The payments industry is constantly evolving. These are the key factors that will have the greatest impact on consumers and businesses in the next year.
The pandemic is back!
As the pandemic started to recede, the global economy saw a strong recovery during the second half 2021. With COVID-19 booming in many countries, consumers and businesses will face new challenges. While most are better equipped to weather the storm than during the initial wave of flooding, others will struggle to withstand the continued hardships.
The H1 2022 overarching story will focus on the payments industry continuing to support businesses in their efforts to overcome the pandemic.
Globalization of instant bank transfer
Financial institutions can now offer a variety of payment services through the Open Banking legislation in Europe. This includes direct bank transfers to facilitate cross-border real-time banking payments. Although there is no legal framework to support Open Banking outside of Europe, this doesn’t mean that financial services or fintech’s can’t build their own networks through different methods.
Fintech’s and banks are establishing relationships that enable real-time banking payments and bank transfers between countries like the U.S., South America, and Australia. Other countries such Australia and India are also investing in similar schemes. The expansion and integration of cross-border direct bank payments networks into one structure, akin to the global Open Banking initiative, will be one of the major trends in global payments by 2022.
5G, Wallets as-a-Service and embedded finance
One of the most interesting trends in fintech is the incorporation of payments and other financial products into services and apps that are not financial. Customers can now get the financial products they want, right when they need them, by integrating payments and other financial services into their user experience. It’s easier, more intuitive, and most importantly, it’s effortless and frictionless.
Two factors that we expect to see driving further growth in embedded finance is the expansion of Wallets-as-a-Service, which will enable non-financial businesses to quickly implement multiple seamless payments through a single simple integration, and the development of 5G, which will enable more IoT enabled technologies to integrate financial elements into their user experience.
The mass appearance of crypto payments
Since years, crypto evangelists have been hoping for more real-world applications for decentralized currencies. The most popular of these is eCommerce payments. We are starting to see businesses respond.
Globally, businesses offering crypto payment options in online checkouts will see a rapid increase in demand over the next 12 months. Our latest research shows that nearly half of all businesses (48%) say they are determined to include crypto payments in their online checkouts as soon as possible. 53% also say they plan to add crypto to their online checkout in the coming year.
Mobile wallets have the potential to surpass cash and cards in-store payments
One legacy of the COVID-19 payments pandemic will be contactless payments taking over physical payments. However, we don’t expect this trend to slow down. Mobile wallets are becoming more popular due to their security and convenience. For example, in the U.S. 40% of smartphone users were using mobile wallets in 2020. This growth is expected to continue as global smartphone penetration accelerates and online and offline payment methods merge.
Neo banks use payment to win high-street banking customers
In recent years, many high-street bank branches have been closed in many countries (e.g. In the UK, over 4,000 branches of banks have been closed since 2015. This trend will continue, and digital-only banks will be able to fill the gap for customers who are unable to access their bank in person.
Customers who have used branch services for years will have to choose digital banks over traditional banks. This is in part because they don’t have the technical savvy. Customers who have maintained a relationship with their bank to that end will still need cash. Digital banks are increasingly partnering up with digital cash solutions to transform third-party stores into ‘virtual branch’. The customer makes a digital transaction and then deposits cash at a registered payment point.
A more important role in omnichannel payments
Businesses need to renew their commitment to omnichannel payments. The COVID-19 pandemic has increased the speed of merging online and retail payments. The consumer shopping habits of consumers have changed. Customers will continue to place orders online, collect their products in person, or pay for delivery. We will also see more app checkouts in stores that allow customers to shop in person and pay online.
In 2022, businesses that didn’t embrace omnichannel before will need to rethink their approach. Our recent research has shown that online retail is the future of retail. 71% of small U.S. businesses accept online payments, and nearly half of those who don’t plan to do so in the future will. However, only 13% of these small businesses are looking at closing their stores and going online exclusively.
Businesses must recognize the value that a single source can offer in terms of customer behavior and trends to succeed within this environment.
Balanced Payment Processing We work hard to stay on top of the current payment trends. We also continue to grow our company to keep up to date with the latest trends. This will help our customers’ growth. If you are interested in learning about the payment processing offers, we provide to small businesses please call us at (800) 354-6256 or via email [email protected].