10 Trends that will Shape the Payments Industry in 2023

January 31, 2023

Tearsheet’s Ismail Umar asked experts in the payments space to share insights on the most important payments trends for 2023.

Based on the insights provided by a number of experts from across the payments spectrum, Umar shares 10 key trends that are likely to shape the payments landscape this year. Important themes for 2023 involve B2B payments, M&A activity, real-time payments, digital wallets, fraud, sustainability, and more.

1. B2B 3.0

“In 2023 and beyond, we’ll see a 3.0 version of B2B payments — one where the new frontier of global B2B commerce is digital, secure, fast, and flexible. We’ll see a rise in B2B mobile payments as the preference for businesses to pay and be paid by phone increases, and B2B payments digitization will fuel increases in B2B ecommerce purchases.

More B2B businesses than ever are now providing online payments, and 80% of B2B transactions are expected to be digital by 2025. The digitization of business processes will continue to accelerate B2B transactions and integrated payment offerings beyond paper cheques and invoices.

Accounts receivable teams are already seeing the benefits of sending electronic invoices and receiving digital payments. More and more governments are making progress in payments digitization, whether in the form of disbursements to citizens or to and from agencies as clients. Banks, processors, and networks continue to make progress against potential use cases for virtual cards. The flywheel of innovation will continue as the ecosystem provides more features and functionality to streamline business payments and operations.”

— Darren Parslow, Global Head of Visa Business Solutions

2. More use cases for real-time payments

“The growing global gig economy will drive the use cases for real-time payments. S&P Intelligence reports that the success of RTP hinges on whether FIs and fintechs can leverage practical applications. Instant payroll for workers at gig economy companies is one such example. During the second quarter of 2022, instant payroll accounted for 15% of the total volume on The Clearing House’s RTP network.”

— Charles Rosenblatt, President of PayQuicker

3. More investment in payment choice to meet consumer needs

“Consumers prefer – and in some cases, need – to pay in a myriad of ways ranging from tapping their digital wallets to paying with government benefits. From enabling payment options like BNPL, PayPal, and pay-by-bank across channels, to allowing consumers to receive payouts instantly into the account of their choice, businesses increasingly view payments as an opportunity to maximize customer choice and create loyal experiences.

Think of the gig economy worker who wants to be paid wages daily, the mother of four needing to use her EBT card to order a grocery delivery online, or the insurance claimant that needs funds quickly to remediate damage from a flooded basement. Each consumer has a unique payment preference driven by a real-life need. Brands will increasingly invest in payment choice in 2023 to create experiences that drive loyalty and enable people to navigate their financial lives.”

— Casey Klyszeiko, SVP, Head of Global Ecommerce and Carat at Fiserv

“As people become increasingly comfortable with doing all their business online – from groceries to gas bills – and the economy evolves to be more global, developers will seek to have a payment option for every niche need that arises. This will appear with the further integration of pay tools in-app and in-site. For example, Instagram now links to your bank so when you’re scrolling through your feed and see an ad, you can purchase that product with a single auto-filled swipe.”

— Sukanya Madhavan, Head of Product Management and Engineering – Payments SSU at CSG

4. Fraud adapts to a “hybrid” world

“As more and more of the world adopts a “hybrid” work lifestyle, fraudsters are keeping pace, adapting their tactics and finding new ways to scam consumers. And with more travelers paying for flights, hotels, food, and making all sorts of purchases along the way, fraudsters have more opportunities to gain access to sensitive data.

With travel quickly returning, we’ll likely continue to see an increase in cross-border fraud. We expect small businesses to continue to be targets, as they often don’t have the resources or know-how to prioritize security tools and other safeguards.

All of this means that security and trust will remain critical. Next-generation authentication breakthroughs in user protection like EMV 3D Secure (EMV 3DS) are helping to make global ecommerce secure in real time. Digital payment methods like virtual cards will continue to make it easier and more secure to do everything from purchasing plane tickets to splitting the check at dinner. Businesses will also become more aware of the importance of investing in security tools to prevent fraud and insurance policies that could help mitigate the impact of a breach.”

— Paul Fabara, Chief Risk Officer at Visa

5. Increased M&A activity

“As fintech valuations take a dive, this could be an opportunity for banks to buy up payments companies. With the amount of niche, specialized paytechs, we may also see some of them converge to combine services.

Additionally, we will see partner consolidation in the payments space be a trend. Companies’ resources have become more valuable than ever before and thus, they will want to work with partners/vendors who can help them across multiple problems, not use 5-10 different partners/vendors with multiple integrations.”

— Charles Rosenblatt, President of PayQuicker

6. Every smartphone will (eventually) become a POS terminal

“Businesses will amend current payment strategies and adopt SoftPOS (Software Point of Sale) for specific use cases, pushing legacy POS companies to develop SoftPOS in-house.

SoftPOS allows NFC-enabled smartphones and tablets to function as payment terminals without any additional hardware. Currently, an estimated 3 billion smartphones have NFC globally, giving about 20% of the world’s population access to this payment technology.

While we don’t see smartphones replacing terminals in 2023, we do imagine that we will begin to see SoftPOS creeping in to augment existing payment technology and hardware to reduce bottlenecks, and in some cases, even cross-border fees.”

— Ralph Dangelmaier, CEO of BlueSnap

“The pandemic sped the transition to unified commerce, blending the in-store and online experience. Customers welcomed these changes, and now want companies to keep, improve and expand their digital channels. For retail, this will show up most clearly in evolving in-store hardware, i.e. the transition from POS hardware to online, phone-powered terminals. In 10 years, hardware terminals as we know them will cease to exist.”

— Brian Dammeir, President of North America at Adyen

7. Consumers will demand more sustainable payments

“While this year will see more people leaving home for work, leisure, and everything in between, consumers are centering concerns about sustainability and climate change in their behaviors and consumption patterns.

According to a recent study from Skift and McKinsey, 40% of travelers globally were willing to pay at least 2% more on carbon-neutral flight tickets. So far, that same data shows that only 14% of travelers have actually done so. In 2023, we expect to see more consumers walk the talk as more options like the Visa Eco Benefits bundle become available.

Recommerce — another term for circular commerce, where rental, refill, repair, resale, returning and redistributing goods make for more sustainable choices — is also gaining popularity, with 69% of participants in a recent Visa survey saying they would choose retailers based on recommerce activities. In the year ahead, we expect more card rewards for consumers who make sustainable choices and tools that help consumers visualize their impact when making plans.”

— Jeni Mundy, Global Head of Merchant Sales & Acquiring at Visa

8. More reliance on digital wallets

“The digital wallet is quickly becoming the preferred way for younger generations to interact with payments, and businesses are following suit. Facing physical coin shortages and the ever-present need to streamline and digitize, we will see businesses largely prefer the digital wallet to dealing in cash or, increasingly, to dealing with physical cards.

With the potential rise of the metaverse, cash will be extinct in that environment, and a physical card will be useless, so customers will have no option but to switch to the digital wallet.”

— Jeff Kump, President, CSG Forte

9. Businesses will move their payments data to the cloud

“To unlock new value from their payments data, businesses will tap cloud solutions to achieve new levels of access, analysis, and efficiency. Enabling secure data transfer via the cloud will modernize how payment data flows to decision-makers, and will guide business decisions.

By leveraging data in real time across business functions, companies will innovate at speeds expected in today’s rapidly changing commerce landscape. With ready-to-query payments data, businesses will also enhance consumer experiences by integrating real-time payment data into the checkout process, strengthening loyalty and rewards programs, improving decisions for embedded financial services, and fortifying fraud mitigation.

Similarly, companies will need to take advantage of enhanced access to real-time data and use it to identify customer trends that can lead to a competitive advantage.”

— Casey Klyszeiko, SVP, Head of Global Ecommerce and Carat at Fiserv

10. Next payments tech focus: the automotive industry

“States like California are leading the charge in making electric cars the primary type of vehicle. As a result, a lot of digital transformation is on its way to the automotive industry, and fintech will latch onto this in 2023 to bring payments more seamlessly into car tech. The automotive industry will need to create a universal experience across their brand from dealership to website to app to car dashboard (including one-click accessory, subscription, and charging payments). Without this kind of integrated experience, companies will risk falling behind competitors and missing out on key revenue generators.”

— Brian Dammeir, President of North America at Adyen

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