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.
Today we hear insights from payments experts, including the adoption of tap-to-pay technology, the role of blockchain and AI in payments, flexible payment terms, security in authentication methods, PSD3 implementation, vertical-specific solutions, and the rise of digital wallets.
Streamlining cross-border payments
Looking back at 2023 trends, Audrey Hall, chief product officer at Atlanta-based fintech Brightwell, says there has been a surge in the number of domestic players launching products that allow users to send funds from one wallet to another. This is making it easier and more convenient for people to send money to friends and family domestically and internationally.
“Consumers and businesses are increasingly demanding quicker payments,” she says. “This is driving innovation in the cross-border payments space, as companies are developing new technologies to enable faster and more efficient payments. Technological advancements have enabled quicker and more efficient cross-border payments, saving time and effort.”
In 2024, Hall expects blockchain, artificial intelligence, and machine learning to play a more prominent role in streamlining cross-border payments. She added: “Digital payments will become ubiquitous, with cashless transactions becoming the norm for both domestic and cross-border payments.”
The need to innovate
Now more than ever, buyers are expecting flexible payment terms as a standard offering, helping them bridge the financial gap between selling goods to customers and paying suppliers, suggests Gil Shiff, co-founder and COO of 40seas, the order now, pay later cross-border digital financing company.
“This year we’ve also seen some significant advancement around government involvement in the fintech realm, with FedNow as a prime example,” he says. “By enabling instant and secure money transfers between banks and individuals, FedNow aims to modernise and enable a more efficient US payment infrastructure.
“Looking ahead, with a major increase in e-commerce and peer-to-peer payments, as well as growing adoption of mobile banking, financial institutions will need to innovate to meet evolving customer expectations and compete with fintech disruptors. In 2024 I expect to see a surge in real-time transfers as more customers demand a seamless banking experience.”
Demand for security
Deepak Jain, CEO and founder of Wink, a biometric identity and payments authentication platform, has seen a new and notable surge in the demand for secure, strong authentication based passwordless consumer experiences due to the continued resurgence of account takeover and online commerce fraud.
“As hackers continue to gain access to powerful AI tools, we can expect this trend to gain greater prominence in 2024. Despite the continued proliferation of the above payment innovations, comprehensive solutions offering a stellar user experience, robust fraud protection, and default safeguards akin to traditional credit cards remains elusive.
“This is the reason why, especially in the US, consumers still gravitate towards using their credit cards for making online purchases, despite the US leading the charts on the scale of online e-commerce fraud.
“Amid this, Early Warning’s Paze Wallet initiative emerges as a beacon of promise, potentially revolutionising guest checkout scenarios, enhancing conversions, and curbing fraud for merchants.”
Next is PSD3
One crucial lesson that emerged in 2023 is the importance of strengthening trust in the financial industry, says Marius Galdikas, CEO at financial platform ConnectPay.
“As events like the Silicon Valley Bank collapse and the Railsr incident drew attention to certain vulnerabilities in the financial sector, the best response is not just putting up the right safeguards, but also letting people know what’s being done about it. Clear communication is at the heart of building and maintaining trust among customers and stakeholders.
“As we look ahead to 2024, two prominent trends are poised to shape the financial services sector. First is an expected uptick in utilising AI for more complex processes, like data analysis and fraud detection. This will result in improved efficiency and security, but it will also involve the challenge of adhering to evolving regulatory guidelines and cybersecurity measures.
“Secondly, there will be an immense focus on properly implementing Payment Services Directive 3 (PSD3), the updated version of PSD2, which is expected to take effect by the end of 2024. This directive will introduce new regulations to enhance security and consumer protection in the EU, which will underscore the industry’s ongoing commitment to efficient and secure open banking. Every fintech will have to review its compliance processes to support and ensure a smooth transition.”
Michael Seaman, CEO of payment consultant Swipesum, thinks the fintech industry has flourished over the last 12 months, specifically in the payments world with more software companies began embedding payment processing into their offerings.
“AI has also become an increasingly important tool within financial services and will continue to trend upward. Fintech leaders are leveraging AI to help detect and prevent fraud in real-time. I think we’ll continue to see how this technology can revolutionize payment security for the future and elevate other aspects of the processing experience.
“With new technology, however, comes elevated risks, which will lead financial institutions to adapt their strategies to counter these issues such as new types of fraud, deepfakes and advanced phishing schemes.
In 2024, I predict that the payments industry in particular will gravitate towards vertical-specific solutions, crafting financial services and industry-specific tailored experiences. I also believe that the mass adoption of network tokens will continue to significantly enhance payment security, customer experience, and lower interchange costs.”
Three to watch
In 2024, Johannes Kolbeinsson, CEO and co-founder of fintech company Paystrax, predicts that digital wallets will outpace physical wallets due to their convenience, although accessibility issues persist. He also anticipates the rise of ‘payment orchestration’ to simplify and cost-optimise transactions for businesses. Additionally, he highlights concerns about authorised push payment (APP) fraud.
“An increasingly cashless society has given rise to mobile commerce. So much so that digital wallets are set to become the most preferred online payment method during 2024, accounting for over a third of all payments globally. The continued trend towards mobile wallets is heavily driven by convenience.
“From tube fares to supermarket tills, digital wallets have become so popular that one in five people in the UK now says they likely won’t carry a physical wallet within the next five years. Because why take a bunch of physical cards with you when just your phone will do?”
On payment orchestration, he said: “Payment orchestration makes more sense for bigger corporations right now as businesses have a minimum volume of sales before it makes it a viable option, but once adopted it can make a big difference in terms of driving up sales and negotiating better transaction fees.”
While on APP fraud, Kolbeinsson also commented: “In 2024, there needs to be widespread warning signs to help highlight the potential threat and ensure customers don’t take on any unnecessary risk. Consumers should be pushed to make card payments to keep their money safe until APP becomes mature enough that it can be used widely without the fear of fraud.”