Mercator Advisory has warned US payments players to make contingency plans for a slowing economy, with a darker economic picture forecast following a strong 2018. In the group's annual outlook for the US payments industry for 2019, it advised that customer engagement would become more important than ever, as payments firms aim to retain as much business as possible over the next 12 months.
Regulation, data protection and privacy will also be key focuses for the US payments industry in 2019, following the example and impact of the EU's General Data Protection Regulation (GDPR) on US firms last year, following GDPR's implementation in May 2018.
"Regulations will continue to impact the payments industry in 2019, with the new US prepaid rule taking effect in April, and the establishment of new security standards through the revised Payment Service Directive (PSD2) in the EU," noted Aaron McPherson, vice-president of research operations at Mercator and primary author of 2019 Outlook: US Payments.
The company said 2019 would see innovations made in 2018 being built on, albeit in a more challenging economic and technological context.
"2019 will build upon and realize the payment trends we identified in 2018: open application programming interfaces (open APIs), mobile devices, faster payments and fraud and risk management," McPherson remarked.
"Faster payments, in particular, attracted the most attention as same day Automated Clearing House (ACH) and Zelle showed strong momentum, with Zelle achieving its goal of displacing Venmo in total payments dollar volume.
"We expect even more disruption in 2019, as The Clearing House's real-time payments (RTP) system emerges out of pilot, new competitors emerge, and the Federal Reserve makes key decisions on how it will participate," he added.
According to the outlook, fraud and risk management advanced considerably in 2018, due primarily to technologies such as AI, biometrics and blockchain powering innovative products and solutions. Mercator also predicted new tokenization services will launch in 2019 which will continue to disrupt the industry.
The outlook builds on Mercator's 2019 Outlooks series, which provides a company-wide view on customer engagement, global payments, faster payments, and risk and fraud management, and featured a number of international players within the payments market including Google, Apple, Samsung, Alipay, Mastercard, Visa and PayPal.