Tuesday, June 25, 2024

    The changing face of payments

    As the world settles into the new normal of global recession, all eyes are on efficiency gains, along with consumer spending habits. And that means payments are becoming more important. So, what is in store in 2023? Paul Skeldon reports

    A new study from Juniper Research finds that revenue from embedded financial services will exceed $183 billion globally in 2027; increasing from just under $65 billion in 2022.

    Growing by 182% over the period, the report found that this expansion will be largely driven by non-financial businesses incorporating embedded finance options into their product offer.

    These options will usually be introduced within the checkout process of an eCommerce transaction or incorporated seamlessly within a mobile app; resulting in enhanced financial options for the consumer and potential new revenue streams for vendors.

    The report emphasised that it will be crucial for businesses to identify which financial services work best within their customer environment, whether B2B or consumer. Choosing products that align with target demographics and offer genuine consumer benefits will be the most successful.

    The business-to-business sector also offers some new opportunities to PSPs. B2B payments is in need of a revolution akin to that seen in consumer markets: businesses want efficient and easy ways to pay. With this sector set to be worth more than $111trn globally by 2027, there is a huge payment opportunity there.

    Open banking booms

    The rise of Open Banking based payments – such as direct bank transfers, for instance, as exemplified by the work done by Nuapay – are starting to take the consumer market by storm. With businesses also now looking for more automated, more secure and more rapid payment services, many of the lessons learned in the consumer market could see the creation of some interesting B2B payment tools.

    This offers the telemedia sector not only an opportunity in creating these services, but also could well help business that have to pay each other – and get paid – across the value chain also benefit.

    A separate study from Juniper Research has found that the number of instant payment transactions will exceed 376 billion globally by 2027; increasing from 97 billion in 2022, a 289% growth.

    It predicts that an increased roll-out of instant cross-border payment schemes in multiple countries will drive this growth by enabling businesses and consumers to benefit from greater speed and efficiency.

    This efficiency is gained by processing payments over instant payment rails, which provide time and cost savings, while also offering greater transparency over transactions to stakeholders than traditional payment rails.

    An instant payment is any payment outside of a card network that is capable of receiving funds in 10 seconds or under.

    The report forecasts that cross-border transactions will grow at a faster rate than domestic transactions globally. It anticipates that cross-border transactions will rise from 631 million payments globally in 2022 to over 6 billion in 2027. The creation of instant payment schemes by international bodies, such as the EU, and an increase of bilateral agreements between these bodies will be key drivers of growth over the next five years.

    These bodies will be essential in creating cross-border instant payment networks, as they have the capital and influence to connect disparate payment schemes across different geographical regions in order to maximise the value proposition of instant payments. In turn, the report recommends that regulators increase partnerships with international bodies to broaden payment schemes and expand access to instant payment services.

    Fintech trends for 2023

    From tribe-based banking to embedded finance, Nick Root takes a look at what’s in store in the wider fintech market and how it may impact how people pay

    Embedded finance

    Banking as a service defines an ecosystem in which licensed financial institutions offer non-banking companies access to their services, typically through the use of APIs.

    BaaS enables clients to embed financial services into their own products or build completely new financial services from scratch. Use cases vary from modern virtual card issuing products, creating in-app payment methods, or building the next neobank, to setting up traditional card programmes, white-label payment processing, or embedding multi-currency IBAN accounts into your apps.

    The emergence of API led banking services means that distribution is no longer an issue. That layer of friction has now been removed, with any digital company being able to offer a financial service without the headache and complexity that offering financial services used to bring. What WordPress did for the internet, FinTechs are doing for finance.

    Cryptocurrency will become an everyday way to pay

    In 2023, we expect to see a growing number of financial institutions accept cryptocurrency as a form of payment.

    Mastercard recently announced it is keen to start rolling out plans to make crypto an ‘everyday way to pay.’ Acting as a bridge between crypto trading platform Paxos (used by PayPal) and major banks, Mastercard will handle the major roadblocks, including regulatory compliance and finance.

    Furthermore, Google also announced a partnership with Coinbase, allowing customers to pay for some cloud services with cryptocurrency in early 2023.

    As more and more people invest in cryptocurrency, businesses are starting to adopt it as a form of payment. “The term ‘pay with crypto’ has seen a surge of interest, with searches increasing by 136% since 2017, and with huge firms such as Google jumping on board, in 2023, we predict more banks and financial providers will join them.

    Contactless wearables

    The Internet of Things is making waves in the fintech sector, allowing consumers to pay for goods and services faster than ever with wearable technology.

    Alongside smartphones, bracelets and smartwatches are now being used to make payments instead of a bank card.

    The Apple Watch is one wearable that took the world by storm, showcasing an upward trend in 2022. Smart rings are also on the rise, with searches for the revolutionary wearable increasing by 180% globally.

    We predict this trend will continue to grow in 2023, and in light of this, fintech companies will increasingly use these connected devices to gather customer insights and make more informed decisions.


    The rise in digital products means there is an increased risk of data breaches, cyber hacks, and money laundering – but that’s where Regtech comes in. Regtech is a group of organisations that solve challenges arising from a technology-driven automated economy.

    The Regtech industry is expected to disrupt the regulatory landscape by providing advanced tech solutions to compliance issues that arise in the Fintech sector.

    Despite being coined in 2008, in the last five years, searches for ‘Regtech’ have increased by 184%, and on top of that Grand View Research predicts a 52% growth in the technology market by 2025, giving it a value of $55.28 billion.

    Artificial intelligence

    AI will also continue to drive infrastructure decisions in the Fintech sector. Chatbots specifically will become more sophisticated and could soon be the future of fintech customer service.

    In fact, studies from Juniper Research suggest that successful banking-related chatbot interactions will grow 3,150% between 2019 and 2023, saving banks a lot of time – 826 million hours to be precise.

    Over the last five years, Google searches around the topic have seen significant growth too, with the term ‘AI in banking’ increasing by 104% globally.

    Tribe based banking

    The term ‘digital tribe’ has become popular in recent years, used to describe online communities who share a common interest, and are usually connected through social media or other online platforms.

    In 2023 and beyond, we predict more businesses will engage with online ‘tribes’ as a way to form deeper connections with consumers.

    As such, we also anticipate more businesses launching their own financial services centred around the tribes they are connected with. In the past, people from diverse communities have been uncomfortable with legacy banks because they have not been represented, don’t feel empathised with, and aren’t open to communication.

    In this new era, banks need to be more authentic and receptive to communication. People from these communities will soon be looking for a bank that gives them a sense of representation and openness.


    Nick Root is CEO at Intergiro

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