payment, no matter what time of day or where you are in the world, goes through quickly, securely and safely.”

Leveraging Technology Updates to Fight Fraud

The ETA puts the same amount of effort into developing products and services as it does into defending against fraud. Fraud ran rampant during the pandemic, leading to losses of nearly $6 billion for consumers in 2021.

The Electronic Transactions Association scales the systems its members use with the economy and the volume they receive so systems are ready for changes and security updates. The association said it takes action to support new technologies while thoroughly checking them to strengthen security.

“When we build a 10-foot wall, thieves build an 11-foot ladder,” Talbott said. “So we always build a 12-foot wall and protect members and consumers with a variety of different metrics. We use machine learning to look at all of the data globally, and commit additional resources where they need to go.”

The payments industry is about meeting consumers where they will be instead of where they are now. The association fully believes that smartphones will surpass the need for carrying a wallet everywhere in the near future.

States are already allowing for digital IDs on phones, and people can upload their credit cards, gift cards, and membership cards in apps and smart wallets. These devices provide an additional layer of security through biometrics, including fingerprint and face recognition.

It’s easier to replace phone data and smartphone wallets than to replace a physical wallet with cards and identification. The ETA believes it’s only a matter of time before these trends become muscle memory to consumers.

The ETA is continuing to develop and deploy new products and services. Part of that involves strengthening the industry’s operational resiliency to benefit merchants and consumers.

“If people can’t come into your store, they can order online,” Talbott said. “You can keep your business rolling and it gives another opportunity for consumers to interact with the merchant.”

Educating Merchants & Policymakers on Payment Trends

A major focus for the Electronic Transactions Association in ensuring adoption of new and safe technologies comes in its robust education platform. The association works in government relations, industry affairs, and member education efforts to help these groups understand complex modern payments.

Merchants need to be aware of rules and regulations to be successful in accepting payments. The ETA said policy makers usually need to play catch-up with the industry to further protect merchants and consumers.

The association meets with policy makers on behalf of the payments industry to help create better policies that lead to better products and services. An example of where the ETA is helping clear up confusion is with cryptocurrencies.

Many consumers only see cryptocurrencies as an investment, but they have far more potential because of blockchain technology. The government is working through how to regulate those payments to protect people who use cryptocurrencies from scam.

Laws and regulations apply to payments, but these laws do not include cryptocurrencies yet. The ETA is making progress and said it expects to process purchase with cryptocurrencies soon. The association plans to use its expertise in the payment space to incorporate cryptocurrencies into modern payment systems.

The ETA not only follows regulations that protect consumers and members, but it goes above them. The association polices itself and ensures its members have zero liability in fraud cases, which is more than what the law requires.

“There is a shared responsibility between the industry and consumers to understand the product or service. For our end, we make sure that we provide information about the products and service,” Talbott said. “Merchants can also share the info and the consumers can take it and to understand the product or service they are using.”

Members within the ETA share their successes with others to show what works, the challenges they experienced, and how they incorporated new technology. This information is also vital for consumers to see and understand what products and services they are using.

Learning new technology is complicated, but learning how to use it can pay off. Consumers learned that peer-to-peer systems are a fantastic way to send money to someone you know or trust, while a credit card is good for making purchases from merchants.

The ETA said it’s important to understand those differences to create useful innovations in the payments world.

“The more consumers know, the better,” Talbott said.