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 our selection of leaders discuss the evolving payment landscape in 2024, touching on trends like convergence of personal and corporate payments, real-time cross-border payments, interoperability’s influence, and the significance of orchestration in streamlining payments in the travel sector.
Evolving corporate needs
In 2024, Visa Cross-Border Solutions predicts five key trends: convergence of personal and corporate payment systems, a shift towards enhancing back-end infrastructures, heightened focus on compliance and data security, the emergence of central bank digital currencies (CBDCs), as well as a focus on faster settlement processes in financial transactions.
Tim Moncrieff, senior director, strategic initiatives, Visa Cross-Border Solutions, says: “Businesses will increasingly demand payment solutions characterised by speed, ease of access, transparency and cost-efficiency, mirroring what we’ve grown accustomed to in personal banking.
“This ‘consumerisation’ of institutional payment experiences is likely to be a significant focus in cross-border. Cross-border already plays a systemic role in business activity, as evidenced by its robust growth and scale with flows forecast to reach about $250 trillion by 2027.
“The demand for improved performance and accessibility in cross-border, however, will drive a focus on systemic interoperability and straight through processing – to ensure the digital experiences enabled through domestic instant-payment schemes and digital wallets can be replicated in cross-border.
“The complexity and scale of corporate transactions necessitate a heightened focus on regulatory adherence and data protection. The Financial Stability Board (FSB) is taking significant steps in this direction, as detailed in its G20 Roadmap for Enhancing Cross-Border Payments report. This trend underscores the need for robust security protocols and compliance frameworks, ensuring that as payment system interoperability progresses, the necessary attention is given to legal, regulatory, and supervisory frameworks, and cross-border data exchange.”
Real-time payments impact on cross–border payments
Andy Davies, global head of payments at Endava, a provider of digital transformation services, offers insights into the growing momentum of real-time payments and innovations in enhancing transparency.
“In 2024, we’re set to see a positive shift as real-time payments build momentum within the cross-border payments space. Innovations to overcome the current lack of transparency and control around where money is within the system will continue to emerge, enabled by the much richer data landscaped that comes with the shift to ISO20022 – especially where this data aids know your customer (KYC) and anti-money laundering (AML) compliance.
“The B2B space stands to benefit the most from modern cross-border payments because it accounts for 80 per cent of all cross-border transactions but the much greater transaction values involved requires hardened security to ensuring transactions are reliable and losses from fraudulent activity are prevented. Inevitably this means that B2B payments will attract greater friction in terms of authentication and consent.
“Organisations will need to consider the new industry trends with cross-border payments alongside new banking standards and practical applications of current and upcoming developments. In the new world of borderless transactions, investing the time and technology in improving the cross-border payment experience will be critical to not only frictionless payments but also growth, liquidity management and risk mitigation.”
Frictionless cross-border payments are a crucial catalyst of a seismic shift in digital transformation, says payment unicorn Nium, enabling economies and businesses around the world to increasingly become more global.
“If 2026 will be the year that the global payments system reaches $3trillion (as Mckinsey predicts), 2024 must be the year that we begin to fully unlock this potential and pave the way for transformational growth,” comments Manuel Sandhofer, SVP and general manager, Europe, at Nium.
“Next year, new regulation such as an updated PSD2/3 framework and the development of the New Payments Architecture in the UK will create new challenges for business leaders whilst opening the doors to payment innovation.
“As a result, traditional banks will face even more competition from digital disruptors, driving strategic fintech partnerships to keep pace with the evolving needs of their customers.
“Beyond traditional remittance services, we can also expect new use cases for real-time global payments to continue to emerge 2024. Whether its online marketplaces sending funds to their global merchant sellers, streaming platforms paying their content creators around the world, or insurance companies disbursing claims to businesses across borders, we’re seeing many industries begin to embrace real-time global payment infrastructure.”
Benefits of interoperability
2024 promises a significant paradigm shift driven by the pervasive influence of interoperability – a transformative wave set to define the next five years, suggests Kamran Hedjri, founder and group CEO of payment provider PXP Financial.
“Interoperability should not be dismissed as a buzzword. Instead, it emerges as a fundamental concept revolutionising payments experience, allowing disparate payment systems and platforms to collaborate seamlessly. This is not a passing trend, it signifies a sweeping transformation across sectors, fusing physical and digital realms into a unified experience.
“The benefits of interoperability reverberate across the financial ecosystem, offering enhanced convenience, streamlined financial management, cost reduction, and expanded customer choice. It plays a pivotal role in regulation, compliance, security and fraud detection, ensuring effective monitoring and prevention of fraudulent activities.
“Cross border payments are poised to achieve unprecedented seamlessness, fostering global connectivity and efficiency. Beyond merely facilitating transactions, payments interoperability acts as a catalyst for innovation, healthy competition and overall global commerce growth by lowering trade barriers and promoting financial inclusion.
“On a global scale interoperability has the potential to alleviate financial exclusion, granting access to the global economy for underbanked populations. Governments will leverage interoperability to streamline state payment systems, possibly integrating Central Bank Digital Currencies (CBDC’s).
“In 2024, I believe fintech leaders will continue to actively explore multifaceted applications of interoperability, from digital currency options to blockchain integration. For fintech startups eyeing this transformative wave, prioritising innovation, customer-centricity, and effective communication is paramount.”
It’s all about orchestration
David Doctor, CEO of Outpayce from Amadeus, a travel payments company, discusses its mission to simplify travel payments, highlighting the industry’s focus on innovation as well as the concept of ‘orchestration’ to streamline payment processes.
“Our mission has always been to play our part in helping the travel industry get paid simply, by empowering travel agents, corporations and hotels to overcome payment hurdles and meet changing user demands. It’s been promising to see the continued push to achieve this right across the industry in 2023, as payments players develop innovative technology solutions to enable the efficient management of payment flows for travel businesses, while also prioritising the traveller experience.
“This year has seen many exciting developments, but one of the key buzzwords for us has been ‘orchestration’. Perhaps this is because the concept of orchestration aims to achieve the same things that we do as an organisation – to remove complexity and streamline the processes that lead to optimised payments.
“Something we have learned over the years is the importance of the connections that payments companies situated within the travel ecosystem possess. With direct links to hundreds of partners, travel agents and acquirers, we understand that this can facilitate the creation of a truly connected payments network.
“For example, when applying this to orchestration, fintechs working within travel are best placed to understand the difficulties in accepting payments across diverse markets, and can access insights not just into acquirer fees, but also reconciliation and risk profiles, in turn enabling efficient, intelligent routing. As the travel industry further embraces this technology, we will begin to see the unlocking of the true value that lies in orchestrating payments according to a deep knowledge of the traveller as well as the transaction.”