Payments Speed and Security Acceleration Driven by Behavioral Expectations

The future of payments won’t be built overnight. But progress is being made almost every single day.

Technology is reshaping every facet of business. The pursuit of efficiency, security and seamless customer experiences is driving change in how transactions are conducted and transforming the ways businesses can operate.

Aaron Le Hew, director of invoice-to-cash at Esker, shared his thoughts on the key drivers, technological advancements and challenges shaping the landscape of payments modernization for the PYMNTS series “What’s Next in Payments: Payments Modernization.”

Le Hew explained that there are three primary factors influencing the payments modernization landscape: the demand for speed and convenience; the necessity of cybersecurity and payments security; and the growing popularity of advanced payment modalities like real-time payments.

“Customers are looking for more seamless, fast and secure payment options and a better experience,” he said. “That is going to help push institutions to adopt new technologies that can help meet these expectations, such as mobile payments or even digital wallets.”

With cyber threats becoming more sophisticated, institutions must invest in advanced security measures. This includes technologies like strong card authentication, encryption and fraud detection systems to protect payment processes.

The growing popularity of real-time payments abroad is also expected to gain traction in the United States, as organizations embrace the ability to receive working capital instantaneously, enhancing financial agility, Le Hew added.

Modernization Trends and Challenges

All the payment advances in the world mean nothing if they aren’t supported and integrated across existing infrastructures and payment network modalities.

“One of the biggest things that organizations are looking for is, ‘How can I use my current infrastructure and the partnerships that I have?’” said Le Hew, noting the importance of remaining agnostic to accommodate various payment options.

Despite posing challenges for vendors, the surging adoption of virtual cards is another trend gaining momentum in the U.S., Le Hew added, explaining that Esker is focused on automating these processes to reduce labor intensity and expenses associated with card transactions.

We are focused on “helping our clients reduce the expenses of these cards,” he said, highlighting that often businesses are not taking the lowest assessment fees and that by using technology, firms can “achieve the lowest fees so that if buyers are asking them or requiring them to accept these payment options, they can go ahead and do so.”

At a fundamental level, the integration of emerging payment modalities, such as digital wallets and virtual cards, necessitates seamless integration with core banking systems.

Le Hew highlighted the importance of API-driven applications to support these integrations securely. Separately, ongoing marketplace standardization efforts, such as ISO 20022, are crucial in harmonizing payment processing across platforms.

“Digital payments, such as Apple Pay and Google Wallet, are widely accepted in the consumer world and are starting to be introduced into the B2B space,” he said. “There’s certainly an appetite and interest in allowing these payment options to come through. And API-driven applications are going to be key to the process of evolving and supporting these integrations into banking platforms and also allowing it to be secure.”

Role of Emerging Technologies

Emerging technologies like blockchain and artificial intelligence are also poised to revolutionize payments, along with the broader business landscape.

Blockchain holds potential for cross-border payments by speeding up settlements and reducing costs, Le Hew explained, noting that in the long term, centralized digital currencies could further streamline international transactions.

AI is already making strides in fraud detection by analyzing transactions in real time to prevent fraudulent activities. Additionally, Le Hew highlighted how AI and machine learning can be used for predictive analysis, enabling vendors to proactively offer different payment options based on customer behavior trends.

Still, despite the options out there, in a high-interest-rate environment like today’s, companies must prioritize investments that create value for customers. Le Hew advised focusing on solutions that offer a strong return on investment and meet real-world business needs.

Partnerships with FinTech companies are also essential for driving payments modernization. By using technology and ensuring integration with existing systems, these collaborations enable companies to remain agile and innovative, Le Hew said.

Looking ahead, he explained that by focusing on speed, security and integration, companies can navigate the challenges and capitalize on the opportunities. As Esker’s own efforts demonstrate, strategic partnerships and investment in emerging technologies will be key to staying ahead in the future of payments.