As the curtains come down on yet another eventful year, here’s a quick recap of the top payment trends that made news in 2021.
Payments are at the epicenter of transformation…
This explains the groundswell of alternative payment solutions that have cropped up in the past year.
Much like 2020, 2021 threw a curveball at us. In a desperate attempt to thrive in the ‘new normal’, most businesses had to bear the brunt of closure. For all of us in the payments and FinTech industry, while there have been many highs and lows — the highlight has to be the series of payment trends that have been accelerated by the pandemic.
What transpired was a seismic shift in the adoption of digital payments — contactless payments, to be more specific. With the ongoing surge in these touch-free payment options, the global market size of contactless payments is expected to reach $23,410 million by 2027. The likes of Buy Now, Pay Later (BNPL), and Real-Time payments (RTP) have had their moments as well.
These payment models can credit their sudden popularity to the customers’ growing expectations for speed coupled with the need for exceptional convenience.
The power shift to digital
The payments industry has experienced disruption at a pace never anticipated before the pandemic. With cash displacement in play, COVID-19 on its part has turbocharged the adoption of digital payments.
Going by PWC’s study, the global cashless payment volumes from 2020 to 2025 are projected to soar by a staggering 80%.
Source: PwC Strategy& global payments model, 2021
With the pandemic packing half a decade’s worth of change into the last two years — what we’re seeing today, is a significant push towards digital payments.
A much-welcomed push I would say, but certainly, one that was not anticipated anytime, till now.
Mastercard New Payments Index took stock of the growing appetite among consumers for digital payments — as per their survey, in 2022 close to 93% of consumers will consider using at least one digital payment method such as biometric payments, QR codes, and contactless payments.
That said, experts are of the opinion that the global digital payments market will hit $11.29 trillion in transaction value by 2026.
Amid the changing face of payments, the future sure looks promising with new opportunities arising from the digital shift.
With that in mind, here are the top 5 trends that ruled the payments space in 2021.
Looking back at the top 5 payment trends that created waves in 2021
Payment Trend #1: Real-Time payments go mainstream
We’re amidst a massive shift from batch to Real-Time Payments (RTP). Over the years, the growing demand for a faster payments network has paved the way for the deployment of real-time payment rails in 56 countries. RTP’s surge in the last few months stands as a testament to the immense value that this payment model brings to merchants, businesses, and banks.
Payment Trend #2: The Buy Now, Pay Later revolution
Much has been written about Buy Now, Pay Later (BNPL). Deferred payment flexibility, simpler checkout processes, faster approvals, and zero-interest options are just some of the many benefits that BNPL boasts of. As per reports, 3% of global eCommerce revenue is expected to come from BNPL by 2023. While there may be hidden risks that merchants and BNPL providers need to be wary of, the growth trajectory of this trend has been impressive, to say the least.
Payment Trend #3: Cross-border E-commerce, a rising opportunity
The last two years have changed the way we shop forever. The global E-commerce market is set to reach $1 trillion by 2025. All this is to say that cross-border payments have been a game-changer in the E-commerce space. Though we are faced with a glaring need to make cross-border payments frictionless — online marketplaces like Amazon and the increased adoption of digital payments in the retail world, are prime reasons for the rise in cross-border payments in recent times.
Payment Trend #4: AI and ML have shaped the payments industry
Artificial Intelligence (AI) and Machine Learning (ML) have gone way beyond being technologies that are only deployed to fight the war on fraud or automate payment processes. Leveraging the power of machines, artificial intelligence has been actively utilized to streamline payments at every level and make them ubiquitous for the end-user.
Payment Trend #5: A renewed focus on data analytics
Data-driven strategies are ruling the payments space. From analyzing purchase behavior to customizing the user’s experience, in the past year we saw many payment providers making use of vast troves of data to offer customers an inimitable experience.
The payments industry is headed towards an exciting future, with payment modernization at the core of it.
Jeroen Holscher, Vice President Global Payments and Cards Practice, Capgemini backs this up with data:
“About 55% of the executives we surveyed said their technology investment priorities were payments infrastructure modernization.”
At Opus, we are at the forefront of modernizing payment platforms for some of the biggest names in the industry. We look forward to helping organizations accelerate digital transformation and tap into emerging payments trends in 2022.
Follow me on LinkedIn and stay on top of the latest trends and technologies that are shaping the payments industry.