The pandemic has had a significant impact on the payments industry, with consumers increasingly resorting to online means as a safer alternative to utilizing cash to pay for shopping, food deliveries, utility bills, and other services.
Consumer behavior has changed significantly since this catalyzing event, and the growth of digital payment methods doesn’t seem to be stopping any time soon, as more than 50% of the US is expected to incorporate them into their day-to-day life by 2025.
These are the top 5 digital payment trends to look out for in 2023.
The advancements in communication technologies have made smartphones a central organ of our lives, as it is the touchpoint between the real and the digital world. The payment industry is experiencing a pivotal change with the surge of mobile wallets.
Mobile wallets are a convenient way to store and manage your money, as well as make payments without having to carry around cash or credit cards. With a mobile wallet, you can keep track of your spending, budget better, and even earn reward points.
As of 2022, there are 3.4 billion mobile wallet users in the world (1.3 billion more than in 2021), and it is expected to grow to 5.4 billion users by 2026, which represents 60% of the current world’s population.
This large adoption can be explained by many reasons, one of them being the rise in popularity of SuperApps like WeChat, in China. These powerful platforms are an all-in-one mobile experience. They offer communications, food delivery, events and travel bookings, e-commerce, and even financial services.
Having everything in one place allows for a seamless, streamlined, checkout process.
At the same time, marketplace giants like Amazon, Alibaba, and Mercado Libre are pushing their own online wallets to benefit customers and stores by facilitating business even outside their e-commerce platforms, and charging transaction fees.
For example, thanks to Mercado Libre, thousands of merchants and service providers in Latin America are now able to offer debit and credit cards as payment methods, allowing them to grow their business as they move away from cash-only payments.
Mobile Phone Manufacturers like Apple and Samsung also saw the opportunity of adding Mobile Wallets to their offer. The high demand for their devices and the convenience they imply, perfectly explain the broad use that the public is giving to their wallets.
A contactless payment is a transaction made using near-field communication (NFC) technology. NFC is a short-range wireless connectivity standard that allows devices to exchange data over radio waves. Contactless payments can be made using credit cards, debit cards, mobile phones, smartwatches, and other devices equipped with NFC technology.
There are several benefits of using contactless payments. First, they are very fast and convenient. Customers can simply tap their card or device on the terminal and the transaction will be processed immediately. Second, contactless payments are more secure than traditional methods because they use encrypted information that is difficult for criminals to copy or steal. Finally, they can help businesses reduce costs by eliminating the need for paper receipts and manual processing of transactions.
With consumers becoming more accustomed to contactless payments and the benefits they provide, and merchants who were previously unwilling or unable to take contactless payments now being able to, it is projected to be one of the major trends for 2023.
Companies have typically relied on third-party integrations to enable their customers to accept payments through their platform, resulting in a disconnected, often slow, and problematic customer experience between software and payments.
Now they are able to address this issue first-hand by becoming payment facilitators and integrating payments directly into their own software solutions. Incorporating payments within the product’s flow, rather than merely bolting them on, provides their clients with a unified experience across all areas of their platform.
Embedded payments are just one edge of a more complex digital finance trend: Embedded Finance, which is expected to grow to 7 trillion dollars in transactions by 2026.
At Arrears, we offer embedded payments to optimize the Debt Collection efforts of our clients.
AI is playing a big role in the Digital Payments revolution. These are the main four ways it is shaking up the industry.
With the strike of COVID-19, many businesses were forced to embrace digital transformation sooner than expected. Loyalty Programs are one of the main technologies adopted in this short period and are expected to grow from $8.6 billion in 2021 to $18.2 billion in 2026.
Loyalty Programs are a great way of increasing the lifetime value of a customer, by increasing customer satisfaction and building a strong relationship with your brand. Offering rewards and special treatment to your most loyal clientele, will make them feel that they are receiving so much value for their money, and will keep doing business with you.
It is also a great way of collecting actionable data. A well-designed loyalty program can provide valuable data that can be used to improve marketing and other business decisions.
Loyalty Programs are quite the old trick, but the digital landscape offers the possibility of great innovation. Check out how Amazon Prime successfully reinvented Loyalty Programs to adapt to their digital nature.
Digital Payments are one of the main lines of innovation for this decade. Many trends (including those ones stated above) will play a massive role in its future. While the outcome is uncertain, we know that the objective of these advancements will always be making payments more convenient, secure, and personalized.
