Key payments trends for 2023 & beyond
Sending a text to pay for a bus ticket in France, using a QR code to buy groceries in China, tapping a sales terminal with a mobile phone in the US, or carrying out an international payment through an app in Thailand.
Sending a text to pay for a bus ticket in France, using a QR code to buy groceries in China, tapping a sales terminal with a mobile phone in the US, or carrying out an international payment through an app in Thailand.
Even before Covid-19, these ways of paying for goods and services were evidence of a steady shift to digital payments – a shift that might ultimately lead to an increasingly cashless global economy. Global cashless payment volumes are expect to grow by more than 80% from 2020 to 2025, from about 1 trillion transactions to almost 1.9 trillion, and to almost triple by 2030, according to analysis by PwC.
But what will be driving this process? As 2023 is approaching, Qorus decided to take a look at the some of the main payment trends that will be shaping sales over the months and years to come – read on for valuable insights!
BNPL (Buy Now, Pay Later)
Financial uncertainty during the pandemic led to an influx of apps (such as Affirm, Klarna, and Afterpay) that let consumers spread payments out across monthly installments – and it clearly has been a mutually beneficial endeavor. Brands are now able to convert more customers by promising lower initial payments, and shoppers can invest in higher-priced products without breaking the bank.
BNPL payments are expected to account for roughly 24% of ecommerce transactions by 2026 (up from 9% in 2021) and to top $1 trillion in annual gross merchandise volume by 2025. In light of such trends, 65% of merchants added BNPL as a payment method in 2022, and the number of merchants (and BNPL companies) offering BNPL solutions is likely to continue growing.
Blending of offline and online shopping experiences
Even as shoppers return to brick-and-mortar stores, they've changed the way they pay for goods and services. A recent Shopify report finds that merchants underwent an increased demand for shopping experiences during which clients pay for their orders online and pick them up at physical locations.
Rather than going back to physical credit cards that require paper receipts, there’s now a preference for frictionless payment methods. These methods reduce the steps in the buying process and include mobile and digital wallets, one-click payments, auto-renewing subscriptions, and in-app payments.
Merging online and offline payment methods so customers can shop where they want, when they want, will continue to be prevalent in 2023. Businesses processed $3.9 trillion in frictionless payments in 2020, a number that’s expected to increase to $8 trillion by 2024.
QR codes
QR codes have existed for a while, yet did not have such a notorious role in commercial transactions until the unfolding of the Covid-19 pandemic when merchants were looking for fast ways to switch to contactless transactions.
One is nowadays likely to see QR codes at restaurants, retail stores, and other businesses, enabling clients to see the price list, check a food menu, unlock discounts, get loyalty bonuses, make payments, leave feedback, etc.
Given the inexpensive integration and the versatility of implementation, it is no surprise that QR codes have won the hearts of merchants and consumers alike, and their prominence will continue to expand. Experts predict that the number of consumers using QR codes in purchases will exceed 2.2 billion by 2025, which equals 29% of all mobile phone users globally.
Digital wallets
Digital wallets have become a convenient way for shoppers to make purchases in an instant, whether they’re in-store or buying online.
The use of digital-wallet-based transactions grew globally by 7% in 2020, according to a report by FIS, which predicts that digital wallets will account for more than half of all e-commerce payments worldwide by 2024, as consumers shift from card-based to account- and QR code-based transactions.
A McKinsey study suggests, however, that there’s a disconnect in consumer thinking. Many express a preference for a bank provider, but the providers they mention when asked what digital wallet they use now aren’t banks: PayPal, Apple Pay and Google Pay. Not surprising since almost no financial institutions currently offer a digital wallet.
Cross-border payments
The rise of low-cost real-time payment technologies, cross-border e-commerce, remote work and invisible open finance, coupled with overall frustration with the traditional correspondent banking model, has expanded opportunities for payment enablers to meet the demands of a decentralized yet globalized world.
End-to-end service providers who operate across borders stand to benefit if they have the right people, process and technology that enable financial freedom. They will be challenged by upstarts to collaborate and develop faster, more innovative, and transparent payment solutions.
As of 2020, the global mobile payment market was estimated at $816.5 billion, and is projected to reach over $5.5 trillion by 2025. In a PwC-led survey, 42% of respondents felt strongly that there would be an acceleration of cross-border, cross-currency instant and B2B payments in the next five years.
Digital Reinvention community
With Qorus memberships, you gain access to exclusive innovation best practices and tailored matchmaking opportunities with executives who share your challenges.