A 5 YEAR OUTLOOK

Payment Trends and What Drives Them

From gold coins to paper money, cashiers cheques to credit cards, new technology always replaces the old. Payment cards have been commonplace for decades, but consumers’ needs have changed, and cards are increasingly being superseded by a new generation of payment methods. To understand why, there are three trends to consider:

#1: Going contactless

The reliance on physical bank cards to make payments is losing its appeal, and the last decade has seen the appearance of revolutionary new payment solutions like Apple Pay. The Covid-19 pandemic also played a significant role in the adoption of contactless payments, with the value of contactless payments rising from 80.5bn in 2019 to 165.9bn³ in 2021. Consumers are less inclined to rely on intermediaries between merchants and banks, which is promising for the account-to-account payments outlook.

#2: Convenience

The global subscription e-commerce market almost doubled to $120.04bn between 2021 and 2022, and is predicted to grow to $904.2bn by 2026.⁴ Subscription models provide stable revenue for businesses and convenience for customers who don’t want to input their details for regular purchases. But traditional payment cards pose a problem: each time they expire, new details must be added and the smooth flow of commerce risks being interrupted. Account-to-account payments remove the need for inputting new details, providing consistent revenue and a faultless customer journey.

#3: Security

Fraud has always been a serious concern when it comes to payment cards, and the problem hasn’t been solved. The card industry faces $400bn in losses⁵ this decade due to fraud, affecting millions of consumers and businesses worldwide. A2A payment methods include features like multi-authentication, risk engine technology, and amount limits. With built-in credit checks, merchants can also avoid failed payments due to insufficient funds or compromised accounts, mitigating accidental risk as well as fraud.

These trends explain why payment cards are increasingly falling out of favour, but for a fuller understanding of what’s to come, we need to look at what’s arrived to replace them.