The Impact of 5G Connectivity On Payment Solutions

5G is quickly becoming the most widely adopted technology, driving opportunities, improvements, and innovations across a variety of industries. One of the key spaces that is already showing signs of being impacted by 5G is payment solutions. 

Since the Covid-19 pandemic, several fintech startups, ecommerce, and related platforms took to the mainstage to showcase their innovative payment solutions in answer to the consumer need for more hygienic and convenient transactions. Unsurprisingly, traditional financial institutions waivered in their approach to the transforming payment landscape – although with the rise of 5G connectivity this has quickly changed and many banks have launched solutions that compete with the up and coming fintech companies.   

In this post, we’re going to unpack how 5G Connectivity is transforming the payment solution space.

First, What is 5G?

By now most people are familiar with the term ‘5G’ and how it relates to the connectivity we enjoy through our smartphones. But that’s about it. Beyond that, it’s assumed that this is just another technical advancement, too complicated to bother with. 

The reality is that 5G is easy enough to understand. 

5G stands for the ‘fifth generation’ of cellular technology and it refers to the network and technology used to enable mobile devices to transmit data and interact with one another. Where 1G and 2G simply gave us cellphones with the ability to call and text, 5G has the potential to take the usefulness and efficacy of cellular networks to a whole new level – and a whole lot faster, too.

This is particularly true in the payments industry, where the increased speeds, more reliability, and reduced latency will improve the customer experience by sparking the development of new solutions and making transactions faster and more secure.

What Does 5G Mean For Payment Solutions?

Let’s talk about what 5G means for payments – especially in South Africa, which, in spite of having a much higher percentage of banked consumers than the rest of Africa, is still one of the biggest mobile markets in the continent.

Traditional transaction methods involving the physical exchange of notes, coins, and cards had already started losing popularity as a result of the pandemic, but progress has done what it’s always done… As we march forward, the things that can’t keep up or aren’t offering the same degree of usefulness will be left by the wayside. 

This has coincided with the introduction of 5G into the market, which has dawned a new day for payment solutions. In just a few short years, we have seen that both businesses and consumers alike are privy to a veritable smorgasbord of new payment processing options. 

4 Ways 5G Will Benefit Consumers and Retailers

5G technology has been wholeheartedly embraced, as seen in the dramatic shifts in various industries. Notably, we have seen the benefits of 5G connectivity in the way we transact. It’s not just about offering the latest and greatest innovation (although it’s never a negative reason to go to market with something ‘cool’), it’s about the benefits that 5G unlocks for both businesses and consumers.

These are the four major ways in which we think that 5G will impact payment solutions. 

1. Less Latency

Network latency is the amount of time it takes between a user’s action and a web application’s response to that action. This timeframe is also called ‘lag’ and with each new generation, the delay we experience gets shorter.

When it comes down to it, 5G is just so much faster than 4G technology. Consequently, 5G promises extremely short delays, so you don’t have to wait long for your payment to go through. Or to look at it from another perspective, with streamlined, speedy transactions you don’t run the risk of customers cancelling their purchase because it’s taking too long. 

2. Smarter, Customised Payments

From researching, browsing, shopping, all the way through to processing transactions, 5G has the power to make the shopping and payment process seamless and more customised to the customer. One example is Amazon Go, which allows customers to locate, select and walk out with their purchases – the transaction automatically completed through a fully smart, customised payment process.

3. The Rise of Digital Wallets

In the retail sector, we believe that we’ll see an increase in the use of digital wallets as a payment option as a direct result of the faster data download speeds that 5G offers. This assumption comes from the fact that in a post-Covid-19 world and in South Africa’s mobile-driven market, consumers overwhelmingly prefer mobile payment technology over paying with cash. As 5G is more widely adopted, digital wallets will continue to be the more convenient and preferred way to pay.

4. Mobile Shopping Will Skyrocket

There are three major ways we think that mobile shopping is going to take off. Firstly, many people are still cautious about shopping in person, opting to make more purchases online, using their phones. Secondly, 5G provides a frictionless end-to-end shopping experience, making it easier and faster for customers to get their shopping done on their devices. And lastly, 5G supports IoT technology which businesses can use to create interactive and engaging experiences. 

We Can Help 

Wondering how 5G technology can improve efficiencies, streamline transactions, and offer more secure, reliable, and faster payment processing in your business?

Connect with us and let’s talk about the future of a 5G-powered payment solution for your specific business size and type.