Top Payment trends to watch out for in 2024
Digital payment technology has brought about disruptive changes in our lives. Although these solutions come with a host of advantages, top three factors contributing to their wide-scale popularity are:
The elevated convenience, unparalleled flexibility, and superlative security are the biggest advantages of digital payment solutions. There is no denying that we as a global community have an unsatiable thirst for convenience, so nothing is going to stop here.
In this blog we look at:
Peer to Peer payments
Central Bank Digital Currency
Social Commerce Payments
Let’s look at them one by one:
Have no doubts regarding the growth of mobile payments in the coming years. In the US alone, mobile payments are marked at 53 billion dollars in 2022. It is expected that this number will surge to a whopping 600 billion by 2030.
Mobile payments can be via:
SMS payments or Pay by Link
Peer to peer payments
Mobile payments are easy, simple to use, and swift. Business representatives can meet clients and settle payments with just a smart device. Mobile payments eliminate the need for inserting cards or remembering sensitive data every time a payment is to be made.
Studies predict that mobile payment transactions are set to grow to 900 billion in 2024. Mobile wallet or digital wallet is an application that enables users to send or receive money. Apple Pay, Google Pay, Samsung Pay are all examples of digital wallets. Users can sue digital currency units in exchange for goods and services.
Did you know that more than 50% of Americans use digital wallet more than any other mode of payment and this includes credit/debit cards too. Recall that American society is still heavily card-reliant economy and yet owing to its reliability, security, and superior convenience are all reasons attributed to its popularity.
Biometric payments are another emerging advanced payment technology. This technology was until now limited to security agencies and other law enforcement entities, but today, its increasingly finding more acceptance in mainstream transactions.
With giant card companies like Visa and Mastercard offering biometric cards, the technology has received much needed fillip. Biometric payments use a gamut of biometric authentication methods to authorize a transaction. Iris or retina scanning, face recognition, DNA matching, vein pattern analysis, etc. are various methods used.
P2P payments are mostly used to send money directly to people. PayPal, Venmo, etc. can be used to enable seamless transfer of funds between two parties. Using a peer-to-peer application downloaded in your phone, you can send money to another person’s account with just their mobile number or email address.
The superlative convenience of these P2P applications make them very popular. However, the biggest disadvantage that is perhaps stymieing its wide-sale use is its increased vulnerability for fraud.
Scamming and phishing attacks are very common in P2P payments. But to fight this, emerging technologies like biometric verifications and strong multi factor authentication can be used. Also, mostly P2P payments are free of costs and come with no additional hidden charges. However, few card companies levy 2% to 3 % charge.
When APIs are used to share financial data of a consumer, with their consent, to third party vendors, the process is called open banking. There is scant doubt regarding the pivotal role open banking has played in the evolution of the financial services sector.
These third-party service providers can be SaaS companies or Fintech establishments or any digital payment solution providers. Open banking differs from traditional banking in the sense that traditionally only banks had access to the customer’s financial data.
With the emergence of open banking, consumers and businesses enjoy more access to financial products and services that can be utilized to better financial management.
Popular investment banking applications like Robinhood or Wealthsimple are examples of business enterprises that leverage open banking.
Central Bank Digital Currencies
One of the latest and most advanced payment trends is CBDC, a digital version of a country’s currency. Do not confuse CBDC with crypto currency because unlike crypto, CBDCs are regulated, and its worth is fixed by the country’s central bank.
Every government is well aware that the future of payments is digital, and the only way forward was digital adoption. CBDC is the global government’s foray into the cashless sector where fewer people are expected to use traditional currency.
Finland has been experimenting with CBDC as early as 1993, and several other countries are now following suit. India is planning a phased roll out of e-rupee, the UAE has launched its e-dirham. China with its eCNY, Singapore, Jamaica with its ‘Jam-Dex’, e-Naira of Nigeria, “sand dollar” of Bahamas, Ghana are a few examples.
Any currency that exists virtually or digitally can be called crypto. The major difference with CBDC is that there is no centralized bank or bank-link entity involved in verifying or authorizing transactions.
It’s more like decentralized, peer to peer, digital payment ecosystem. A distributed public ledger enables crypto transactions and is based on block chain technology. When you own crypto currency, no tangible currency is involved.
Bitcoin, Ethereum, Ripple, Dogecoin, Litecoin are a few examples of crypto currency.
Social Commerce Payments
The social commerce sector is expanding and growing exponentially. The sector is expected to touch 6 trillion by 2030. Social Media platforms like Facebook, Instagram, TikTok are increasingly becoming the go-to application for best recommendations for public and what is best, these sites are not just social media platforms alone. People can actually shop via these apps.
Businesses can set up an account on any of these platforms and start selling their products directly to customers. Businesses are exploring these portals to tap into a whole range of customers which they will be missing out on without online presence or digital payment options.