As we move further into the digital age, the payments industry is experiencing rapid evolution, with new technologies emerging and traditional methods getting an upgrade in the process. It is essential for players in the payments industry to watch these trends closely to stay relevant and maintain a competitive edge. In this article, we will explore the payment industry trends that are shaping up in 2023, with a focus on both traditional and emerging payment methods.
Traditional and emerging payment trends
With the rise in e-commerce, it's apparent that card payments will remain an important payment method in 2023. A study showed that in 2020, more than 90% of retail transactions were still done using cards. However, the use of physical credit cards is diminishing, being replaced by virtual cards, wearable devices or tap-and-go options.
More businesses and consumers are going to continue to adopt contactless payments in 2023. Contactless payments include mobile payments, Near Field Communication (NFC) payments, and QR codes. These types of payments allow customers to transact without having to physically interact with another person or device. This type of payment is more convenient and faster, so it is expected to increase in popularity in the foreseeable future.
Mobile Payments: Mobile payments are predicted to continue their current trajectory and become the most popular payment method by 2023. Mobile payment transactions could reach $14 trillion, with Asia dominating this payment trend.
QR Codes: QR codes have been widely used in Asian countries like China and most of SouthEast Asia. It has also gained adoption in western countries due to its convenience even for physical retailers, restaurants, cafes and street vendors in small cities that have enabled easy and affordable jacking into the digital economy.
EMV: Europe, Asia and other countries have been making the transition to contactless EMV cards to follow suit to the United States. And as the use of contactless payments becomes more secure, it's expected that the use of these cards will continue to grow.
Open banking, which allows third-party developers to build applications and services around existing financial institutions, is expected to continue its growth in 2023. This form of banking allows consumers to share their financial transaction data across multiple institutions, giving them more control over their finances. Open banking also helps financial institutions to share data securely, enabling them to create new products and services that enhance the customer experience.
Cryptocurrencies have been making a buzz for years, and they are rapidly gaining significant acceptance in traditional finance. With the growing adoption of cryptocurrencies, we expect to see more businesses and individuals using them for payment transactions, especially in industries where high-value transactions are made. With the launch of Central Bank Digital Currencies (CBDC) all over the world, the trend of digital currencies will grow stronger in 2023, in emerging economies that have limited access to traditional banking.
Decentralized Payment Technologies
With the rise and mass adoption of decentralized networks, the payment industry is also starting to adopt the technology. Decentralized payment platforms offer increased security benefits as payment information is stored on a distributed network rather than a centralized database that can be compromised. In this highly digitized and decentralized age, it is no surprise that decentralized payment technologies will become a significant part of the payments industry.
Greater control, flexibility and convenience
The payment industry is evolving rapidly, and businesses that want to stay ahead must adapt to changing trends. Four key trends that are expected to play a significant role in the payments industry in 2023 are decentralized payments, contactless payments, open banking, and cryptocurrency.
Decentralized payments offer several benefits, including increased security, lower transaction fees, and faster processing times. These benefits are particularly valuable for businesses that want to streamline their payment processes and reduce costs.
Contactless payments are also gaining popularity, as they offer customers a faster, more convenient way to make payments. With contactless payments, customers can complete transactions without the need to physically interact with another person or device, reducing the risk of transmission of germs.
Open banking is expected to become more widespread, providing customers with greater control over their financial data and enabling the creation of new products and services. By giving customers greater access to their financial data, open banking can help businesses tailor their products and services to better meet customer needs.
Finally, cryptocurrency is gaining acceptance in various industries and is expected to become a mainstream payment method in the future. Cryptocurrencies offer several advantages over traditional payment methods, including 24/7 processing times and lower transaction fees.
Overall, the payment industry in 2023 is expected to provide customers with more choices, flexibility, and convenience than ever before. Businesses that want to remain competitive must be willing to embrace these emerging trends and adapt their strategies to meet the evolving needs of their customers. By doing so, they can position themselves for success in the years ahead.
An insight into 2023 according to GoCrypto
Luka Planinc, General Counsel
Payment industry will experience multiple changes in the next few years, many of which are already in development but will probably not be issued yet in 2023.
One of these is the implementation of CBDCs which is being discussed both on national and EU levels, however there are still too many details that need to be agreed upon, including the technology that will be used for their issuance.
Developments in the field of biometric payments will continue in 2023. The new trend will probably include face, fingerprint and voice recognition and will significantly streamline payments in the future. But before the actual implementation, providers will still need to solve the question regarding the processing of personal information. The technology will come as a great innovation, but will not entail any specific systemic changes in the industry.
What we can surely expect in 2023 is more regulation. The EU will continue implementing regulatory requirements in the field of payments and cryptocurrency. We can also expect stricter Anti-Money Laundering legislation. This will make any illicit activity more difficult but will in turn also prolong a wide range of business activities. Stricter AML regulation will entail a more detailed monitoring of clients and transactions as well as more use of machine learning and artificial intelligence.
Digital and mobile payments will continue to grow stronger, replacing a large portion of traditional payment methods. I do not expect cash payment to disappear, but its flow will surely decrease. Real-time payments will be a big game changer. SEPA Instant Credit Transfer and blockchain payments are already showing us great use cases of instant payments in the EU. We can expect to see real life uses in retail in 2023 and 2024. These services will decrease the added value of payment cards and traditional payment schemes, but will not replace them entirely.
Ajet Redžepi, Chief Sales Officer
The last 50 years, over 90 U.S. banks with billions in assets have gone bankrupt. And the list goes on. This also involved the area of payments.
Contactless payments, biometric authentications, AI and machine learning, e-commerce... These are different approaches to already existing ways of making the payments that either facilitate or speed up the process or implement it in a different way.
The future of payments should be focused on permissionless (you don’t need a permission to spend your money), security (remove unneeded interactions), decentralization (not controlled by any government or financial institution), speed (instant), cheap ( lower fees), acceptance (regardless of the location) and anonymity to a certain extent (keep your financial transactions private).
Žiga Toni, Deputy CEO
In the future I see payments moving even more into frictionless payments, but in a different sense of that word as it was perceived thus far. Frictionless should mean that the consumer can pay with any card or wallet, any currency he chooses, and the merchant gets settled in his preferred way and currency. Additionally, I see big movements in the future on the unbanked population being able to hold their funds in an alternate way to cash. I see them holding funds in a wallet, preferably in a stable currency so that they are not affected by the inflation which is usually present in unbanked markets.
Timotej Polach, Chief Security Officer
The world of payments is changing rapidly due to advancements in technology and shifts in consumer behavior. People are increasingly using digital payment methods, such as e-commerce and contactless payments. The use of blockchain technology and cryptocurrencies is gaining popularity as well, offering secure and efficient ways to transfer funds. Biometrics, such as facial recognition and fingerprint scanning, are expected to improve payment security and convenience. As the world becomes more connected and globalized, efficient payment systems are becoming even more essential. Future payment systems will likely focus on innovations that make payments quicker, simpler, and more secure to meet the growing demand for seamless payment transactions.