Now that the new year has arrived, it is appropriate to consider the difficulties the payments sector is facing as well as our hopes for the future.
Paytech saw some notable advancements in the US, Europe, and the UK last year. In this article, I discuss the trends that, in my opinion, had the biggest impact on the payments industry in 2023 and how I think those trends will continue to force fintechs to change in 2024.
Of the many trends we saw last year, one that experienced a rapid rise to prominence was social commerce. A fast-growing branch of ecommerce, social commerce is facilitated by social networks and digital media and resonates with Gen Z consumers. Its rise in the post-pandemic years has been rapid, and I expect it to go from strength to strength this year as brands attempt to deepen their understanding of Gen Z consumers by meeting them where they spend the most time: social media platforms.
The data seems to bear this out, with 67 percent of consumers having already made purchases through social media platforms and 53 percent of global consumers stating their intention to shop more through social media platforms, according to Wunderman Thompson.
Of course, the knock-on effect of ecommerce diversifying and becoming ever more global is that fintechs must adapt and tailor their cross-border payment solutions. This year, there will be a greater emphasis on eliminating financial borders between different regions and diverse markets and for fintechs to offer solutions that connect retailers and merchants with a global customer base.
In November, under the new eIDAS 2.0 regulations, the European Parliament and the Council of the EU finalised an agreement introducing European Digital Identity Wallets. Following the full guarantee of EU law, digital wallet holders will now be able to open bank accounts and make payments, amongst other things, with their digital ID. What comes next will be a surge in demand from European consumers for digital wallets, changing how institutions think about opening accounts and executing transactions and pushing us all closer to a cashless society.
As the European payments landscape moves closer to its Chinese counterpart — which has embraced digital payments more than any other nation — we can expect a higher level of trading, increased transaction volume, and more collaborations and partnerships between financial institutions and third-party service providers worldwide. However, fintechs will once again face challenges they must overcome. The lack of uniformity across the European payment landscape, the diversity of payment preferences, and the disparities between technologies across member states will require flexible and dynamic solutions from payment providers.
The rise of social commerce and the demand for digital wallets in 2024 will be two great drivers forcing fintechs into a strategic rethink. Most of the industry still separates local and international payments, with integration coming via payment gateways that are often expensive and prone to delays. However, we are witnessing a shift from a segregated payment landscape towards a single global payments market as everything becomes internationalised.
To benefit from this change, fintech companies need to evaluate the performance of their cross-border payment services. Old, slow, and outdated technology with delays, difficulties, and limitations will throw up roadblocks for traders and retailers, making it harder for them to expand their businesses to international markets. It also challenges consumers who expect an efficient, effective, and seamless customer journey when purchasing products overseas.
So, I expect fintechs to make every effort to make transactions as frictionless as possible this year. I think we’ll see a reverse in the previous trend — in which disruption forced businesses to adopt digital payment solutions quickly at the expense of UX — in favour of delivering a world-class customer experience. We will see user-friendly interfaces, faster payment processing times, and real-time feedback mechanisms become crucial to how fintechs think about their capabilities and assess their customer journey. Anything that streamlines the client's payment procedure, from the front- to the back-end, will be valuable and crucial to success in 2024, as the industry continues to move towards truly instant payment solutions.
This article was originally published in The Paypers` Global Payments and Fintech Trends Report 2024. The report compiles insights and expertise from leaders representing companies across the financial services spectrum and it delves into the latest innovations and trends in payments and fintech across key markets worldwide.
Irene Skyrnova is the Chief Customer Officer at Unlimit. She is responsible for all client interactions and for building the company’s long-term customer strategy. Irene is an expert in customer experience, success, cryptocurrencies, and ecommerce. She boasts a breadth of international experience, holding roles that span public relations and marketing to customer care and business development.
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