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.

As our paytech monthly topic concludes we heard from the industry about the future and what new trends will impact the paytech world. We take a retrospective look and investigate which payment technologies have shaped the industry into its current iteration.

Buy Now Pay Later (BNPL) has taken the payments world by storm

Different age groups are very quickly adopting BNPL explains Rich Bayer, UK country manager, Clearpay, the BNPL provider: “The growth of BNPL as a preferred payment option is one of the most significant shifts retail payments has seen in the last five years – and the trend is set to continue.

“Clearpay’s latest Oxford Economics report revealed that nearly one in three UK consumers used BNPL over the 12 months ending August 2023, with this figure rising to 41 per cent and 36 per cent respectively among Gen X and Millennials.

“This data, coupled with the fact that Boomers were the payment method’s fastest growing group of users last year, demonstrates that it’s no longer accurate to think of BNPL as a product just for Gen Z and Millennials.”

Digital wallets are usurping other payment types

For James Fry, senior vice president strategic expansion, WorldPay, the payment processor, digital wallets have been the most disruptive payment technology in the past five years. He explains that more retailers will expand their offerings to include them as time goes on.

“Without a doubt, digital wallets have had the most profound impact on payments in the past five years. According to The Global Payments Report, digital wallets have usurped other payments types for both e-commerce and at the point of sale (representing 49 per cent and 32 per cent market share respectively) showing how truly disruptive the technology has been.

“Not only that, but these payment methods also continue to be the fastest growing with forecasted rates of 12 per cent and 15 per cent CAGR for ecom and POS. As consumer preferences drive this space, I would expect more retailers to expand their offerings to enable digital wallet and contactless experiences for their customers. The message from consumers is clear: they desire the seamless and fast experiences digital wallets and contactless payments offer.”

It’s not just technology that has been setting trends, but the companies using it

Bonnie Green, solutions architect, Shieldpay, the payments solutions provider, looks towards Stripe as a trendsetter for the payments industry, identifying the fintech’s success and how others should learn from it.

“Undoubtedly, the payments industry has evolved and grown substantially over the past five years, with some extraordinary advancements in the underlying technology powering payments. A core player in this space is Stripe. Their streamlined setup, seamless integration, and user-friendly solutions have become the hallmark of its success and have set high standards for the industry.

“I think we should particularly call out Stripe’s remarkable integration capabilities and APIs. Their unique scaling strategy via the developer community with simple, easy-to-deploy coding has led to the company establishing a prolific global footprint.

“With this, it is also important to touch on the pivotal role they have played in establishing an internationalised financial infrastructure. In 2024, we will see an industry-wide focus on cross-border transactions. The early pioneers of paytech, such as Stripe, have been pivotal to setting up a strong core capability, and have set the industry up for success for a new era of global payment transformation.”

Software-driven and self-service solutions hold the crown for the biggest impact

Peter O’Halloran, VP and head of enterprise and digital commerce EMEA, Fiserv, the fintech and payments solutions provider, notes the impact in terms of accessibility and seamlessness that software-driven and self-service solutions have had the biggest impact on the payments market.

“The shift towards software-driven and self-service solutions has been the most impactful development in the past five years. Customers and merchants alike are no longer restricted to fixed tills, which can result in frustrating queues and lost sales for merchants. Being able to accept payments anywhere in-store or even at the fuel court where customers can pay at the pump, has been made possible through smart devices using softPoS solutions.

“We know that customers are also increasingly wanting to pay quickly on their own terms. Merchants investing in unattended self–service options have paved the way– with customers using vending machines, for example, able to make contactless payments from their phones.

“With convenience and flexibility enabled by these solutions, the checkout experience has been entirely redefined for merchants and consumers.”

Straight-through payments

Pat Bermingham, CEO, Adflex, the B2B digital payment processor, explains how straight-through payments have shaped the market in the last five years, look at how processes have evolved.

“In the B2B world, straight-through payments (STP) have changed the game. Five years ago, accounts payable teams would typically call suppliers to provide card numbers for payment. This wasn’t efficient, and huge delays could be incurred by businesses using this approach. However, STP has flipped the B2B payments process on its head.

“STP enables real-time commercial card payments and puts power in the hands of buyers, rather than suppliers. Buyers can automatically ‘push’ payments to suppliers, increasing security and control, speeding up payments and significantly improving supplier relationships that are crucial to better business. It also removes burdensome PCI DSS compliance from the process by automating manual processes.

“Do not underestimate the impact STP has in a B2B payment landscape worth trillions. It helps boost organisations’ ability to conduct business at scale and can support automatic transaction splitting to execute large ticket transactions.

“STP significantly enhances the ability to perform prompt payment, in line with growing regulations. Prompt payments mean a healthier cash flow, something that is vital for businesses of all sizes, but particular SMEs. As more businesses adopt STP, expect to see it further level the B2B payment playing field by reducing barriers to faster payment.”

Tap-to-Pay technology has transformed terminal accessibility

Tap-on-phone and tap-to-pay have revolutionised POS terminals, enabling greater accessibility for payments explains  George Sinanis, COO, Viva.com, European cloud-based neobank.

“The chorus has been growing from merchants seeking out more affordable and flexible alternatives to legacy POS hardware for some time now. But in the last year alone we’ve seen how Tap-on-Phone or Tap-to-Pay technology, which transforms smartphones into terminals, has truly met this need.

“The technology represents a new era of simple, convenient and flexible payment acceptance for merchants. Not to mention the financial benefits that come from reduced infrastructure investment and maintenance costs and boosted sales opportunities. Whether it’s a sole trader, Black Cab driver or a food truck owner, Tap-on-Phone has enabled smaller merchants to set up their business and simply start taking cashless payment on-site or on-the-go, anywhere their customer is.

“That said, we’re seeing from our own customers that demand isn’t limited to small merchants, with mid-sized retailers and restaurants also identifying use cases to streamline the in-store customer experience and reduce costs. Tap-on-Phone technology will continue to be a powerful tool for a range of merchants as they strive to stay competitive and deliver a premium experience to customers.”

Simplicity comes from using your phone as a payment point

Andrew Doyle, CEO, NorthRow, the AML Software-as-a-Service company, explains how different technologies have enabled a better end-user experience, looking at the rise in mobile payment and blockchain.

“The rise of mobile payments and digital wallets – this has been fuelled by the widespread adoption of smartphones and the internet. As consumers embrace the ease and quickness of tapping their cards or using mobile payment apps to make transactions, the growth in mobile payments has been driven by demands for a more practical and seamless payment experience.

“Such convenience has led to a dramatic increase in their use for both online and physical store transactions.

“Furthermore, mobile and contactless payments often incorporate advanced security features like biometric authentication (fingerprint or facial recognition) and tokenization, which substitutes sensitive data with non-sensitive equivalents. These features have made mobile payments more secure than traditional methods, reducing fraud and increasing consumer trust.

“While other payment innovations like cryptocurrencies, blockchain-based payments, and P2P payment platforms have also made notable impacts, the sheer scale of adoption and the broad influence of mobile payments and digital wallets across various sectors make them arguably the most impactful payment solution in the last five years.”

Amid a boom of new technologies, let’s not forget about the power of contactless

Andrew Burman, principal and global practice lead, transformation and automation, at Ryan, the global tax services and software provider, also identifies various technologies which have impacted the payments world.

“The payment industry has continued to undergo significant and accelerated change over the past five years.

“Contactless payment methods have become more popular, making small transactions more convenient and increasingly replacing traditional cash transactions. However, this convenience has come with an increased risk of fraud, especially as the upper limits for these transactions have increased over time. Fortunately, artificial intelligence (AI) and machine learning (ML) have continued to evolve to help manage the risk of fraud more effectively and efficiently as the volume of transactions has increased exponentially.

“As consumers have become more mobile, it has become increasingly challenging to keep track of their locations, adding a layer of complexity to managing finance and tax implications and liabilities.”

Perks of blockchain

“Blockchain technology has also continued to develop as part of the portfolio of solutions to track payments, providing a new level of transparency across each step of the payment chain. This has resulted in more complete audit trails, on a more real-time basis, which offers greater convenience and insight for finance and tax teams. To match this, tax authorities and auditors are increasingly moving to real-time interrogation of data, meaning transactions have to be captured correctly, the first time, every time.

“Meanwhile, payment methods and models have become more diverse, with the likes of Apple Pay and PayPal increasingly being used at the point of purchase, bringing payment convenience to consumers’ fingertips. However, this increase in the number of parties involved in any transaction has also created challenges in managing and tracking payments.

“Connectivity between systems on a more real-time basis has helped manage this increased complexity, but nevertheless finance and tax teams are feeling the impact of the exponential growth in transaction numbers and are increasingly finding they have to adapt to ever-more complex and voluminous data sets to keep up with the demands and stay in front of the financial and tax-related issues.”

Six years after the implementation of PSD2 mandated open banking for banks, we take a look back at how the open banking ecosystem has evolved with industry experts offering insights into what needs to happen in 2024 and beyond to ensure its continued success.

While open banking has achieved significant milestones, there is a prevailing sense that it has yet to reach its full potential. To assess the current state of open banking, we first journey back to its beginnings to understand the path it has travelled on so far.

The open banking journey to date

Open banking was initially launched in the UK in 2017, shortly after the Competition and Markets Authority (CMA) concluded its market investigation into retail banking. The investigation’s findings revealed the complete dominance of the largest banks in the financial market, prompting the CMA to mandate that the nine largest banks in the UK, known as the CMA9, collaborate to facilitate secure sharing of consumers’ banking data with trusted third parties.

Shortly after, January 2018 saw the revised Payment Services Directive (PSD2) requiring all banks and financial institutions in the EU to do the same.

Both the actions taken by the CMA and the EU directive, PSD2, aimed to drive innovation and competition, as they recognised that consumers and small businesses alike would greatly benefit from the increased competition brought about by open banking. The moves also hoped to significantly enhance the security of payments, as well as the protection of consumer data.

Since then, the open banking space has celebrated several milestones and has continued through its overall development.

But is open banking failing to achieve its goals? 

Despite significant goals being reached, not everyone in the financial sector agrees that open banking is where it should be six full years after PSD2 mandated its implementation.

As Hans Tesselaar, executive director at Banking Industry Architecture Network (BIAN) explains, more work needs to be done to ensure open banking can fulfil the ambitions goals initially set out by the CMA and PSD2: “Despite global efforts, open banking has still not met its potential.

“While there have been some developments since its inception, the fact that open banking is primarily initiated and supported by regulators and not consumer demand means that these have been minor.

“The underlying goal in the past five years has been to increase competition within the sector – but no one wants to give away the advantage of their valuable data, and receive limited benefits in return.

“Going forward, increased education on the benefits of open banking, including reassurance of security implications and enhanced customer offerings will be key to wider adoption. Encouraging adoption among consumers, while looking at those who are having success with this globally, such as Singapore, will be a key driver too.”

What else needs to be achieved?

This lack of consumer demand needs to be addressed if open banking technology can reach its full potential.

To find out what steps could be taken in the UK to address this, we hear from Stephen Wright, who initiated the NatWest open banking programme and is now head of corporate and regulatory APIs there, who explains: “While open banking is used by around 10 per cent of the adult population, its use cases are limited and have not yet entered daily or weekly usage for most consumers and businesses.

“To accelerate increased adoption of open banking, there needs to be a compelling user experience and expansion of use cases. We also need clarity from the government on the future of the new implementation entity and the commercial model for open banking.

“Having a clearer sense of direction on this will catalyse the cross-industry collaboration and market investment that is needed to speed up and facilitate the transition to open finance and smart data.”

Also speaking to The Fintech Times, James Hickman, CCO of Ecospend, the financial data and payments platform built exclusively for open finance, revealed his view that regulators are failing to keep up with the uptake of open banking: “The growth of open banking in the UK has surged in the last six years, benefiting users and businesses with efficient and secure payment solutions.

“Growth has been so dramatic that some of the regulatory framework surrounding the technology still lags behind – most notably in terms of consumer protection. The recently published Future of Payments Review underscores a need for greater clarity in this area, particularly regarding liability for open banking transactions.”

Still space to grow

Use cases and regulations aside, Tom Burton, director of external affairs and public policy at payment processor GoCardless, also reveals that open banking payments technology still has significant room to evolve, with much work left to do: “It’s early days for open banking, especially on the payments side.

“We and experts like Joe Garner, through his Future of Payments Review, believe it will be the primary alternative to card payments. For that vision to become a reality, open banking payments need to be truly ubiquitous.

“That requires a few things: the ability to collect recurring real-time payments across every use case, full coverage across banks and a great user experience. Integration into digital wallets will boost adoption, as will improvements to the dispute resolution process.

“This will take years, not months. So while we fully believe that the future of open banking is bright, there are many obstacles to overcome before it reaches its full potential.”

Can 2024 still be a pivotal year for open banking?

With this in mind, could 2024 be a write-off for open banking milestones? Although there is still much work to be done, it may not necessarily be all ‘doom and gloom’ for the coming year.

In fact, 2024 could still prove to be a “pivotal year”, says Tom Burton: “First, as more household names adopt open banking, such as JustGiving which has just partnered with us for open banking payments, more consumers and businesses will get to experience the ease, security and convenience of open banking. Hopefully, this will breed familiarity and gradually pave the way for future use.

“Second, 2024 could be the year we really start to make headway on Variable Recurring Payments (VRPs), especially given the announcement last month by the Joint Regulatory Oversight Committee (JROC) that a commercial VRP pilot will commence in Q3 this year.

“We have played a big part in the process to date and while it’ll be many more years before VRPs reach mass adoption, maintaining momentum and hitting this milestone is crucial.”

What about open banking beyond the UK?

Adnan Chowdhury, UK policy lead at foreign exchange fintech Wise, explains the firm’s view on the success of open banking across the EU: “Wise was an early adopter of open banking when it first launched, giving us considerable market share in a short amount of time.

“Even though the past six years have posed some challenges that required a significant amount of bilateral testing, we believe that it offers a feasible, low-cost alternative to traditional cards.

“These issues should have been mitigated by the UK’s more harmonised approach. In the EU, open banking has made slower progress: without a single standard, the majority of firms struggled to get traction without relying on a third party.”

Chowdhury also explained what Wise has witnessed regarding open banking across the rest of the world: “Globally, open banking has not yet fully been embraced – not by policymakers, consumers nor merchants. In some places like Australia, where an open banking equivalent exists, the lack of adoption and compliance means the value it currently provides is limited.

“In other jurisdictions where open banking hasn’t yet been established, delivering an open banking framework needs to be the first step in unlocking another way of paying that is affordable and convenient, and can compete with cards. The true challenge, however, lies in making all of these different open banking setups interoperable.”

A new year means new year’s resolutions. Although some people may look to better their health at the gym or choose to read more in 2024, research from Loqbox, the financial wellbeing business, has found that 84 per cent of its members are looking to establish new financial goals this year, as financial health becomes a bigger priority.  

A 2022 study from the UK’s Financial Conduct Authority (FCA) reported that 24 per cent of adults surveyed expressed low confidence in handling their money. Additionally, 38 per cent admitted to having low knowledge and awareness of financial matters. Meanwhile, an ONS study revealed that 42 per cent of adults expect not to save any money in the next 12 months.

However, a stark contrast emerges when comparing Loqbox members’ optimistic savings goals and overall financial wellbeing. It found that 83 per cent of members are looking to set savings goals for the upcoming year, and 53 per cent of respondents declared an improvement in their financial wellbeing since joining Loqbox.

Tom Eyre, co-founder and co-CEO of Loqbox, comments: “As we embark on a new year, the insights gathered from our recent survey paint a compelling picture of the financial aspirations and resilience of our members in 2024. Financial goals are being listed as a key part of many people’s New Year’s resolutions, and this dedication speaks volumes about the drive of UK individuals toward achieving financial stability.”

Tech can provide a helping hand to improve financial situations

Growing Loqbox usage aligns with a broader trend emerging among Brits relying on modern finance tools to improve their financial situations. Data from a PwC study reveals that the UK’s usage of personal finance apps surged by 71 per cent between 2017 and 2022, with people using budgeting apps as tools to track expenses, set budgets, and improve financial habits.

Eyre added: “Our commitment at Loqbox is evident in the transformative impact on our members’ financial lives. While a significant percentage of UK adults express low confidence and knowledge in financial matters, our members showcase a remarkable contrast. Loqbox members are not only setting optimistic savings goals but actively improving their overall financial health. We’re proud to be at the forefront of this positive shift, helping our members take charge of their financial futures.”

Loqbox found that 75 per cent of respondents outline specific goals for improving their credit scores in the next year, showcasing a proactive stance toward overall financial health.

Users aren’t getting carried away this time of year either. Despite a majority refraining from setting a budget during the Christmas holidays in 2023, 63 per cent of members admit to cutting back in other areas to accommodate festive spending. This awareness has caused a setback in spending in areas such as dining out (64 per cent), shopping (50 per cent), social events (46 per cent), and recreation (31 per cent).

Chainlink (LINK) price has rebounded by over 240% from its yearly low of around $4.70 in June 2023. It may rise further still in the coming days and weeks, according to a slew of on-chain and technical indicators, as discussed below.

LINK price nears ascending triangle breakout

LINK’s price has been consolidating inside what appears to be an ascending triangle pattern since November 2023.

Ascending triangles are bullish continuation patterns when formed during an uptrend. They resolve when the price breaks above the upper trendline and rises by as much as the maximum distance between the upper and lower trendlines. 

It appears LINK eyes a similar breakout scenario in December 2023, now treading around the triangle’s upper trendline near $16. Suppose it rises decisively above the said resistance level. Then, its triangle breakout target will come to be over $19.50, up 20% from current price levels.

Thus, if it rises decisively above the said resistance level then its triangle breakout target will be over $19.50, up 20% from current price levels.

Chainlink supply on exchanges plunges

More clues about Chainlink’s potential 20% rally in December 2023 come from data tracking LINK supply across crypto exchanges (the red wave in the chart below).

As of Dec. 3, crypto exchanges held about 150.39 million LINK tokens, the lowest since February 2020. That marks a 19% drop from the 2023 peak of 185.71 million LINK in August, occurring alongside a 150% rise in the token’s value. 

A depleting supply across exchanges hints at traders’ preference for holding LINK tokens over selling them for other assets. So, LINK’s potential to continue its 2023 bull run increases if demand doesn’t diminish.

LINK whales are accumulating 

Strong demand for LINK tokens persist among its richest addresses, according to data tracked by Santiment.

Also read: Is the altcoin season here? How to trade small-cap coins amid high volatility

Notably, Chainlink’s top 200 whale addresses have accumulated $50 million worth of LINK tokens since the beginning of November.

That coincides with a 50% rally in LINK’s market valuation, suggesting that whales accumulated the token at its higher highs. Simply put, Chainlink’s top holders believe its value will rise further by New Year’s.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.