The payment industry is continuously evolving with new technologies and consumer behaviors. As we look ahead to 2024, several key trends are expected to shape the future of digital payments.
From the return of foreign tourist shopping growth, the trend towards currency exchange, for example, with Rates (rates.fm) to re-commerce, from the growth of digital B2B transactions to the development of CBDC, cryptocurrencies and tokenized fiat currencies. Not forgetting the security challenges. Let’s predict what awaits us in the new year.
Key Takeaways:
- Foreign tourism and shopping rebound will spur demand for currency exchange services and boost retail sales. Services like Rates.fm that allow travelers to monitor exchange rates will grow in popularity.
- Consumers, especially younger generations, will increasingly make environmentally-conscious choices like eco-friendly transportation and re-commerce. Rewards programs and tools that showcase sustainability impact will arise.
- B2B payments will continue digitizing, with over 80% of transactions projected to be digital by 2025. Innovation in virtual cards, invoicing, integrated systems will modernize B2B processes.
- Cryptocurrencies will face pressure, dropping less established projects. However, programmable money like CBDCs and tokenized fiat gain traction for use cases like payroll, micropayments.
- Fraud and cyber threats evolve, small businesses remain vulnerable. Advances in authentication and user protection like EMV 3DS will counteract risks in digital payments.
- Overall, innovation around security, sustainability, and convenience will shape the payment landscape. Investing in fraud prevention and customer-friendly experiences is key.
What will 2024 hold for digital payments? Our team has prepared a document that summarizes what I believe will be the some expected trends that will characterize the coming year. Let’s look at them together.
Contents
Foreign tourists are returning, as is retail shopping
Global ones are already gaining the momentum they had before the global lockdown and, as a result, this gave a good boost to the recovery of trade.
According to statistics, the percentage of purchases in the tourism sector has already recovered to more than 70%, and this value is likely to increase in 2024. Purchases typically increase between June and August, affecting both retail and traditional travel categories such as hotels, restaurants and entertainment. At the same time, many tourists began to take advantage of tourist offers in less crowded business destinations. And in addition, tourists have a tendency to travel to previously not very popular points, which in turn contributed to the increase in requests for currency exchange and the popularity of services for monitoring the exchange rate, such as Rates.
Although the recovery of tourist and business destinations continues to grow, tourism offers in business-friendly cities will continue, with hotels and travel agencies maintaining higher prices for business travelers and resorting to reduced rates for tourists to compensate for the remaining gap in accessibility. Given that some borders have yet to open, notably China, it is likely that travel and related retail spending will rise further.
Greener shopping and behavior
In addition, it is worth noting that 40% of travelers worldwide are willing to pay extra for zero-emission flights, but not many carriers currently offer this service. According to Visa, that percentage will increase in 2024 thanks in part to more options available.
Also gaining popularity is “re-commerce”, i.e. circular trade, in which renting, charging, repairing, selling, returning and redistributing goods allows you to make more ecological choices. In fact, 69% of consumers who participated in a recent Visa survey said they would choose retailers based on their recommerce activities. In the coming year, companies like Visa, whose cards are accepted in 150 countries, expect more cards that reward consumers for green choices, as well as tools that help them visualize the impact of their purchases or projects.
Practicality and simplicity will also play a key role. This applies to paying for public transport with a contactless credit, debit or prepaid card or wearable device. Most users expect contactless payments to be part of their travel experience. In the future, analysts expect contactless communication to become standard payment for public transport.
B2B is evolving into 3.0.
Payments are increasingly being made online by B2B organizations, and by 2025, 80% of B2B transactions are predicted to be digital. Beyond paper checks and invoices, digitization of corporate operations will continue to boost B2B transactions and integrated payment systems. Accounts receivable departments are already reaping the benefits of e-invoicing and digital payments. More and more government entities are digitizing payments to and from individuals and government agencies as consumers. Banks, payment systems, and networks are continuing to explore potential applications for virtual cards. The ecosystem’s delivery of new services and features to expedite payments and company processes will continue to stimulate innovation.
Cryptocurrencies, the reduction will affect less reliable projects
Now is not a good time for cryptocurrencies. But it is the reduction that the market is experiencing that will lead to the rejection of less reliable projects, while those based on a balanced approach that corresponds to new technological developments will continue to generate significant web3 solutions for companies and consumers.
For the foreseeable future, governments, central banks, traditional financial institutions and fintech companies will continue to focus on programmable money and payments, be it CBDCs, stablecoins or other tokenized fiat currencies. So, may be in future USA government will decide to make a crypto US dollar. The most popular use cases for web3 payments on the horizon include payroll streaming, micropayments streaming and cross-border transactions.
Finally, more and more brands are using NFT technology to create new digital experiences, enabling new use cases in commerce, payments and loyalty. This trend is expected to accelerate, opening new opportunities for commerce, payments, rewards and loyalty between consumers and brands.
New risks
Cybercrime strategies aimed at fraud and data collection have been adapted as a result of the ‘hybrid’ work-life balance that more and more people have adopted. As travel recovers quickly, cross-border fraud may increase. More than half of travelers (58%) are concerned about the possibility of credit or debit card fraud while traveling, according to a new Visa survey.
Synthetic identities, which are created by merging entirely fictitious data with real-world data, are perhaps the most pressing cause for concern. Because they typically lack the resources or expertise to prioritize security and other precautions, small businesses will continue to be attacked.
Security and trust will still be important factors in digital payments in 2024. Recent developments in authentication and user protection, such as EMV 3D Secure, are already helping to increase the security of international e-commerce in real time. Everything from buying plane tickets to splitting the dinner bill will become easier and safer with the proliferation of digital payment systems. The importance of investing in anti-fraud security measures and insurance policies to mitigate the effects of fraud will also become increasingly apparent to businesses.
Conclusion
“Green” trends, online payments, virtual cards, tokenization… The payment trends of 2024 will have one common feature – innovation. Everyone, starting with small businesses, will be implementing these trends in order to stay in the game. And large market players will compete with each other in the development of high-performance technologies and meeting consumer expectations, while complying with regulatory requirements.
