Payment Trends: The Evolution of Transactions in Business

The evolution of payment methods has significantly simplified transactions, with convenience being a constant priority. As we progress into 2024, merchants must stay informed about emerging payment trends to maintain customer satisfaction, enhance security measures, and streamline transaction processes. The upcoming trends in payment innovations include several digital payment methods, such as:

• Mobile payments
• Mobile wallets
• Peer-to-peer payments (P2P)
• Buy now, pay later (BNPL)
• Cryptocurrency payments
• Biometric payments
• Real-time payments
• Open banking
• Central bank digital currencies (CBDC)
• Social commerce payments
• Embedded payment partners

By adapting to these advancements, businesses can ensure a seamless customer experience while navigating the evolving landscape of payments.

Mobile payments

In 2024, the upward trajectory of the mobile payments industry is expected to persist, following the trend seen in 2023. This mode of payment has emerged as a prominent choice in recent years, evidenced by its substantial market growth. 

Following the acquisition of a POS system, payment processing becomes straightforward, facilitated through devices such as tablets, smartphones, or watches.

The key advantage of mobile payments lies in their speed, particularly evident in their contactless nature. By eliminating the need for card insertion and manual input of payment details or waiting for change, both customers and merchants benefit from the efficiency and swiftness of the transaction process.

Digital wallets

Mobile wallets are set to become even more popular in the coming year. In fact, digital transactions are expected to jump from around $802 billion in 2023 to a whopping $929.8 billion in 2024. So, what exactly are mobile wallets? Well, they're like your digital pocket full of cash, but instead of rummaging for coins, you're tapping your phone to pay for stuff.

You've probably heard of some of the main mobile payment apps like Apple Pay or Google Pay – those are prime examples of mobile wallets. They let you ditch the physical wallet and use your smartphone to buy things or send money. It's like having your own personal cashier right in your pocket!

According to a study by Forbes, more than half of the people surveyed prefer using digital wallets over traditional methods like swiping credit cards. And it's no wonder mobile wallets are fast, secure, and super convenient. Plus, you can handle all your transactions without ever leaving the app. 

Peer-to-peer payment apps

Peer-to-peer (P2P) payment apps are all about making it easy to send money directly to another person. Think of popular apps for these types of digital payments like PayPal and Venmo – they let you transfer funds seamlessly from your bank account to someone else's, all through your phone.

Imagine you're out for dinner with a friend, and they cover the bill. Instead of fussing with cash or IOUs, you can simply whip out your P2P app, enter their phone number or email, and send them the amount owed.

It's this convenience that has made P2P apps so popular. But, like with anything involving money online, there's a downside – the risk of payment fraud. Scammers and phishing schemes can sometimes target P2P apps. To stay ahead of these threats, developers are constantly beefing up security measures, like adding biometric authentication.

Most of the time, using these apps won't cost you a penny, especially if you're transferring funds directly from your P2P account or linked bank account. However, watch out for fees if you're using a credit or debit card – some providers may charge a 2-3% fee for those transactions.

Here's a cool bonus: some P2P providers offer optional debit cards that let you spend your balance directly, and if you're using Google Pay, it syncs seamlessly with your Google Account. So, whether you're splitting a bill or paying back a friend, P2P apps have got you covered.

Buy now, pay later 

Buy now, pay later (BNPL) is like a modern twist on layaway, offering customers a convenient alternative to traditional payment methods. As living expenses continue to climb, BNPL has emerged as an enticing option for shoppers.

So, how does it work? Well, imagine you're eyeing that new gadget or stylish outfit. With BNPL, you can split the cost into manageable instalments, with the first payment due at checkout. This flexibility lets you enjoy your purchase right away while spreading out the remaining balance over time. Many BNPL plans come with minimal or even 0% financing, making it even more appealing. And the best part? There's often no need for an initial credit check.

It's no wonder people everywhere are embracing BNPL, especially for bigger purchases. Knowing you can pay over time makes splurging a bit easier on the wallet. However, the game might change for BNPL companies in 2024, as traditional financial institutions start offering similar services. With the market evolving, seeing how BNPL providers adapt to stay ahead will be interesting.

According to the Consumer Financial Protection Bureau, BNPL loans from five major lenders saw an astonishing growth of over 970% from 2019 to 2021. That clearly indicates its increasing popularity and relevance in today's shopping landscape.

Cryptocurrency payments

Cryptocurrency, often simply referred to as crypto, represents a digital form of currency that exists solely in the virtual realm, operating independently of major banking institutions. It functions as a decentralised, peer-to-peer payment system, eliminating the need for intermediaries in transactions.

At the heart of cryptocurrencies lies blockchain technology, a distributed public ledger that records and updates all transactions, managed collectively by currency holders. Unlike traditional money, owning cryptocurrency doesn't involve physical notes or coins; instead, it's all digital.

Some well-known examples of cryptocurrencies in the financial services industry include Bitcoin, Ripple, and Ethereum. To acquire cryptocurrency, individuals can either fund their own accounts through a chosen platform or enlist the services of a broker to handle the process on their behalf.

One of the key advantages of cryptocurrency is its accessibility, allowing users to easily engage in transactions across borders. Additionally, cryptocurrencies offer enhanced security and privacy features compared to traditional payment methods.

However, perhaps the most enticing aspect of crypto is its decentralised nature, providing users with diversification from conventional financial instruments like stocks and bonds, as well as freedom from reliance on centralised banking systems.

Biometric payments

Biometric payments, one of the emerging payment trends in the digital payments landscape, have experienced a significant transformation. Once confined to security agencies and law enforcement, biometric payment methods have now entered the mainstream, with both Visa and Mastercard offering biometric cards, signalling their integration into everyday commerce.

These innovative payment methods leverage unique physical characteristics for authentication, such as iris, retina, facial recognition, DNA matching, and vein patterns. While biometric identification is often incorporated into a two-step authentication process for added security, its primary allure lies in its convenience.

By seamlessly authenticating individuals based on their distinct biometric traits, these systems eliminate the need for passwords or PINs, streamlining the transaction process for customers. This convenience factor plays a significant role in driving the widespread adoption of biometric payments in today's digital landscape.

Furthermore, they not only meet evolving consumer preferences for convenient and secure ways to make transactions but also contribute to the broader goal of protecting customer data. In an era where payment fraud and financial data breaches are major concerns for consumers and financial institutions alike, biometric authentication methods offer a robust solution for enhancing security while ensuring seamless cross-border transactions.

As the payments industry continues to evolve and adapt to changing consumer demands, biometric payments stand out as a transformative innovation with the potential to revolutionise how we conduct financial transactions. With their seamless integration into digital platforms and their ability to facilitate transactions across borders, biometric payments are poised to play a central role in shaping the future of the global payments landscape.

Real-time payments

In 2024, we anticipate a surge in the adoption of real-time payments by banks, businesses, and consumers alike.

Real-time payments represent a revolutionary shift in how funds are transferred, offering instantaneous transactions without the typical 1-3 day waiting period. With payment authorisation occurring in real-time, payers witness immediate deductions from their accounts, eliminating the frustrating delays associated with traditional methods.

This advancement holds immense significance for businesses, particularly those seeking timely settlement payouts. Instead of enduring prolonged waiting periods, businesses now receive payouts directly into their accounts daily, enhancing cash flow management and operational efficiency. Notable applications facilitating real-time payments include familiar platforms such as PayPal, Venmo, and Interac e-Transfer.

Moreover, the scope of real-time payments extends beyond individual transactions between consumers. It encompasses a broad spectrum of scenarios, including payments between businesses (B2B), transactions between businesses and their suppliers, as well as consumer-to-business interactions. This versatility underscores the transformative potential of real-time payments in facilitating seamless, efficient financial transactions across various sectors and scenarios.

Open banking

Next up in our payment trends is open banking. It represents a transformative shift in the financial services industry, enabling the secure sharing of financial data through APIs with third-party services, with the explicit consent of consumers. This practice is pivotal in fostering innovation and enhancing accessibility to financial products and services.

In the traditional banking model, the relationship between banks and consumers was largely insular, with banks holding exclusive access to consumer financial data. However, open banking flips this paradigm on its head by placing consumers and businesses at the centre, empowering them with greater control over their financial information.

Through open banking, consumers can access a wide array of financial products and services offered by third-party providers, ranging from fintech startups to digital platforms. This expanded access enables individuals and businesses to better manage their finances and discover tailored solutions to meet their specific needs.

Notable examples of businesses leveraging open banking include investment apps like Robinhood and Wealthsimple, which utilise financial data shared through APIs to provide innovative and user-friendly investment platforms. These platforms leverage open banking to offer personalised insights, streamline transactions, and enhance overall financial management capabilities for users.

Central bank digital currencies 

Central bank digital currencies (CBDCs) represent a cutting-edge payment trend gaining widespread traction among governments worldwide. Unlike cryptocurrencies, CBDCs are regulated forms of digital currency, with their value determined and maintained by the respective country's central bank.

As the world moves towards digitalisation, the future of payments is increasingly becoming digital. Governments are recognising the need to adapt to this shift and are exploring the development of CBDCs as a means to modernise their monetary systems. With the dwindling use of physical currencies, CBDCs offer a viable solution to meet the evolving needs of digital economies.

Expect to see more announcements and advancements in the realm of CBDCs in 2024 and beyond. However, it's important to recognise that implementing CBDCs is a complex undertaking with far-reaching implications. These implications extend beyond finance, impacting broader aspects of the financial system, monetary policies, and banking systems. As such, the development and adoption of CBDCs require careful consideration and coordination among various stakeholders to ensure their successful integration into the global economy.

Social commerce payments

Social commerce payments are on the rise as part of the evolving landscape of payment trends. With revenue projected to exceed six trillion dollars by 2030, this sector represents a significant opportunity for businesses to tap into the growing demand for online payments.

The integration of social media platforms like Facebook, Instagram, and TikTok into the payments industry has transformed the way consumers engage with digital transactions. Platforms such as TikTok Shop highlight the increasing importance of digital payment methods within the payment ecosystem.

Businesses operating within the financial services industry are recognising the potential of social commerce payments to expand their customer base and drive revenue growth. By leveraging mobile payment apps and digital wallets, businesses can facilitate seamless transactions and cater to evolving consumer preferences for convenient and secure consumer payments.

In addition to enhancing customer experience, social commerce payments also present opportunities to protect customer data and mitigate fraud. Businesses can ensure secure transactions and build customer trust by implementing biometric authentication methods and contactless payments.

Embedded payment partners

Investing in a sophisticated payment partner is crucial for businesses seeking to streamline their payment processes and enhance customer experience. Epos Now is a leading provider of innovative payment solutions, offering a comprehensive suite of tools designed to meet the diverse needs of modern businesses.

Epos Now's POS software integrates seamlessly with various digital payment methods, including mobile payments and traditional credit and debit cards (we also accept Google Pay and accept Apple pay). This flexibility enables businesses to accept payments conveniently and securely, catering to the preferences of today's consumers.

Moreover, Epos Now Payments ensures fast and reliable transactions, reducing wait times and enhancing operational efficiency. With real-time payment processing and secure transaction networks, businesses can rest assured that their customers' financial data remains protected.

Embracing tomorrow's transactions today with Epos Now

Payment trends have come a long way, making transactions simpler and more convenient. As we move into 2024, staying updated on emerging trends is crucial for businesses to keep customers happy and transactions smooth.

Mobile payments continue to rise, with more people using their smartphones for transactions. Mobile wallets like Apple Pay and Google Pay are becoming increasingly popular, offering a convenient way to make purchases without carrying cash or cards.

Peer-to-peer payment apps like PayPal and Venmo make it easy to send money directly to friends and family, while buy now, pay later options provide flexibility for shoppers.

Cryptocurrency payments are gaining traction, offering secure and decentralised transactions outside traditional banking systems. Biometric payments, using features like fingerprints or facial recognition, are also becoming more common, providing added security and convenience.

Real-time payments are speeding up transactions, allowing businesses to receive funds instantly. And with open banking, consumers have more control over their financial data, leading to a more personalised banking experience.

Central bank digital currencies are on the horizon, offering a regulated form of digital currency backed by governments. And social commerce payments are booming, with platforms like Facebook and Instagram allowing users to shop directly within their apps.

Investing in a reliable payment partner like Epos Now can help businesses navigate these trends, providing seamless payment solutions and ensuring secure and efficient transactions. With the right tools and strategies in place, businesses can adapt to the evolving payment landscape and meet the needs of their customers effectively.

Liked this blog? Check out our importance of integrating payments guides for more helpful payment knowledge.