The velocity of change and volume of the digital payment market, which is expected to reach $12.55 trillion by 2027, are astounding as the demand for digital payment solution is increasing in the market. Rapid payment technology innovations are providing new digital-first consumers with more options, and acquirers, solution providers, and merchants must make informed decisions about how to position their businesses to meet those demands.
As you renew your business strategy for the new year, keep these payment trends in mind as they gain traction in 2023 –
Mobile Wallets
According to the 2021 Mobile Wallets Report, published by Boku and Juniper Research, one in every two people worldwide will use a mobile wallet by 2025. China leads the world in this payment technology, with 45 percent of adults using it every day and 41 percent using it once a week. Only 6% of adults in the United States and Canada use a mobile wallet on a daily basis; however, analysts predict growth in all regions.
One of the factors driving adoption is convenience. Consumers who primarily use their smartphones for online shopping can complete transactions with just a few clicks thanks to mobile wallets. Furthermore, because mobile wallets can be used in-store as well as online, they provide a single payment method that customers can use across all channels.
'UPI on Credit' is Expected to Become Operational in 2023
In 2022, NPCI will launch UPI on credit to boost online payments even further. Customers can use this feature to add their Rupay credit cards to UPI and make payments.
We will see the exploration of UPI on credit in 2023 (short-term credit with the goal of "sachetising" credit into small ticket and formalizing lending for the unbanked population). "We will see new customers entering the digital ecosystem through new use cases and technologies," said Gayathri Parthasarathy, Partner, and Leader - Financial Services, PwC India.
The feature of linking credit cards to UPI is said to increase digital payment adoption in India, and industry leaders believe it will be operationalized by 2023.
The Future of Buy Now, Pay Later Could Be More Subtle
Many negative headlines have been written about buy now, pay later offerings, and while obituaries may be exaggerated, change is on the way.
The World Bank-sponsored Global Payments Innovation Jury report summed up the near future succinctly:
"BNPL usage is set to increase in the short/medium term because of strong benefits for consumers and merchants. Credit losses, on the other hand, are expected to rise significantly, and the sector is certain to lose its unregulated status in many major markets. As a result, rapid growth is viewed as a short-term phenomenon rather than a long-term game changer."
Evidently, the Consumer Financial Protection Bureau in the United States will regulate BNPL in the future, with rulewriting underway in the aftermath of its significant research emphasis on fact-finding among the major players. The bureau has invited BNPL companies to "volunteer" for examinations ahead of regulations. This will transform the business, but analysts in the United States and other countries have noted that BNPL companies saw it coming and were beefing up compliance functions in preparation for regulation.
Tap to Phone
Merchants can now accept contactless payments directly on their smartphones thanks to new payment technology. According to Discover Global Network, the tap to phone market will reach $76.3 billion by 2025, growing at a 23.4 percent CAGR.
A tap to phone solution can assist small and medium-sized businesses (SMBs) level the playing field by allowing them to accept contactless payments without incurring large CAPEX for upgraded payment technology. Huge and enterprise merchants can incorporate these capabilities into their IT deployments to improve customer experiences away from the checkout counter and outside the four walls of their stores.
Cross-Border Payments are Expected to Grow in 2023
In 2023, a growing percentage of cross-border payment companies will establish new fintech partnerships to offer crucial financing options for ecommerce businesses looking to expand and grow across borders.
Cross-border payment providers can help ecommerce businesses accelerate their time-to-market in addition to assisting them in expanding and growing. Merchants will come to rely on their partners to quickly and efficiently launch new products on online marketplaces and their websites to buyers all over the world.
Innovative cross-border payment service providers are strategically investing in the development of value-added, integrated services to support the growth of ecommerce businesses.
Wrap Up
Keeping up with emerging trends, innovations, increased regulation, and the introduction of brand-new international payment standards can be difficult. With Panamax, you can reduce the complexity of managing your entire payments environment. Panamax's Fintech solutions can assist you in creating new opportunities by digitally transforming your business with next-generation technologies.
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