The Future of Merchant Services: Seven Payment Industry Trends to Watch in 2024
The payment processing industry continues to undergo significant transformations in today’s rapidly evolving digital landscape. As we approach 2024, businesses and consumers alike are poised to experience new trends that promise to make payments more secure, efficient, and convenient. In this article, we’ll explore the payment processing trends that are set to shape the industry in the coming year.
1. Contactless Payments Surge
Contactless payments gained momentum during the COVID-19 pandemic and show no signs of slowing down. The technology is improving, and companies are releasing innovative new solutions regularly to meet demand. In 2024, we can expect contactless payments to become even more widespread. More businesses will embrace NFC technology, and consumers will increasingly opt-in for mobile wallets like Apple Pay, Google Pay, and others. Contactless payments offer both convenience and safety, making them a win-win for all parties involved. You will even start seeing this trend becoming more generally expected at convenience stores, gas stations, and retail environments.
2. Biometric Payment Authentication Will Gain Traction
Enhancing payment security will remain a top priority in 2024. Biometric authentication methods, such as fingerprint recognition and facial recognition, are gaining popularity as they provide a higher security level than traditional PINs or passwords. Payment processors will likely integrate these biometric authentication features into their systems to further protect customers’ financial information. Mastercard’s successor to selfie pay, the Biometric Checkout Program, is one example of how big players are starting to invest in this technology.
3. Cryptocurrency Acceptance: Not Just Rumors
Cryptocurrencies like Bitcoin and Ethereum have been making headlines for years, and in 2024, they are expected to become more widely accepted as a legitimate form of payment. Payment processors will likely offer solutions that allow businesses to seamlessly accept cryptocurrencies, opening up new markets and catering to tech-savvy customers. You can learn more about some of the blockchain building blocks from organizations like the Minnesota Blockchain Initiative.
4. More Instant Peer-to-Peer (P2P) Payments
Waiting days for payments to clear will become a thing of the past in 2024. Instant payments will become the norm, enabled by technologies like real-time payment networks and blockchain. This trend will benefit businesses, especially those in the e-commerce sector, by improving cash flow and customer satisfaction. In the face of increasing inflation and economic downturn, increasing the velocity of money becomes more important for merchants, and P2P Payments are a great way to do it.
5. Enhanced Data Security
With the rise in cyber threats, payment processors will continue to invest in advanced cybersecurity measures. Expect to see more robust encryption protocols, tokenization, and machine learning-based fraud detection systems to keep transactions safe from evolving threats. Our friends at CyberFin have seen cyber security breaches from payment portals grow continuously. In some situations, the nefarious hacker will replace the pay now button with a direct link to their bank account, all without a single notification to the customer or merchant.
6. More Personalized Payment Experiences
Consumers expect tailored experiences, and payment processing is no exception. In 2024, payment processors will leverage data analytics and artificial intelligence to provide personalized payment options, offers, and recommendations, enhancing the customer journey. The retail industry has led this process change of making payments integrate into apps and buy now, pay later options. The business-to-business industry is following suit with different types of integrations into accounts receivable processes to create a unique payment experience for each customer.
7. The Rise of Cross-Border Payments
In a world where instant, cost-effective payments have become the norm, dissatisfaction with the traditional correspondent banking model, known for its complexity and expenses, has fueled the rise of non-bank providers. These new entrants and innovative solutions are challenging the dominance of traditional bank and card-based payment systems on a significant scale. For example, consider the P27 initiative in the Nordic region, a groundbreaking endeavor that seamlessly integrates 27 million residents across four countries and currencies into a unified ‘domestic’ instant payment system. In a survey conducted by PwC, 42% of respondents felt strongly that cross-border, cross-currency instant and B2B payments would accelerate in the next five years. This is reinforced by the adoption of ISO 20022, a globally developed methodology for transmitting data that provides a consistent messaging standard for payments.
How to Leverage These Trends in Payment Processing
To thrive in this dynamic landscape, businesses should stay adaptable, invest in cutting-edge technologies, and prioritize the security and convenience of their customers. By embracing these trends, payment processors can keep up with the times and lead the way in shaping the future of financial transactions. Remember, in the world of payment processing, the future is here — and it’s all about innovation and customer-centric solutions.
The overarching pattern that influences these trends is that customers and merchants alike want speed, convenience, and customer service with their money. A merchant’s ability to provide a good shopping experience depends on a fluid checkout process and generous customer benefits like loyalty cards and payment integrations, which drive growth in online shopping over brick-and-mortar.
2024’s emerging technology spans the entirety of merchant services — everything from your POS hardware to your merchant account will be affected. That’s why having a reputable merchant partner with access to these innovations is crucial. If you want to learn more about any of these seven trends or want to explore which could benefit your business, contact the Evolve Payment team today.