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Updated by 11.15.2023
6 Top Payment Trends Making Their Mark in 2023 and the Near Future
Unbelievable as it may seem, 2022 is drawing to a close, and 2023 is just around the corner. With this in mind, here are six major payment trends to watch next year and going forward.
1. Farewell to Payment Friction
Consumers show little inclination to return to their pre-pandemic use of physical credit cards that require paper receipts and, instead, favor frictionless methods of paying for not only goods but for services. These methods, all of which reduce the steps in the buying process, include mobile and digital wallets, one-click payments, recurring payments, and in-app payments.
A merging of online and offline payment methods so customers can shop as well as make payments, wherever and whenever they wish, will prevail in 2023, analysts say. Statistics support such a contention: According to Statista, an international marketing statistics portal, businesses will process $8 trillion in frictionless payments by 2024, a significant jump from the $3.9 trillion worth of frictionless payments remitted in 2020.
2. Mobile Wallets and More Mobile Wallets
Research from global consultancy Capgemini pegs digital wallets as accounting for more than half of all e-commerce payments worldwide by the end of next year. The number of mobile wallets maintained by consumers is on target to total 4.8 billion by 2025, up from 2.8 billion in 2020, with nearly 60 percent of the world’s population expected to have adopted mobile wallet technology over the next three years.
3. Embedded Payments Enjoy Extended Reach
The past few years have brought heightened interest in embedded payments–digital payment options that are embedded within non-payment apps. Embedded payments are defined as those available at checkout on e-commerce sites, text-based payments, or closed-loop payments where merchants “own” the entire transaction.
Embedded payment solutions adoption has, until recently, been seen primarily in what some analysts refer to as “traditional” markets, such as retail, e-commerce, and transportation. However, demand for embedded payment options is becoming prevalent in other industries, among them healthcare, education, employment, and real estate.
4. Real-Time Payments a Reality
Real-time (instant) payments that are initiated and settled nearly instantaneously are becoming more of a reality than ever. Consider the statistics: According to MarketsandMarkets, the global real-time payments market will explode in 2023, skyrocketing to $25.9 billion from just $6.8 billion in 2018. GrandView Research predicts that the global real-time payments market, which stood at $10.64 billion in 2020, will expand at a CAGR of 33 percent through 2028.
MarketsandMarkets attributes projected growth of the real-time payments market in large part to the “increasing use of smartphones and connected devices and increasing consumer demand for quicker payment”.
In a recent report, GrandView analysts noted that “the flexibility offered by real-time payments to consumers and businesses in making and receiving payments is expected to drive the growth”. The power of real-time payments to help businesses strengthen their cash flows — in turn improving operational efficiencies, budgeting, and overall cash management — will be equally strong catalysts here, they believe.
5. B2B Checks Check Out
Some business-to-business (B2B) payments are still being made by paper check, but far fewer businesses than ever before pay other businesses for goods and services in such a fashion. Moreover, the number of B2B check payments is expected to decrease even more in the coming years.
According to a survey released by the Association for Financial Professionals (AFP) this past October, checks account for just 33 percent of B2B payments in the U.S. and Canada, down from 50 percent in 2013 and 81 percent in 2004. Similarly, Nacha’s ACH Network statistics reveal a 20.4% increase in B2B payments volume in 2021. Through the first half of 2022 (the most recent figures available), B2B volume on the ACH Network was 2.9 billion payments, up 16 percent from the first half of 2021.
Additionally, more than 40 percent of respondents to the AFP survey said their organizations will “very likely” convert the majority of B2B payments to their suppliers to digital methods in the next three years. Another 27 percent of participants deemed it “somewhat likely” that their companies will migrate the majority of their payments to major suppliers to digital vehicles over the next three years, an increase from the 22 percent of survey respondents who said the same in 2019.
6. Artificial Intelligence Sees Real Growth
Worldwide, spending on artificial intelligence (AI) by governments and businesses will top $500 billion in 2023, according to IDC Research. Financial institutions and merchants will continue to leverage AI to pinpoint fraudulent activity and safeguard customer data against it, as well as to power chatbots to aid in payment acceptance.
Banks and credit unions are also relying heavily on AI to achieve and maintain regulatory compliance, with two-thirds of institutions having already introduced it for these purposes and more now doing so, a survey by fraud prevention technology provider OneSpan shows.
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