Hiring freezes and caution
We have witnessed a number of hiring freezes and a more general market slowdown across payments; however, for many companies, hiring continues selectively, albeit at a slower pace (notably product, sales, technology and engineering and marketing). Processes are typically cautious and sticking to tighter budgets with less legroom to negotiate on both fixed and variable components. There has been a strong focus on internal promotions for many organisations. Following mass restructurings, particularly within technology companies and PE backed fintech’s, there has been a huge opportunity for payment providers to attract top talent at a more affordable price.
Challenges around infrastructure
Back-end infrastructure is coming up as one of the major hindrances to change. Slow back office and legacy systems are hampering efforts to keep up with the levels of innovation that is demanded by the consumer making it hard for corporates and payment providers to keep up with the pace of change, especially relative to fintechs. Composable architecture is a solution that we are seeing being adopted (slowly) as a solution, allowing banks and payment providers to implement change quicker based on customer response: JP Morgan is for example planning to pilot a digital payment platform to automate invoicing and receipt of rent payments which will serve 100million American through the platform.
Buy Now Pay Later
BNPL has become increasingly popular with millennial customers and where it was once a service provided for larger ticket items consumers are now able to deploy this service for all sorts of purchases. The post pandemic world and the cost of living has increased the use of these services, but because of rising interest rates and reduced liquidity, smaller companies are struggling to compete with larger solution providers (that can easily redeploy cash) and already we are seeing some consolidation in the industry which will likely continue in 2024 .Buy Now, Pay Later (BNPL) is projected to be the world’s fastest-growing payment method in coming years as e-commerce payment preferences continue to shift away from cash and credit cards towards alternative payment options; in some countries it already is.
A continued (and increased) collaboration between finance and technology
As the payments sector continues to evolve, we are seeing traditional payment providers steadily collaborate with fintech and technology to accelerate further innovation. There have been a vast number of mutually beneficial arrangements: As a recent example. Remitly announced in October 2023 that it will integrate Mastercard’s Send and Cross-Border Services to offer its customers more choice in how they securely send money abroad.
Significant growth in other alternative payment methods
Real-time payments: as a result of innovations in technology, general customer expectations for faster payments as well as regulatory pressure, the industry is seeing a real growth of real-time payments. Digital wallets are increasingly being adopted by customers, especially in response to the rising cost of living. Real-time payments continues to be a strong area of growth for most business.
Instant Settlements: There has been an increasing use in the Open Banking initiative which has facilitated the growth of instant settlement technology allowing consumers to pay for items directly from their online bank. This is a trend that will continue to grow throughout 2024.
Crypto Currencies: The market for crypto has experienced a lot of volatility and we have seen a fair amount of churn in the space as employees seek greater longer term security. There is still a strong focus amongst incumbent banks and payment providers on adopting cryptocurrencies as an alternative payment method. Mastercard, Goldman Sachs, and other TradFi companies are each expressing support or already rolling out solutions that will make use of blockchain technology and cryptocurrency. Central banks are exploring digital currencies that are safe, transparent, secure and easily accessible.
Increasingly cashless society
In the post pandemic world, the industry is seeing a huge shift towards digital payments due to the convenience and pace of digital transactions versus cash. The transition to digital is a major and continually evolving trend that will continue throughout 2024 and beyond. Contactless-enabled point of sale terminals and the rising consumer preference for tap to mobile technology and other wearable devices will facilitate this across both emerging and more advanced markets.
Growth of live Commerce (especially in Asia)
There is a growing trend to embed payments into sales channels directly by providing payment links and QR codes that make it easier for consumers to purchase products from online sites and social media. This will continue to grow in popularity (along with growing ecommerce more generally) especially as the influence of social media platforms accelerates across the globe.
Sustainable practices
This has been highlighted as a major theme across the industry as we look to transition to a more sustainable future. The majority of businesses are reducing or eliminating single use plastic cards and adopting ecofriendly and recycled material for cards. Other innovative solutions are being developed constantly: Visa is offering an ‘Eco Benefits Bundle’ which allows issuers to add sustainability focused benefits eg carbon offsets or a calculation of carbon footprint.
Tokenization and a Strong Focus on a Data Security
With the huge rise in digital payments the industry is seeing a surge in fraud, scams and data theft. We are seeing a lot of investment in payment infrastructure with the need to secure transactions across the lifecycle. Data compliance that needs to be met as data becomes more and more protected by privacy regulations. There is a strong interest in candidates with expertise in tokenization as businesses look to protect customer data and remain compliant while still being able to use data to gain insight into customer behaviour and experience.
