Payments are arguably the face of fintech. When you think about financial technology, it is easy to think about solutions which are making payments faster, easier and more accessible.

Having looked at some of the biggest technologies to impact the payments world, like buy now pay later (BNPL) and central bank digital currencies (CBDCs), we now look to the future and what the next trend may be.

Ensuring no delays and no failures through 

An evolution of global marketplaces is going to catalyse payments according to James Butland, UK managing director, Mangopay, the licenced e-money solution. The key to success is going to be ensuring there are no delays and failures.

“By 2027, third-party sales via marketplaces will account for 59 per cent of all global e-commerce, and so we’ll see an increased demand for paytech built with marketplaces and platforms at the heart. Marketplace and platform businesses stand alone in the wider e-commerce sector as they have a two-sided ecosystem, which creates complexity and unique needs that cannot be met by generic payments platforms.

“In 2024, we’ll also see another evolution of user experience (UX) within the payments landscape by combining AI tools and human interaction. Today, users have little patience for poor UX, payment failures or delayed goods delivery, which is why it’s vital for businesses to prioritise improving this journey end-to-end.

“When making a purchase online, the user’s journey extends from browsing the website through to receiving the item. Marketplaces need to supercharge this experience, balancing the application of AI and human interaction for a seamless buying journey. This will help B2B, B2C and C2C marketplace and platform operators provide a more tailored user experience and better facilitate their customers’ ever-changing demands, which is essential for achieving customer satisfaction and building loyalty.”

AI will lead the way in transformation

Dan Dica, CEO, Lynx, the healthcare fintech explains how AI will transform risk management and compliance in payments. “The next big payment trend that will leave a significant impact is undoubtedly artificial intelligence (AI). In so many other industries such as agriculture and education, AI’s applications are still nascent, but it has already shown immense potential in payments, particularly in fraud prevention.

“Digital fraud is the fastest-growing type of fraud. It’s estimated that fraud loss is $5.4trillion globally and accounts for approximately $185billion in losses in the UK. Despite global financial institutions spending upwards of $206billion annually
on compliance with financial crime prevention regulations – the desired effect is not being realised.

“In 2024 and beyond, AI technology will transform payment risk management and compliance, bringing efficiency and enhanced risk identification. This development could not have come at a better time for financial institutions’ in-house fraud teams. They are grappling with increasing constraints on their resources while facing escalating automation employed by fraudsters, necessitating an ongoing effort to stay ahead of the curve.

“By analysing vast datasets to detect behavioural patterns and anomalies, advanced AI can deliver real-time risk scores at scale, reducing the likelihood of fraudulent transactions. This lightens the human load, allowing teams to concentrate on more complex and strategic tasks.

“The most effective AI fraud prevention solutions integrate insights from fraud prevention, anti-money laundering (AML) and cybersecurity risk identification capabilities to address evolving threats or regulatory requirements. Furthermore, by continuously adapting to evolving threats and regulatory requirements through regular model enhancements and daily retraining, these solutions fortify resilience against potential drifts in data distribution, ensuring consistent accuracy”.

Combatting bad usage of AI with AI

A similar sentiment was shared by Kjeld Herreman, head of strategy at RedCompass Labs, the fintech consultant and accelerator. He added that reducing costs using new technologies was imperative for paytechs.

“The most innovative changes that we see in payments is the use of AI and machine learning, which can help banks increase their straight-through processing rates, increase their insights into their client’s transactions, and also deliver on changes more cost-efficiently.

“As fraudsters start to use AI for nefarious purposes such as deep fakes, banks will quickly need to address these threats to protect their customers by developing their own AI systems.

“Soon, payments will be instantaneous, cheap, frictionless and interoperable, able to move along and across different payment rails. However, as was the case in the telecommunications industry, innovation doesn’t end because a product becomes commoditised. Payment service providers will need to find ways of monetising the data generated by payments and creating value-added services that elevate payments beyond a simple transfer of funds.

“The biggest trend will be payment service providers reducing the costs associated with their payment operations whilst simultaneously upgrading their real-time capabilities and looking for ways to connect the various payments rails and closed loop wallets. As the industry continues on the path towards commoditisation, it will become essential for payment service providers to leverage artificial intelligence to service their clients efficiently.”

Four possible trends to emerge

Alex Reddish, managing director of Tribe Payments, the paytech, identified four key areas which are likely to trend in the paytech world in 2024: SoftPOS, smarter data, A2A payments, and modular technologies

“According to a recent Tribe Payments survey, more than 80 per cent of merchants want to improve their customers’ experience, but keeping costs down remains a key priority. Merchants, especially smaller or micro-merchants, don’t want the hassle of hardware that’s time-consuming to install, expensive to maintain, and difficult to upgrade every time a new payment method or industry standard emerges, like PCI DSS.

“In contrast, SoftPOS solutions like Tap-to-Pay enable untethered payment acceptance, available wherever the merchant takes their iPhone, with remote updates delivered over-the-air.

“Additionally, cash can’t tell a merchant what items customers like to browse before buying, nor can it tell them their average spend or where they like to spend it. With SoftPOS, those cash-heavy merchants can now start accepting card and digital wallet payments with just their iPhone, boost their revenues, and gain new data-driven customer insights.

Smarter data

Data’s real value comes from being able to anticipate customer behaviour and create hyper-personalised experiences. And increasingly, that’s what customers themselves are demanding. It’s through enhanced data analytics and insights that innovations spring from.

A2A payments

The new Apple-open banking combo gives consumers the option to make account-to-account (A2A) payments and also cuts out cards altogether. For businesses, A2A payments promise higher conversion rates, reduced transaction costs, and real-time settlement. No need for customers to type in card or account details at checkout, as their payment details are securely stored to enable faster, smoother one-click payments.

Modular technology

Traditional banks have been held back by legacy infrastructure that can’t easily integrate new digital services and UX desired by their digitally native end users. This is where modular technology enables fast integration and distribution of new services. Additionally, this can be easily updated in line with new regulations and new customer use cases.

Managing new payment methods

The next trend to hit to payments world according to Stuart Davenport, chief product officer, Conferma Pay, the virtual paytech is offering a variety of payment methods.

“Within the travel industry, we’ve seen an explosion of virtual card payments, enabling businesses to benefit from spend controls, security, and automatic reconciliation to ultimately deliver streamlined enriched data into their ERP. Through adoption by global travel businesses, both corporates and card issuers have recognised the applicability of virtual cards for non-travel spend.

“A key element to the proliferation of virtual cards within travel was embedded nature of the payment to the purchasing process. Embedding payments into the procurement workflow is crucial to scale.

“Historically, B2B account procurement or online B2B marketplaces payment processes have been focused around A2A invoice payments, we’re now seeing an awakening to the benefits of embedding digital payments to bring broad efficiencies to both buyers and suppliers. Through education on the benefits of card, specifically cashflow, we’ll start to see increased card acceptance levels and higher ATVs.

“A new challenge for finance teams will be managing the broad choice of payment methods they’ll have available. They’ll need intelligent tools to automate how pay-outs are made to continue to the drive of efficiency, making decisions on whether to pay now, later, or avoid fees. Payment choice is driving innovation and efficiencies.”

Stablecoins will take 2024 by storm

The world of digital assets and cryptocurrencies will play host for the next big payments trend according to Marc Taverner, the CEO and co-founder of XEROF, a Swiss financial services provider specialising in cryptoassets.

Looking at stablecoins and CBDCs, he says: “The next big trends in payments will be the growing, global use of USDT, USDC, and other stablecoins. These have been around for some time, but their adoption, especially in the last year, shows that the industry is developing utility, and not speculative assets, which means they are poised to seriously impact the paytech world.

“There is, however, a competition emerging between CBDCs and stablecoins. The latter is proving utility in the void where CBDCs might be seen as the ones that are taking too long to develop, which is why stablecoins are also one of the most impactful payment solutions of the last five years. They have solved for a gap that central bank currencies and systems had not solved for decades.”

A focus on protection

James Lynn, co-founder, Currensea, the direct debit travel card provider pointed out how protection will evolve in 2024.

“Protection is an increasing priority for consumers and the industry is likely to focus heavily on this over the next 12 months. While card payments have a long foundation of consumer protection – supported and financed by merchants through fees to issuers, acquirers, and the scheme – protection of the next frontier of account-to-account payments, especially through open banking, is still in its early stages.

“However, the challenge lies in the lack of a clear funding strategy and a consistent international approach to protection. As a result, this presents a significant hurdle—the proverbial ‘elephant in the room’—that demands a speedy and effective resolution.”

Payments are arguably the face of fintech. When you think about financial technology, it is easy to think about solutions which are making payments faster, easier and more accessible.

With so much potential for different technologies to leave a mark on the paytech industry, we reached out to industry experts to find out what they believe will become the next big payment trend.

Artificial intelligence

For Paul Harrald, CFO of Curve, the financial payment super app, it is hard to look past artificial intelligence (AI) as the next big trend for the space. He explains: “AI is the next big payment trend.

“It will improve the efficiency of payment companies by eliciting patterns from payment data. This will allow a great deal of customer personalisation and improve the overall payment experience. An example of this is fraud detection, which has been well-modelled by AI (deep learning) for more than 20 years.

“Most fintechs are very well placed to avail themselves of the opportunity of generative AI. This is because they tend to be microservice-designed and natively digital. Fintechs have long embraced agile methods, which favour rapid and continuous deployment, meaning they are likely to be first to try out and optimise, and while always subject to nascent regulation will be well placed to shape this regulation.

“More importantly, the typical architecture a fintech adopts will allow customisation and personalisation at customer level; in effect, fintechs can supply operating systems in which customers develop their UI. This can be profoundly difficult in monolithic and highly production-focussed environments, whereas a fintech whose essential role is offering its products via a UI, and who spends a great deal of time in that UI, will naturally see how to allow its customers to do the design work. In this regard, fintechs often have tech-savvy customers which may help adoption.

“In this way, fintechs that allow their customers to design what they see as beautiful, those who allow customers to choose the tone of voice with which they are addressed, and who provide choice and convenience wrapped up in customisation, will undoubtedly prevail as they will dominate in all aspects of the customer experience.”

Open finance driving innovation

Pedro Batista, VP of payments at Payhawk, the business spend management firm, explains how open finance could lead the key to the next leap in innovation: “In 2024, we will see an explosion of innovation in payments driven by open banking and open finance regulations.

“As third-party providers gain more access to financial data, new financial services will emerge that leverage transaction data to offer personalised insights and value-added services to consumers and businesses.

‌”For SaaS companies like us in the spend management space, this will enable new product capabilities that seamlessly integrate payments with financial planning and cash flow management. For example, we will be able to analyse historical transaction data to predict future spending, identify wasteful spending and automatically take action like cancelling unused subscriptions or re-allocating budgets. Machine learning will enable our spend management platforms to get smarter and more personalised over time.

“Real-time payments will become the norm, allowing businesses to optimise cash flow in 2024. Our platforms will leverage real-time data to provide dynamic insights into organisational spending and liquidity. This will support faster, data-driven spending decisions and allow us to offer premium services like flexible reimbursements, instant spend notifications and daily spend reporting.

‌”Stronger partnerships between fintechs and banks will further accelerate innovation. As a scaling fintech, we are uniquely positioned to collaborate across the payments ecosystem – from processors to banks to regulators – to shape the future of Intelligent Spend Management. Our open and configurable platforms will enable rapid deployment of new innovations in spend analytics, payments and cash flow management as they emerge.”

Addressing back-end challenges

Jon Knott, head of insights at Dojo, the card payment solution provider, also had his say on the next big paytech trend: “After the pandemic saw companies shift to digital, businesses increasingly looked towards new and innovative payments services – from QR codes to open banking – leaving many with ‘patchwork quilt’ payment infrastructure and challenges around data integration.

“With the speedy roll-out of new systems and applications, businesses are struggling to join disparate technologies, resulting in challenges around accountancy and tracking of finances, as well as operational inefficiencies across their organisation.

“This year, we encourage businesses to uncouple their electronic point of sale (EPOS) and payment systems as the first step to achieve a more seamless payment infrastructure, something Dojo enables.

“Not only is this advantageous for security and data protection, but it also allows businesses to take advantage of innovative products and specialist providers an all-in-one system may not supply, as well as significantly reducing the risk of downtime by relying on one provider.

“We anticipate more businesses addressing such back-end challenges to integrate their different payments systems, boosting efficiency of the business and ensuring higher quality data and insights that can inform decision-making processes moving forward. Such insights will help them focus on what’s most important – delivering an even better experience for their customers.”

Tap-to-pay technology becoming ‘truly embedded’

Richard Carter, CEO and co-founder of Lopay, said: “2024 will be the year tap-to-pay technology becomes truly embedded in the way small businesses and sole traders take payments.

“Millions of people already manage their entire life through their smartphone, so for mobile devices to become the primary way we pay for things seems like a natural evolution. The change is already underway. Official data from UK Finance shows that in 2022 30 per cent of adults were registered with at least one mobile payment service, with that figure climbing to over half among the under-35s.

“This year we’ll see the technology be embraced beyond these primarily young early adopters. For consumers, the ease of paying for things by just tapping their phone onto a merchant’s phone makes the appeal of tap-to-pay obvious. But we’ll also see a big shift among businesses, for whom tap-to-pay removes the need for cash, cards, card readers or tills, reducing their costs and streamlining the sales process.

“Rewards and expense programmes are set to shake up the paytech industry in a big way, as payment platforms start enabling merchants to not only take payments, but spend their earnings and accrue rewards points for redemption on tailored deals and offers. It’s an approach that adds value for their users while expanding traditional payment platforms into full digital wallets.”

‘Several megatrends’ in the future of paytech

Funmi Dele-Giwa, general counsel and head of governance at Onafriq, the omnichannel payment network, explains which trends could be the next to make a big impact on the space: “In the last few years, the payments industry has gone through significant transformation.

“New technologies that drive innovation have been introduced and fintech began to move into the mainstream financial services space. Many fintechs challenged the incumbent payment players through the use of advanced technology and by focusing on solving real customer pain points.

“Looking forward, there are several megatrends which will likely continue to drive dramatic changes in the payments industry. Digital currencies will continue to challenge the status quo and will likely spearhead new products, services, and channels.

“Artificial Intelligence and the ability to mine and utilise all the data associated with running a payment business will play a more and more important role in the near future, especially in areas such as risk, compliance and KYC. Finally, enhanced regulatory oversight will require payment players to mature in their regulatory approach and invest in their regulatory compliance environment.

“Although many of the payment trends are global in nature, the impact they have differ from market to market. On the African continent, where we operate, the new trends in payments facilitate financial inclusion at scale while across the more developed world, payment trends are typically those that enhance already existing payment methods – making them faster, simpler and more transparent.”

Stablecoins

According to Dr Paolo Tasca, founder of the Centre for Blockchain Technologies at University College London, stablecoins may well emerge as the next payment trend: “The next big paytech trend in 2024 will absolutely be stablecoins, as they will be utilised for institutional payments.

“The creation of unified payment networks like the Unified Payments Interface 2.0 and the ‘buy now pay later’ offers.

“Developed markets have the issue of ‘what’s good enough’ versus the leapfrogging in emerging economies (like China jumping straight to cash). Digitisation in emerging economies is threatening the dominance of payment networks in the Western world, which is not upgrading itself as fast.”

Payments are arguably the face of fintech. When you think about financial technology, it is easy to think about solutions which are making payments faster, easier and more accessible.

Buy now pay later (BNPL) has certainly taken the paytech world by storm. We previously discussed if the technology would be able to surpass credit cards due to its popularity.  While the general answer was “no it is unlikely”, some experts suggested that should BNPL’s growth maintain its current trajectory, then it could be possible. This can only be done if the BNPL hype remains – but is it already over?

We reached out to the industry to find out.

Hype is not over. Financial education is needed

Dr. Kate Mielitz, accredited financial counselor, Beyond Finance, the financial education platform, suggested that the BNPL hype was not over. However, she noted the importance of financial education around the technology so more people could be aware of the booming technology they could be tempted to use.

“We need to do a much better job of educating the public about the pros and cons of credit cards and BNPL short-term loans. Foundational financial education and practice, such as budgeting and understanding how credit works, must be part of high school, trade school, and college curriculums. We need to require this as foundational education so more consumers are informed about the pros and cons of their purchasing decisions.

“Further compounding the issue is that if interest rates go down, consumer spending will likely increase. And through BNPL, consumers could feel that they’re much more flush than they are and get into a financial pinch.”

Hype is not over. It has reaffirmed its value since the pandemic

The pandemic accelerated BNPL’s adoption. However, many technologies that emerged during that time have since slowed their growth as hype has died down. This is not the case though for BNPL according to Tom Voaden, head of partnerships and channel sales at BR-DGE. He explains how it has evolved to match new consumer needs and in turn, kept its hype.

“Buy Now, Pay Later was one of the breakout payment innovations during the pandemic, but, nearly four years on, the technology remains an important and powerful tool for merchants and consumers. It is easy to write off BNPL as a pandemic phenomena, but like all alternative payment methods, BNPL has developed over time, reshaping itself so that it remains relevant and competitive in the eyes of the payment ecosystem.

“In the last 24 months, BNPL has reaffirmed its value to consumers as more people have been financially challenged by the rising cost-of-living. Not only have market players been able to support consumers with flexible short-term loans, but many have worked hard to create value-add services such as comparison or artificial intelligence functions to improve the consumer experience.

“While we expect to see tighter regulation of BNPL in the near future, this shouldn’t be a barrier to future innovation. For example, while the technology has penetrated the online market, many believe there is a strong opportunity in the years’ ahead to become a greater fixture in-store and develop an improved multi-channel offering for merchants.”

Hype is not over. The younger generation will ensure its success

“The hype is far from over,” said Irene Skrynova, chief customer officer of paytech, Unlimit. BNPL is a natural fit for those wanting to make their money go further she explained. “Economic headwinds show no sign of going away, so BNPL will continue to be a crucial tool in the belt of consumers. Customer onboarding processes will need to be as seamless as possible for retailers to reap the rewards of this growing market.

“The promise of cheap and easily accessible credit makes BNPL payments particularly attractive for Gen Z and millennials. The lack of friction when paying with BNPL is especially alluring when compared to the traditional process of acquiring a credit card.

“BNPL will remain a major growth market. Analysts predict that, by 2027, over 900 million people worldwide will regularly use BNPL. This growth will bring new entrants to the market, and competition will provide consumers with additional choices.

“The accessibility of BNPL can pose risks. Consumers must understand BNPL is credit, and that they need to proactively manage their debts to avoid late fees and credit score damage. Providers haven’t always communicated this clearly in the past, so it’s no surprise that clarity of communication is emerging as a key area of focus for regulators globally.”

Hype is not over. It’s growing

For Daniel Meyer financial services lawyer Freeths, it seems as if BNPL’s hype is only growing as younger demographics continue to adopt the technology. “The hype around BNPL is definitely not over – the sector in fact seems to be growing! The sector has seen larger, more established businesses take an interest, which shows that they see a sustainable and growing sector in the long-term.

“BNPL providers are well-placed to take advantage of new technologies such as AI and machine learning to further improve and tailor BNPL solutions to customers, enabling future growth. Many BNPL customers are also in the younger age bracket, meaning BNPL is definitely not a dying trend.”

In the weeks leading to November, nonfungible token (NFT) data showed a consistent upward leap in weekly sales. While the volume is still far from its peak in 2021, executives in the industry believe the upward trend will likely continue. 

On Nov. 6, data published by blockchain analytics firm Nansen showed that NFT sales volume leaped from $56 million in the week ending on Oct. 9 to $129 million in the week ending on Nov. 6.

According to Jonathan Perkins, the co-founder of NFT marketplace SuperRare, this trend is likely to continue for the coming months. The executive believes that the worst has passed and is expecting upward swings shortly. He said: 

“I think the worst of the NFT-hangover-induced bear market is behind us, and things are turning around. Marketplace volume will always be volatile, but I expect a massive upward macro trend in the next six months.” 

Perkins also believes that the downturn in NFTs was “purely sentiment.” The SuperRare co-founder told Cointelegraph in a statement that in the past 18 months, nothing “inherently went wrong” with NFTs.

“NFTs are a fundamental advancement in the internet because they introduce traceable origin and ownership to digital objects. This unlocks a new online creator economy that can be 100x bigger than Web2,” he added. The executive also believes that in the long term, NFTs will be a big part of the online economy and the space will see volumes that “eclipse those of the last cycle.”

Commenting on the topic, Sonia Shaw, partner and vice president of partnership at digital asset exchange CoinW, said that the recent growth in NFT sales reflects a “broader and more profound interest” that extends beyond art and collectibles. Shaw told Cointelegraph that NFTs represent a significant shift in digital and physical asset management. She explained: 

“Their application in verifying the authenticity of unique and valuable items across industries is pivotal. […] NFTs are an essential part of the evolving digital economy, especially with their integration into Web 3.0 and the metaverse.”

Shaw also highlighted that potential use cases for NFTs could revolutionize industries such as identity management, real estate, healthcare, finance and supply chain logistics. While the executive believes in the role of NFTs in advancing digital ownership, Shaw also told Cointelegraph that it’s essential for players to also be mindful of the challenges. This includes regulatory considerations, environmental impact and security issues.

Related: NFTs in the academy: Fighting fake credentials and unfair wages

Meanwhile, Oscar Franklin Tan, the chief financial officer of NFT platform Enjin, echoed the sentiments. Making a case for NFTs, Tan highlighted that NFTs have already been established as a unique digital asset class entirely separate from crypto. 

The executive also told Cointelegraph that many investors entering the digital asset space back in 2021 were interested primarily in NFTs. Furthermore, Tan also pointed out that NFT communities like the Bored Ape Yacht Club (BAYC) and Azuki have “remained intact” despite the bear market.

As more investors come into crypto, they may also eventually dive into NFTs. “Renewed interest in Bitcoin and Ethereum will necessarily spread to blue chip NFTs and newer collections, including gaming NFTs,” Tan added.

Magazine: China’s surprise NFT move, Hong Kong’s $15M Bitcoin fund: Asia Express