It’s a time of reflection and anticipation at The Fintech Times throughout December, as we look back at developments and trends over the last 12 months and forward to the year ahead.
We’re excited to share the thoughts of fintech CEOs and industry leaders from across the globe to 2023’s key takeaways and what we should expect to be top of the agenda in 2024.
In 2024, payment experts foresee increased demand for instant payments, greater use of alternative payment methods, simplified mobile-friendly payments, user-focused and secure payment practices, automation of payment processes, and heightened reliance on data analysis and AI.
Instant payments to reach new heights
The demand for quick, digitised payment methods is growing following Covid-19, according to Antoine Cuypers, director, strategic alliances and key accounts at Intix, a transaction data management platform.
“Over the years, there has been a persistent clamour from consumers and businesses for quicker, digitised payment methods, intensified by the urgent need for safe, touchless payment options in response to the Covid-19 pandemic. As we enter 2024, the emergence of truly instant payment solutions feels almost inevitable. Both in Europe and North America, it’s a trend that has serious scope for growth.
“According to research from the European Central Bank (ECB), Single Euro Payments Area (SEPA) instant credit transfers currently account for only 14 per cent of all conventional SEPA credit transfers. During the next 12 months, it’s highly likely that number will grow much further with more and more companies entering this emerging space and offering real-time payment solutions that add value to the lives of businesses and individuals.
“Legislation brought through by the European Commission will also help to further proliferate adoption rates. The proposed regulation has been designed to ensure that every citizen holding a bank account in the European Economic Area can make instant payments in euro. If this is implemented, then we will see a considerable increase in demand for instant payment solutions across the continent.”
The growth of instant payments
Lena Hackelöer, CEO and founder of Brite Payments also talks about the shift towards instant and faster payments, noting ‘hugely successful government-led initiatives acting as a catalyst in markets like Brazil and India’.
“I believe that 2024 will be the year when instant payments, as a retail payment method, truly enter the mainstream consciousness across Europe,” she says. “The European Commission’s draft proposal to mandate the use of instant payments for all Eurozone transactions, now provisionally agreed upon by the European Parliament, and Council of the EU, will be one major driver.
“Moreover, the emergence of the next generation of open banking payment solutions, some of which facilitate instant payments along with a range of value-added services, will also play a significant role. Combined with growing merchant awareness of the benefits of instant bank payments, we’re going to see greater visibility in the checkout, paired with initiatives aimed at incentivising consumer usage.
“The use of instant bank payments as a retail payment method is an exciting proposition, offering incredible convenience, reliability, and security for both merchants and consumers. This applies to making payments, as well as receiving payouts, as solutions like Brite handle transactions in both directions – in real time. With our easy-to-use solution, users can pay directly from their bank account using their bank authentication. This means no sign-ups, no card details, and zero hassle when making instant payments online.”
Rise of alternative payments
There will be a further rise in alternative payment methods in 2024, which could take the form of bank transfers, e-wallets or BNPL, predicts James Booth, VP partner management EMEA, at digital payments platform PPRO.
“For instance, British consumers are already using alternative payment methods in more than 50 per cent of online transactions, according to our latest data. Consumers are moving away from wanting to type in their card details on their mobiles, or type in their pin numbers at a store.
“With 60 per cent of Brits shopping online using a mobile device, they are increasingly choosing alternative payment methods that make their checkout easier and provide a more holistic shopping experience.
“It’s no surprise that British consumers are choosing to pay with e-wallets for more than 35 per cent of their online purchases. With numerous e-wallets and apps offering extensive data features, customers can easily track transaction and order statuses. This means they can receive shipping notifications directly within the wallet and even request refunds through these apps. It enhances the overall consumer experience, providing an interactive approach to shopping. Payments now play a vital role in every aspect of the value chain, becoming increasingly integrated into our daily routines.
“In the near future, we can expect to rely heavily on certain apps to manage various aspects of our lives. We already saw this trend in Asia Pacific, with the emergence of super apps like WeChat and Alipay. These apps offer a wide range of services, allowing users to do everything from booking taxis and ordering food to purchasing rail tickets. While Europe has not experienced the same level of adoption yet, we can expect European players to also start embedding complementary services into their platforms to leverage their existing customer base.”
Keeping it simple
The main payment trends in 2024 will evolve around simplification, according to Alex Berrai, deputy CEO at global payment service provider emerchantpay.
“Consumers and merchants have moved from ‘just’ websites to a mobile-friendly shopping experience in the past years. Simplifying the payment process to make it more mobile-friendly is an ongoing trend that will carry into 2025.
“While Google and Apple Pay are at the forefront of these developments, scheme tokenisation in combination with Mastercard’s and Visa’s Click 2 Pay will continue paving the way to simplifying the payment experience for consumers.
“In addition, AI-driven risk management will continue improving data security and reduce the possibility of fraudulent attacks on merchants in the coming years.”
User-centric payments
During 2023, the payments landscape witnessed an accelerated shift towards seamless, secure, and contactless transactions, says Graham Smith, managing director at Volopa, a transaction, payment and expenses company,
“Businesses learned that adaptability is key, with a spotlight on enhancing user experiences. Real time payment systems gained prominence, offering unparalleled convenience and digital currencies took further steps towards finding their home in the real world. Conversely, the crypto environment seemed to raise more questions than it answered.
Customer trust is paramount. As digital transactions surged, so did concerns about security. Fintech leaders grasped the importance of robust cybersecurity measures and transparent communication to build and maintain trust.
Looking ahead to 2024, we predict a continued surge in decentralised finance (DeFi) applications, reshaping traditional payment structures. Expect innovations in biometric authentication and AI-driven fraud detection, ensuring a harmonious blend of security and user-friendliness.
Moreover, cross-border payments will undergo further streamlining, propelled by blockchain and distributed ledger technology. The emphasis on sustainability will also guide the payments landscape, with a growing demand for eco-friendly practices and carbon-neutral transactions.
In essence, 2023 taught us that the future of payments is dynamic and user-centric. As we step into 2024, it’s a journey marked by technological innovation, security fortification, and a commitment to sustainable financial practices.”
Automation of payment processes
Richard Ransom, strategic customer success manager at business payments company Bottomline, says the success of Confirmation of Payee was an outstanding achievement for the payments and banking industry in 2023.
“It revolutionised bank account verification, achieving 99 per cent bank coverage, thanks to mandates driven by the Payment Systems Regulator (PSR) and advocacy work by Pay UK. Banks and businesses that don’t adopt CoP are exposed to risk and potential liability for any losses incurred due to deliberate or accidental misdirection of funds.
“The dominating theme in 2024 will be the continued acceleration of digital transformation and the automation of analogue payment processes. Companies will increasingly move cash management (forecasting, visibility, etc.) and their global payments away from spreadsheets and multi-bank connections to cloud-based payment and cash management solutions with bank connectivity managed ‘as a service’.
“I expect more clarity around the New Payments Architecture initiative, which is on the back-burner for the short term, per the UK Future of Payments report. It recognises that economic and regulatory pressure on banks has made it a challenging environment for the kind of wholesale change to the payments system the NPA will bring. This challenging environment means an increased focus on resilience and efficiency for financial institutions and the wider financial sector, regulated by SS2/21 requirements.”
Leveraging data and AI
Gabriel Le Roux, CEO and co-founder of Primer, a unified infrastructure for global payments and commerce, highlights how merchants will need to increasingly leverage data analysis and AI to keep up with the fast moving market evolution of the payments industry.
“The payments sector is expected to undergo a significant shift in 2024. Driven by a desire to mitigate risks such as downtime and dependence on a solitary vendor that could face financial challenges, merchants will move away from the frequently fragmented and monolithic model associated with a single Payment Service Provider.
“Instead, they will opt for a more unified and streamlined payment experience. This transition will foster an ecosystem that gives merchants the freedom and flexibility to grow.
“To keep up with the fast-moving market evolution in 2024, merchants will also look to increasingly leverage data analysis and AI. Reducing time and complexity whilst increasing certainty is the magic formula for all merchants. This is where AI will come into play, helping merchants spot payment trends more effectively than the human eye, allowing them to focus on other important tasks at hand.”
Streamlining payments
Ongoing economic and geopolitical uncertainty forced businesses to keep a close eye on their balance sheets into 2023, says Brian Greehan, head of B2B solutions at Global Payments
“That meant prioritising cost reduction and operational efficiency over growth and keeping a close eye on cash flow. As a result, finance leaders found their departments squarely in the spotlight. Accounts Payable (AP), in particular, has become ground zero as liquidity and cash flow become even more indispensable.”
“In 2024 finance leaders will prioritise and accelerate their efforts to automate more back-office processes like AP with the goal of streamlining payment processes, establishing more control over transaction timing, and tracking payment flows.
“Increased automation will also help address the challenges by remote and hybrid work which looks like it is here to stay, especially in the finance department.”
