Problems/Issues
The field of cashless payments continues its expansive growth and development as the demand for innovative payment methods grows in need to optimize and speed up payments. Traditional players in the market of non-cash payment systems still retain their weight and leading positions. However, due to the rapid development of technology, companies in the 21st century face new challenges. Among the main problems for these companies, one can single out the need to compete with decentralized financial systems and cryptocurrencies, develop new, improved payment security standards and protocols, as well as the development of national payment systems.
Possible Solutions
The problem of competition with decentralized financial systems is becoming more acute as the security and stability of the latter improve. Making payments bypassing the banking industry, represented by traditional contactless payment systems, can be very attractive to the buyer. In this situation, possible strategic management decisions include supporting lobbying for the introduction of new payment methods, competing with other blockchain players in their niche, or investing in this area and partnering with promising decentralized financial institutions.
Payment security is a concern for both banking organizations and businesses and private consumers, as more and more new technologies are emerging to steal data and conduct illegal financial transactions. Since customers most often rely on the payment provider in this matter, this becomes an important challenge for such companies. The problems of security and containment of cyber crime can be solved both by introducing restrictions on payments and additional checks and by improving IT technologies and developing new protocols to ensure security. The desire of states to develop their own Central Bank Digital Currencies and national payment systems is understandable in terms of the desire of governments to protect the personal data and funds of their citizens (Mastercard, 2022). There are some possible strategic management decisions to cope with this situation. Giant transnational corporations can decide to directly compete with national providers or go for rapprochement and offer support tools to new players in the market.
Recommend Solutions
In a situation of competition with the blockchain sector of the economy, the most rational solution may be investments and cooperation with representatives of this segment. Direct confrontation and an attempt to reduce the growing decentralized finance sector to the shadow economy will need to be more effective since these companies have a clear advantage in consumer loyalty. In the case of investment, the traditional cashless payment operator has a real opportunity to become a link between the buyer and blockchain technologies, which will strengthen its position in the financial market.
Investing in the development of modern technologies and the IT sector is actively used in strategic management and planning. This can be a great way to overcome modern cybersecurity threats and create a platform for innovation in the field of cashless payments. In contrast, increasing the complexity of the payment process and the introduction of additional checks will strain the bank transfer system and may result in undesirable delays in making payments.
Competition with national payment systems may be effective in the short term. However, in the long term, it will not contribute to the development of the banking sector in certain regions (Mastercard, 2022). This may affect the global economy as a whole. Cooperation and support of national start-ups will be much more effective in establishing joint effective work and prosperity of the economy.
Expected Outcomes
The presence of healthy competition is necessary for adequate business development. However, given the significant experience of large companies providing cashless payments, cooperation with new players, such as blockchain organizations, can help develop promising modern areas. In addition, working with national providers can help improve the banking sector in a state or region, benefiting local businesses and private clients. Finally, the support of new technologies will help strengthen market positions and allow companies to compete successfully and do business in the constantly changing conditions of the modern world.
Reference
Mastercard: Creating a world beyond cash. (2022), 1–21.