From consumer to business payments to cross-border transactions, cash is no longer king. Brought about by the rise of smartphones, e-commerce and technology, the convenience of completing everyday banking transactions via your mobile phone or even wearable devices is here to stay.
Alternative payment methods are on the rise as the demand for real-time payments soars, including contactless, which has transformed into a mainstream financial tool.
Big Tech is making its mark in this space, with companies like Apple, Google and Amazon expanding their range of services around payments with ‘tap to pay’ solutions.
The advantages are clear, and it’s now a question of whether traditional banks can adapt to changing demands, collaborating with tech players to evolve with the times, retain existing customers and attract new ones.
Today’s digital payments landscape is being significantly reshaped by a myriad of drivers and accelerators of change
Ease of use is at the forefront, with quick and straightforward onboarding processes, integration with mobile apps, and the reliability of expedient transactions.
Functionality has also evolved, allowing payments to be linked to bank accounts, digital wallets, and even used for digital identity and government services.
Moreover, affordability remains a key driver, with consumers increasingly demanding low or no-cost payment options, financial savings, and access to investments.
“These drivers are further accelerated by globalisation, connecting markets and enabling multi-currency needs,” says Miguel Cunha Amaro, Partner, Deloitte.
“Societal shifts play a role as techsavvy generations and even older demographics embrace embedded fintech solutions. Cost savings and a virtual environment drive businesses away from traditional methods towards efficient digital invoicing and contactless payments.”
The trends in digital payments are marked by a focus on enhancing customer experiences through seamless, alternative payment channels like wearables and mobile wallets.
Emerging technologies, including cryptocurrencies and distributed ledgers, are a reality, and risk management is evolving to address the growing threat of cybercrime.
As the payments landscape evolves, the industry will continue to witness the cannibalisation of traditional methods and the growth of innovative, customer-centric solutions.
In 2024, the financial sector will be shaped by two major trends: Payments as a Service (PaaS) and collaborative efforts between public and private entities.
Proximity mobile payments in the UK are expected to grow significantly, reaching 16 million users by 2026 – a rise that’s being driven by mobile wallet usage within retailer apps like Apple Pay and Google Pay.
“In fact, over the past three years, digital and mobile payments in Europe have surged by over 30%, with an estimated 700 million cashless payment users in 2023,” says Rajasekar Sukumar
Senior Vice President & Head, Europe, Persistent.
“Thanks to the proliferation of digital and mobile payments, in the year to come regulatory changes, including the updated PSD3, will aim to align with new payment trends and encourage Open Banking adoption.”
The digital Euro may enhance security and reduce reliance on non-European countries for transactions, improving cross-border payments.
Additionally, the Netherlands’ acquisition of the iDEAL system as part of a European payments initiative paves the way for a pan- European payment system and a cross-border account-to account network.
Consumers have become more reliant on their favourite brands to provide financial products
“In 2024, I think we will see this trend accelerate, as banking services will begin meeting consumers where they spend more of their time, embedded within existing brand experiences,” comments Nicholas Holt, Senior Director Solutions, Engineering, Marqeta.
“Most products or services in the world have a financial component required, and going forward, brands are likely to want the payment fees embedded into that experience, meaning almost every company is likely to become a financial services company.
The first step is branded cards, but there is no limit to the financial products that could be offered by brands (credit, accelerated wage access, insurance, etc). As a result, organisations will be looking to build out a range of embedded finance solutions to boost customer loyalty and elevate their customers’ experiences.”
Source: Payments Cards and Mobile
