Hiring freezes and caution
We have witnessed a number of hiring freezes and a more general market slow down across payments; however, for many companies, hiring continues selectively, albeit at a slower pace (notably product, sales, engineering and marketing). Processes are typically cautious and sticking to tighter budgets with less legroom to negotiate on both fixed and variable components.
Challenges around infrastructure
Backend infrastructure is coming up as one of the major hindrances to change. Slow back office and legacy systems at traditional payment providers and issuers are simply not able to keep up with the requisite pace of change; this is hampering efforts to keep up with the levels of innovation that is demanded by the consumer.
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 number of mutually beneficial arrangements: 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. Simultaneously this has offered access to the breadth and depth of Mastercards network for Remitly.
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 able to deploy this service for all sorts of purchases. 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 competitors and solution providers that can easily redeploy cash and already we are seeing some consolidation in the industry which will likely continue in 2024.
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 through out 2024.
Cryptocurrencies: 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 large 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. blockchain technology and cryptocurrency.
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. This is a major trend that will continue through out 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 (alongside ecommerce more generally) both in 2023 throughout 2024 , particularly as the influence of social media platforms accelerates across the globe.