2023 Forecast: Key Payment Trends For Online Businesses to Watch Out For
Payments technology is constantly evolving, and it is important for merchants to stay up to date with the latest trends in order to provide the best possible experience for their customers. In 2023, we can expect to see a number of significant trends in the payments industry that will impact the way merchants accept and process payments. Some of the top payments trends for 2023 include the continued growth of mobile payments, the increasing adoption of cryptocurrencies, a greater focus on security and fraud prevention, the expansion of alternative financing options, and the integration of payments with other business processes. These trends are likely to shape the payments landscape in the coming years and will be important for merchants to consider as they plan for the future.
Here are the top 5 trends we expect to redefine the payments landscape in 2023 and onwards:
- Continued growth of mobile payments: The use of smartphones for making payments is expected to continue to grow in 2023, with more merchants offering mobile payment options to their customers.
- Increased adoption of cryptocurrencies: It is possible that we will see increased adoption of cryptocurrencies as a form of payment in 2023, particularly with the emergence of stablecoins and the potential for central banks to issue their own digital currencies.
- Greater focus on security and fraud prevention: As online payments become more prevalent, there will be a greater need for merchants to prioritise security and fraud prevention measures to protect their businesses and their customers.
- Expansion of alternative financing options: There may be an increase in the use of alternative financing options, such as buy now, pay later services and subscriptions, as more merchants look for ways to offer flexible payment options to their customers.
- Integration of payments with other business processes: With the emergence of the embedded finance services, it is likely that we will see more integration of payment processes with other business systems, such as inventory management and customer relationship management, to streamline operations and improve the customer experience.
You could also check our in-depth interview with CatalystPay CEO, Kevin Hart. From emerging technologies to shifting consumer preferences, this is a must-read for anyone looking to stay ahead in the payments industry.
1. Continued growth of mobile payments
According to a report by the consulting firm Accenture, global mobile payment transactions are expected to reach $4.4 trillion in 2023, up from $2 trillion in 2020. In addition, research firm eMarketer predicts that the number of mobile payment users worldwide will reach 4.9 billion in 2023, up from 4.1 billion in 2020. These trends demonstrate the significant growth of mobile payments and the increasing importance of this payment method for merchants.
There are many different mobile payment options available to consumers and merchants. Some examples include:
- Mobile wallet: A mobile wallet is a digital version of a physical wallet that allows users to store and manage their payment cards, such as credit and debit cards, as well as other types of information, such as loyalty cards and tickets. Mobile wallet payments can be made in-store or online using a smartphone or other device.
- In-app payments: Many apps, including those for ride-sharing, food delivery, and online shopping, offer in-app payment options that allow users to make purchases without leaving the app.
- Mobile point-of-sale (POS) systems: Mobile POS systems allow merchants to process payments using a smartphone or tablet. These systems are often used by small businesses and merchants who don't have a traditional POS terminal.
- Contactless payments: Contactless payments use near field communication (NFC) technology to allow users to make payments by simply tapping their smartphone or payment card on a contactless terminal.
- SMS payments: SMS payments, also known as text-to-pay, allow users to make payments by sending a text message from their phone.
- Mobile banking: Many banks and financial institutions offer mobile banking apps that allow users to make payments, check their account balances, and manage their finances from their smartphone.
2. Increased adoption of cryptocurrencies
Cryptocurrency payments are gaining traction as a preferred method of transactions. A survey by Deloitte shows that a majority of retailers, almost 75%, intend to accept payments via cryptocurrency or stablecoin in the next two years. These digital currencies provide a secure, fast and cost-effective way to transact as compared to traditional methods, making it an attractive choice for businesses looking to diversify their payment options.
Cryptocurrency payments offer a number of advantages over traditional payment methods. Some of the most common ones include:
- Security: Cryptocurrency payments are secure and private, making them a great option for businesses to accept digital payments with peace of mind. One of the principal benefits of cryptocurrency in this regard is that payments are final and irreversible unless a refund is issued by the merchant. This eliminates the risk of chargebacks and payment reversals and keeps payment oversight with merchants.
- Speed: Compared with credit card payments, crypto payments have faster settlement cycles. Usually, it takes up to one day, compared to three-five business days when using traditional payment methods like a bank transfer or credit card.
- Cost: While traditional payment options are convenient, they are also expensive. Exactly how much a merchant will pay depends on what industry they are in. High-risk payment industries, such as gaming, pay as much as 10% per transaction. Even if not in a high-risk industry, basic eCommerce payment processing can cost as much as 5% per transaction, plus additional flat fees. With blockchain technology, eCommerce crypto payment solutions can reduce these fees below 3%, including being as low as 0%, per transaction.
Check out all of the benefits of crypto payments in our article “Why And How To Collect Crypto Payments On Your Website?
3. Greater focus on security and fraud prevention
With the growing popularity of online payments, it will be increasingly important for merchants to place a high priority on implementing security and fraud prevention measures to safeguard both their businesses and their customers.
Here are some tips for security and fraud prevention that online merchants can follow:
- Use secure payment gateways: Choose a payment gateway that uses secure protocols, such as SSL/TLS, to encrypt sensitive information and protect it from being intercepted.
- Verify the identity of customers: Use tools like address verification, card verification values (CVV), and 3D Secure to verify the identity of customers and reduce the risk of fraud.
- Monitor transactions for suspicious activity: Use fraud detection tools to monitor transactions for signs of fraudulent activity, such as unusual patterns or large amounts of money.
- Use two-factor authentication: Requiring a second form of authentication, such as a one-time code sent via text or email, can help to prevent unauthorized access to accounts.
- Keep software and security systems up to date: Make sure to regularly update your software and security systems to ensure that you have the latest protection against threats.
- Educate your customers: Make sure your customers are aware of common scams and how to protect themselves from fraud. You can do this by providing information on your website or through email campaigns.
- Implement a data breach response plan: In the event of a data breach, it is important to have a plan in place to quickly contain the breach and minimize the impact on your customers. This should include steps such as informing affected customers, offering credit monitoring services, and reviewing and strengthening security measures.
Find out more about protecting your business against fraud in the article “The Top 5 Security Features to Look for in a Payment Gateway”, as well as “What Is Payment Tokenization And How Does It Work?
4. Expansion of alternative financing options
The expansion of alternative financing options is another trend that is likely to impact the payments landscape in 2023. Alternative financing, also known as "buy now, pay later" or BNPL, includes options like Afterpay, Zip pay, Klarna, that we partner with, etc. They allow customers to make purchases without paying for them upfront and instead, pay for them over time. This can help to make payments more manageable for customers, particularly those who may not have the funds to pay for a purchase all at once.
BNPL options are becoming more and more popular as they allow customers to pay in smaller and manageable amounts and can help them build their credit score. In addition, it can also drive more sales for merchants as they can attract more customers with this option.
For merchants, offering alternative financing options can also provide a competitive advantage, as well as help to improve customer satisfaction and retention. However, it's important for merchants to consider the fees and terms of these financing options, as well as their own risk management policies, before deciding to offer them.
In 2023, we can expect that more and more merchants will begin to adopt these alternative financing options as part of their payment offerings to adapt to the changing consumer preferences, and meet the demand of customers looking for more flexible payment options.
5. Integration of payments with other business processes
Integrating payments with other business processes can streamline operations and improve the customer experience. Here are some examples of how this can be done:
- Inventory management: By integrating payment systems with inventory management systems, merchants can automatically update inventory levels when orders are placed and processed. This can help to ensure that products are in stock and reduce the risk of overselling.
- Customer relationship management (CRM): Integrating payment systems with a CRM system can allow merchants to track customer purchases and preferences, as well as provide personalized recommendations and offers.
- Order management: Integrating payment systems with order management systems can help merchants to track and fulfill orders more efficiently. This can include automating tasks such as sending confirmation emails and updating customers on the status of their orders.
- Accounting & Payroll: Integrating payment systems with accounting systems can make it easier for merchants to track and manage their financial data, such as invoices and expenses. This can help to reduce errors and improve financial reporting.
Overall, the embedded finance services can help businesses to better understand their customers, streamline their operations, and improve the efficiency and effectiveness of their business.
In conclusion, 2023 will bring a number of significant trends in the payments industry that will impact the way merchants accept and process payments. From the continued growth of mobile payments, to the increasing adoption of cryptocurrencies, the payments landscape is set to change in the coming years. Additionally, security and fraud prevention will be more important than ever for merchants to prioritize as online payments become more prevalent. Alternative financing options and the integration of payments with other business processes will be key trends to keep an eye on as well. By keeping these trends in mind, merchants will be better positioned to adapt to the changing payments landscape and provide the best possible experience for their customers. It's important for merchants to keep themselves updated with these trends and be proactive in adapting to them.
We at Catalystpay thrive to enable online businesses by providing a complete payment solution in line with the latest trends and technologies. Contact Us to find out how we can help you take your business to the next level.