The payment industry was bustling with new developments and innovations in 2022. There was so much happening this year.
Besides that, our research also predicted increased focus on cybersecurity, BigTech’s interest in investing in payments, the emergence of payment-as-a-service (PaaS), and more.
The recent developments in the payment industry clearly indicate that customers and merchants are willing to experiment with new payment methods. In fact, studies show that offering multiple payment options can help merchants boost sales by 30%.
As we step into 2023, the payment industry will grow bigger and better. Let’s find out what we can expect in the coming year.
Instant or real-time payments allow customers to transact money between bank accounts in real time. Instant payments are already popular worldwide. But 2023 will see increased adoption of instant payments as every country is taking the initiative to make it a mainstream payment like cash and cards. The Federal Reserve, for instance, is launching FedNow in 2023 to make instant payment services more accessible to citizens. UAE is also rolling out a new real-time payment platform called Instant Payment Platform in Q1 2023. MarketsandMarkets predicts that the real-time payment market will reach $25.9 billion by 2023.
Embedded finance is a way for non-financial companies to provide financial products like lending, insurance, and banking to customers. For example, an Amazon customer can use the embedded credit option to convert a high-value purchase into small payments during checkout. It reduces cart abandonment and enables merchants to provide a seamless customer experience. Embedded finance was popular in the retail, eCommerce, and transportation industries. 2023 will see more industries like healthcare and real estate adopting embedded finance. The US will witness a ninefold increase in the market value of embedded finance by 2025.
The looming recession and inflation have made BNPL one of the most preferred payments in 2022. It was particularly evident during the Black Friday week when BNPL payments increased by 78%. It has enabled customers to spend despite a tight budget. However, regulators are closely scrutinizing and tightening the rules on the BNPL sector. India’s Reserve Bank of India (RBI) has already banned the loading of prepaid payment instruments with credit lines as BNPL companies tried to circumvent the KYC process and credit history checks to issue cards to customers. RBI expects the BNPL to close the compliance gaps and grow into a better version.
Similarly, the US Consumer Financial Protection Bureau (CFPB) will subject BNPL companies like Klarna and AfterPay to stricter scrutiny to protect customers. Even the UK government is keen on tightening the BNPL rules, but that’s unlikely to happen by mid-2023. So, 2023 will focus on making BNPL more compliant and safer for customers.
CBDC is the digital form of a country’s fiat currency issued and regulated by the country’s monetary authority or central banks. The CBDC’s objective is to provide customers and merchants with benefits like privacy, security, convenience, and accessibility while making digital payments. The aim is also to reduce cross-border transaction costs and offer low-cost alternatives to money transfers. Countries worldwide are preparing for CBDC adoption. While India is releasing an official digital currency by the end of 2023 and Sweden is developing e-Krona, countries like the US, England, and Canada are finding ways to integrate CBDC into the financial system. CBDC adoption will pick momentum in 2023 as more countries explore ways to implement digital currencies.
Open banking allows banks and other financial institutions to access customers’ banking and other data from other banks and non-banking financial companies (NBFC) through APIs. According to Statista’s research, over 132.2 million individuals will be using open banking services by 2024. Open banking will become more personalized and provide customers with better control over their finances. Two-thirds of US customers connect their bank accounts to get a 360-degree view of their finances, and 74% of them use open banking to automate their financial tasks. At a time when fear of recession and inflation looms high, open banking seems like a saviour that helps customers manage their finances better. There are concerns about third-party data breaches. However, banks can combat them with the help of advanced security technologies and prioritizing privacy and data security.
Transformation in the payments world has become essential for banks and payment providers to thrive in the post-pandemic era. According to Accenture, payment modernization is a $300 billion opportunity. They predict that over 2.7 trillion transactions will happen through cards and e-payments by 2030. 75% of payment executives consider payment modernization a priority. If banks and payment providers don’t act now, they will lose customers and fall behind competitors.
So, what can banks and payment providers do to stay in business and retain customers? The answer to that lies in adopting modernized payment solutions.
At Verinite, we understand the need for transformational change in the payment experience. That’s why we offer end-to-end assistance – from advisory to migrating and implementing new services. We have worked with IDFC, Yes Bank, and many more financial institutions to implement new payment solutions like QR code payments, wallet payments, and migration projects.
There is a famous saying – the best time to start was yesterday, and the second best time is now. If you want to future-proof your business, get started today.
Contact us to learn more about our payment solutions.