According to the McKinsey & Company report of October 2022, the share of consumers using more than 2 digital payment methods (i.e. all forms of contactless payment) has increased significantly, from 51% in 2021 to 62% in 2022. And when making online payments, they are particularly attentive to three criteria: security, flexibility and fluidity of the transaction path.
Companies are defining their payment strategy according to their customers’ needs. They are looking for the perfect combination of high-performance technology and cost optimization. In the face of stringent regulations and rapid digital innovation, it is in their best interest to partner with a payment provider that can anticipate developments in this area.
Consumer and business behaviors influence the payment world and favor the emergence of certain solutions at the expense of others. Treezor has analyzed them for you and is providing you with an opportunity to discover its top 6 trends in digital payments.
#1 Embedded finance
Embedded finance is a current trend in digital payments and financial services in a broad sense. It allows, for example, non-financial companies in all sectors to integrate payment technology into their mobile solution. In concrete terms, these companies call on a partner, a specialist in BaaS (Banking-as-a-Service), to develop financial services for their customers. This third-party player has the necessary licenses to comply with the regulatory framework. It also masters the technical side (core banking) and its banking offer is scalable (supply of virtual and physical cards, credit, etc.)
The BaaS partner offers white label services and has the ability to deploy financial services integrated with applications. Embedded finance is becoming increasingly popular thanks to its many advantages.
- Automation and digitalization of processes: the technologies implemented contribute to secure exchanges and increase the productivity of non-financial companies.
- Reliability of KYC procedures: the Baas partner takes care of the tedious KYC procedures and masters the regulations. Moreover, the data collected with the consumer’s consent is a source of quality information. A better knowledge of customer profiles makes it possible to target their expectations and to create an adapted offer.
- Seamless customer journey: a seamless customer experience is an additional asset for companies, which helps build customer loyalty.
- Cost reduction, risk mitigation… Embedded finance offers innovative perspectives for the future. Its solutions can be applied in a variety of ways and companies benefit from new sources of revenue.
Did you know?
Treezor is the European leader in Banking-as-a-Service (BaaS) with a presence in France, Germany, Benelux, Italy and Iberia. Its “Embedded Finance” solution allows companies to integrate white label payment into their offer, without any constraints, by outsourcing all the technical aspects in API (from acquisition to issuance), regulatory (KYC, LCB-FT,…) and security to an international team of experts.
#2: Virtual cards
Virtual cards are both an alternative and a complementary product to physical cards. Designed for online or contactless payment in stores, they can be used once or repeatedly. This dematerialized solution has the same level of security as a payment card. In addition, the cardholder is protected against any risk of theft and can block it instantly from his or her cell phone if they have any doubts about its use.
However, a card remains a card. They have been around since 1984, so why make them a trend in digital payments in 2023? Quite simply, because they never stop renewing themselves and surprising us. They adapt to innovative technologies such as mobile payment and provide solutions in various sectors (online purchases, gift cards, etc.)
For example, in the field of mobility, companies can provide their customers with physical or virtual payment cards, prepaid, customizable and co-branded, compatible with X-Pay. The possibilities are vast, from paying for fuel, tolls and train tickets to recharging an electric vehicle.
Once again, the card is of real interest for managing employee benefits. The employees of a company are given a card for their professional expenses. Payment authorizations are fully flexible (transaction limits, brands involved, etc.)
It should be noted that the payment card offer is increasingly promoting a dynamic that respects sustainable development. In the same way that innovation is part of payment players’ DNA, the environmental, societal and economic impact is a major concern for Treezor.
#3 Buy Now Pay Later
Other 2023 digital payment trends: Buy Now Pay Later (BNPL). Consumers like flexibility and immediacy. As they scroll through e-commerce sites, they want to be able to buy what they want without waiting to have enough cash.
BNPL is revolutionizing the world of short-term financing and is particularly suited to B2B transactions and online businesses. It allows the customer to defer payment in a rather attractive way compared to traditional credit instruments. Authorization is immediate and requires no collateral.
This digital payment solution aims to:
- increase the average basket and conversion rates;
- optimize the customer experience;
- improve companies’ cash flow by offering a payment facility.
BNPL is fully in line with the PSD2 recast project. The future PSD3 must take into account the innovative nature of emerging payment methods in order to guarantee the security of confidential data and compliance with regulations.
#4 X-Pay mobile payments
Mobile payments are on the rise because they meet consumers’ expectations. From their smartphones, users register their cards with systems such as Google Pay or Apple Pay. They can thus have several cards in their digital wallet and move around with only one object: their mobile!
All banks now allow mobile payment, as it respects the principles of strong authentication: knowledge, possession and inherence. The transaction is validated through the phone by facial recognition, fingerprint or by entering a confidential code. In the omnichannel era, mobile payment allows you to pay online and pick up in store (click and collect) or to pay in store and have the order delivered to your home!
Did you know?
Treezor has a solid experience in the tokenization of cards that allows mobile payment (Apple Pay, Google Pay) without contact with retailers. This technology transforms the cardholder’s banking data into a digital token. The information is thus stored in an encrypted and confidential manner.
#5 Instant payment
A real-time transaction: that’s the promise of instant payment. The customer initiates a transfer directly through an API integrated on an e-commerce site or through a payment link. They follow a fluid user path that allows them to choose their bank and validate their transaction in a few clicks.
The instant transfer is particularly appreciated in B2B transactions for its characteristics:
- liquidity: the money is available in the account in 10 seconds;
- irrevocability: once the transfer order is executed, the operation cannot be canceled;
- high ceilings: the payment limit can be as much as €100,000.
Companies see instant payment as a way to solve their cash flow problems and accelerate their production process, triggered as soon as the funds arrive in the account.
Instant payment, like the e-wallet, is at the heart of the European Payment Initiative (EPI) that aims to harmonize transactional practices in Europe.
The future of cryptocurrency is still uncertain. It depends on international regulators and decisions at individual country level. However, it is difficult to talk about the trends of digital payments in 2023 without referring to cryptomoney. To pay with this virtual currency, one must have a digital wallet and make sure that the retailer in the store or online accepts this payment method. Cryptocurrency also comes in the form of prepaid cards. These allow you to convert the virtual currency in your wallet into euros and make a transaction. They are also equipped with a reward system to build customer loyalty.
Beware, however, that crypto remains an unregulated, extremely volatile currency, and the risks of piracy or fraudulent activities are very real.
Embedded finance, mobile payments, virtual cards… the payment trends of 2023 have one thing in common: innovation. The financial players, like Treezor, are competing with each other to develop efficient technologies and meet consumers’ expectations while complying with regulations.