The usage of cash has declined because of changes in purchasing patterns exacerbated by the pandemic, and contactless payment solutions have become more popular. Last year, Visa’s global networks handled an estimated $13 trillion in contactless transactions.
Digital isn’t any longer merely another means to move money. Every business that moves money must meet users across computers, smartphones, and other devices and provide rapid, secure payment services.
According to the Mobile Wallets report by Boku and Juniper Research, one in every two individuals will use a mobile wallet by 2025. Over 2.8 billion mobile wallets were in use by the end of 2020. This figure is expected to rise by about 74% by the end of 2025, reaching 4.8 billion mobile wallets in use – nearly 60% of the world’s population.
According to Research and Markets, the Global Digital Payment Market is estimated to reach US$ 12.55 trillion by 2027, increasing at a CAGR of 10.9% between 2021 and 2027.
As you update your business strategy for the new year, keep these payment trends in mind as they gain traction in 2023.
Contactless payments and Tap to phone
The Tap to Phone technology allows merchants to safely take contactless payments on their existing near-field capable Android and Apple handsets simply, by installing an app. Even the tiniest shops may now take digital payments with ease. Larger merchants can also build unique payment experiences that customers desire.
According to a Visa poll, 82% of SMB owners worldwide have updated their operations to match the need for digital payments.
Instead of visiting a physical bank to apply for credit and then making the purchase, embedded finance allow customers to make a purchase and acquire credit all in one spot.
In essence, customer-facing digital platforms use embedded finance technology to include financial services within their own offerings.
Consumers use Embedded Payments to make payments with the push of a button. It enables them to make payments without having to switch between applications, which speeds up the checkout and payment settlement procedures and provides a fantastic user experience.
BNPL Adoption Tends to Grow
Buy Now Pay Later (BNPL), like credit cards, provide consumers with unsecured credit, but they differ in terms of accessibility as well as the positioning of the service itself, at the checkout (either online or in physical stores).
As inflation continues, industry analysts predict that more individuals will choose high-value products in a cost-effective manner. This payment strategy is particularly popular among Generation Z customers, but baby boomers on fixed incomes are also taking advantage of “pay in four” choices.
According to CBInsights, global Buy Now, Pay Later consumption might exceed $1 trillion by 2025.
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Variable Recurring Payments (VRP)
VRPs combine the advantages of direct debit payments with open banking payments.
They, like direct debit, require a mandate that authorizes money to be deducted from their account each month. They feature all the advantages of open banking payments, such as high security, instant processing, irrevocability, and more.
The primary distinction is that VRP does not require each transaction to be validated by the customer. As long as the mandate is valid, a series of open banking payments will be delivered at the frequency specified until the mandate expires.
Read more here: VRP – Variable Recurring Payment
Instant cross-border payments
Cross-border instant payments enable individuals and businesses to make real-time payments by quickly connecting to financial institutions and systems in two or more countries.
According to Juniper Research, global spend on B2B cross-border payments is predicted to hit $40 trillion by the end of 2024, up from $27 trillion in 2022.
While cross-border transactions have traditionally been sluggish, costly, and difficult to trace, the emergence of cross-border quick payment systems are resolving this issue.
These quick payment options can execute a transaction in 10 seconds or less.
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Peer-to-Peer (P2P) Payments
P2P payment is a method of sending and receiving money through mobile devices using a connected bank account or card.
P2P payment transaction types include mobile web payments, near-field communication, SMS/direct carrier billing, and others.
According to eMarketer, the P2P business will generate more than $1 trillion in transaction volume in 2023.
Customers are more concerned about sustainability than ever before.
Indeed, worldwide, the number of Google searches for sustainable goods has surged by 71% since 2016.
It is prudent to match solutions with this payment trend by sourcing sustainable materials, replacing paper statements and receipts with digital statements and receipts, and supporting environmental causes.
With technological improvements and rising demand for cross-channel transactions, it’s time for your banks, fintech, and financial ISVs to upgrade to the newest payment systems in order to deliver uninterrupted services and remain relevant.
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