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What Comes Next for the New Digital Economy?

By Irina Valassi - Mastercard
VP Customer Solutions Center


Irina Valassi By Irina Valassi | VP Customer Solutions Center - Wed, 09/27/2023 - 12:00

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Through the ongoing process of digital acceleration, we are constantly witnessing significant technological innovations that reshape and enhance industries, businesses, and consumers’ lives. What lies ahead embraces reimagining money and new ways to exchange value, including nontraditional assets, such as data, cryptocurrencies, and digital goods. During this journey, the guiding principles of inclusivity and sustainability will define how we design, build, and deliver products. 

To contribute to the future of the digital economy, Mastercard holds the Digital Payments Summit in Mexico City every year, an exclusive event where field experts converge to discuss the challenges and trends to come in this digital era. These are some of the key takeaways we examined during the latest edition:

Ubiquitous wallets will be crucial to manage our digital assets and identities from a single point of control. 

These solutions must provide complete, simple, secure, and seamless experiences. Beyond their application in payments, where consumers have the possibility to request and save their cards on their devices — smartphones, wearables, or tablets — this technology can integrate a multitude of accounts into a singular, safe, convenient, and wearable pass that can hold digital identities and access keys for homes, offices and other domains. 

A tokenized world translates into more secure, immediate, efficient, and connected transactions that represent the gateway for true digitization. 

Tokenization is the process of converting an asset into a token, retaining all the essential information about the data without compromising its security. It promotes trust while favoring, for example, the exchange of goods, money, loyalty points and crypto assets, allowing consumers and companies to use, combine and exchange new types of value,  unleashing new sources of wealth.

APIs (Application Programming Interface), smart contracts and artificial intelligence are all coming together to develop more complex programmable payments. 

New ways to program large enterprise payment flows using logic and automation will increase efficiencies into our economy and enrich customer experiences.  

At a basic level, current application cases for programmable payments would be when a bank’s mobile application is automatized to pay for a service, such as streaming platforms, during the first five days of the month. Conversely, commercial use cases include supply chain transactions and royalty payments. In logistics, automated payments could be triggered upon the verification of deliveries by on-site sensors. Such capabilities empower financial organizations to manage liquidity and risks more efficiently, while reducing processing times and costs. 

Payments will extend to different places and methods.

Open banking allows customers to share data with other financial service providers for their own benefit. Third-party providers include a wide range of fintechs, currency exchanges, merchants, and other digital platforms. The benefits of open banking will allow consumers to access tailored and more relevant financial services that improve their lives. According to Belvo, financial service companies could increase their approvals up to 15% after analyzing shared data.

Multirail solutions offer different payment flows to meet companies, governments, and consumers’ needs. 

This will promote a transparent and inclusive ecosystem that enables seamless transactions anytime and anywhere. For example, remittance payment flows can be made between cards and physical correspondent points or cards and SPEI, the infrastructure of the Bank of Mexico that allows its participants to send and receive real-time payments.

According to Mastercard, cross-border payments between consumers are projected to grow 225% from 2020, reaching US$2.9 trillion by 2027. 

Today, more than ever, the strategies of the ecosystem players must focus on the unbanked population. 

The whole industry must work together to develop new solutions and partnerships that make possible user-centered payment experiences, while promoting financial inclusion in the country and propelling the transition toward a fully digitized economy.

As fraud and identity thefts grow due to the increase of digital interaction, trust becomes a crucial differentiator for companies.

In a world where nearly 70% of the global population has a smartphone and 7 out of 10 consumers believe businesses don’t do enough to protect their personal information, cybersecurity plays a crucial role. At Mastercard, we offer a wide range of solutions that track the entire consumer journey to analyze hundreds of threats based on location, IP, connection, user behavior, biometric patterns, and more, blocking threats before they become losses as a result of fraud.

Innovation serves as the gateway to interact with the digital economy. As part of the payment industry, I’m convinced that the technological advancements and digitization we are witnessing today  will continue to impact people's financial lives. 

Overall, the ecosystem must continue to improve payment speed, transparency, and security, unlocking new opportunities for businesses and consumers. All industry players need to be an example of global cooperation and create solutions that heighten individuals’ quality of life. 

Meanwhile, at Mastercard we will continue to work on initiatives that result in truly positive changes and foster financial inclusion, to bring “the next economy” to our lives. I am excited to be part of this revolution that is shaping an increasingly connected, digitized, safe and efficient payments ecosystem.

Photo by:   Irina Valassi

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