Four Payment Industry Trends For 2023


The payments industry was once dominated by a handful of giants, but now sees near-constant market entry by fintech companies, each offering disruptive thinking and technology. new technology in this field.

This means an innovative mindset must become the norm for any brand looking to influence payments. As we’ve seen in retail, media and banking, user expectations are changing rapidly, so our industry needs to change quickly (faster, in fact). The following four trends will be key in determining the evolution of the industry over the next 12 months:

1. Mobile payments

The world is increasingly moving towards a cashless future. As with many other digital aspects of society, this transition has accelerated throughout the pandemic. Businesses around the world have decided to stop accepting cash to protect their employees and try to prevent the spread of the virus.

But now, with the world reopening, many businesses continue to go cashless as part of the new normal. UK Finance – a trade association of the UK’s banking and financial services industry – has predicted that within a decade, banknotes and coins will only be used for 6% of payments. But it’s not just hygiene that promotes this; Consumers in general are turning to digital channels because of the convenience they bring. For example, mobile payments use fingerprint authorization, which means you can still make purchases if you leave your card or cash at home.

The popularity of online payments, which cannot be done with cash, has rapidly increased the number of digital transactions that take place every day. Plus, it’s much easier to store all your coins securely in a digital wallet instead of counting change – and less cumbersome to carry around. It’s also better for money management because apps can view every transaction, eliminating the need to add up receipts. In the past, there have been debates about inclusivity. But with 91% of the world’s population expected to own a smartphone by 2026, there seems to be no reason to return to a majority cash payment system.

The next step is to find a way to ensure that digital payments are more widely accepted as part of B2B transactions, as currently 50% of B2B payments are made by check. There has been an increase in the pace of movement in this direction, with a number of B2B payment processors reporting massive growth in recent years. But it’s mostly just a shift in usage from checks to cards, thanks in part to lower card network speeds. The next hill to conquer is to move them to digital wallets.

2. Trust

Many times, when asked the top reasons for giving up selling online, customers cite safety. Or rather, the lack of security noticed during the checkout process. Unfortunately, the fear of fraud is on the rise. Research has found that 62% of people now accept fraud as an unavoidable risk when shopping online, and 59% are more concerned about fraud than they are in 2021. These concerns are not unfounded – fraud has skyrocketed in recent years, with year-over-year figures 30% higher than in 2020.

Trust is an important element of any financial service provider. When people’s livelihoods are at stake, it is essential to ensure that their funds are available both where they are stored and transported. Here, the processors have the added responsibility of reassuring customers about the security of their payments, even though there is no actual transfer.

According to a study by the European Commission, the misuse of personal payment information is the second most cited reason for not making an online purchase. Adding visible security elements, such as two-factor authentication, reliability, and credentials for backups is crucial for any payment processor. If they are successful, they not only reduce their risk of fraud, but statistics show that they are also rewarded with a significant increase in sales.

3. Differentiation

Driven by new technologies and changing regulations, the payments industry has grown significantly in recent years. If anything, things are starting to get a bit crowded. New startups are closely following the biggest players, but to succeed, they need to make sure they make a difference.

The easiest way to do this is to reduce prices – this is when advances in cloud computing and hardware greatly reduce transaction costs for customers and merchants. Though there is only one so low they can drop before further cuts become impossible.

Payment service providers can differentiate themselves from the competition by finding ways to make their services increasingly convenient to use, thereby improving the customer experience. For example, PayPal is known for capturing small companies that produce cutting-edge technology. But convenience can also come from integrating with existing software. Since P2D2 – a European regulation aimed at making electronic payments safer – gave way to the opening of banks, payment processors have more leeway in how they can help customers. spend money from different accounts.

4. New technology

Artificial intelligence (AI) is an important way for payment processors to improve security and customer experience while helping to cope with the growing volume of digital payments facing the industry. face.

The AI ​​can automatically and accurately flag transactions it considers unusual, such as particularly large transactions or those made by an unsuspecting person. It can also use machine learning (ML) to fine-tune its operations, understanding each customer so that they are not prevented from making important but unusual purchases. With millions of purchases made every day, it’s not possible to check each one manually. But AI and ML secure legitimate payments much faster than humans can, contributing to better customer service.

AI can also enhance the customer experience by improving customer service interactions. For example, it has been used to power chatbots that can answer simple queries, allowing payment processors to provide round-the-clock customer service. It can also create or cancel long-term orders or direct debit, reducing human intervention and streamlining the process.

Use today’s trends to shape tomorrow’s success

The evolution of the payments industry and the growth of the financial technology industry, coupled with advances in technology and growing customer demand for flexible payment methods, pose challenges. and opportunities for payment processors in the coming year. Those who can meet customer needs by leveraging technology to develop exceptional products and services, provide global security, and win users’ trust will be decisive. lagging behind the leaders.

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