Payment Trends for 2022
With the COVID-19 pandemic still affecting commerce across the globe, it comes as no surprise that most payment trend predictions for 2022 are focused on digital payment methods. Online business is booming and with it, alternative payment methods are as well. Payment methods have surely changed throughout history, but what will the future bring? Buy now, pay later (BNPL), digital wallets, and other cardless payments are expected to put an even bigger dent into the monopoly of credit card payments. The world just got a whole lot smaller than before and we can already see paths for payment trends forming.
Cross-border payments continue to grow
This year, the cross-border shopping industry reached $156 trillion. The increased trade with emerging markets increased volume for cross-border transactions. For merchants, this means a much bigger potential customer base. But with increased volume came the barriers for fast cross-border transactions. With customers from all over the world expecting their demands met as fast as possible, payment options needed to become faster and cheaper.
This is where RTP comes along and takes the lead. Real-time payments (RTP) are transactions that allow businesses to send and receive payments almost instantly. As many businesses adopt RTP solutions, cross-border payments will continue to rise.
Goodbye cards, hello alternative payments
FinTech overall took the world by storm over the last few decades and made significant changes in payment behavior. Traditional payments such as credit cards are becoming obsolete; many potential customers are not able to even get a credit card to begin with. As shopping moved online in the last two years, people started diving into the local digital markets. Credit cards are simply not enough to cover all the different customer behaviors and payment preferences, which is why more and more businesses are deciding that going local is the best way.
It’s not only customers who are leaving their cards aside. Some big merchants such as Amazon are even taking one step further and taking away traditional payment methods. From 2022 onwards, UK customers will no longer be able to pay using VISA cards on Amazon. It’s safe to say that recurring automated payments and familiar methods are slowly but surely replacing traditional ways of payment.
Buy now pay later model
Although not popular due to its risky nature, the BNPL model is finally getting much-needed regulation. Lawmakers are taking on the task of protecting both customers and merchants and making sure that this payment method is not putting either side in financial distress. The system is far from perfect, but definitely taking the place as a major payment trend this year.
With the issues BNPL faces, there is definitely room for improvement. Some of the original providers are already seizing the opportunity. By adapting and offering buy now, pay now options as well, providers are tapping into a new part of the market. It comes as no surprise that research shows that by 2026, global spending via BNPL services will reach $995 billion. This is four times bigger than it currently is, so keep an eye out for this payment method!
Keeping a safe distance with contactless payments
Contactless is convenient. That’s at least what most customers will tell you. Despite not being new, the pandemic of COVID-19 really forced people to think about it every step of the way. Typing in your PIN code suddenly seemed tedious. There is no end in sight for contactless payment since customers are unlikely to give up their comfort.
The sudden surge of merchants who used QR codes for payments opened a plethora of possibilities. Payments became safe and supported by local methods instead of following the same blanket option for everyone regardless of the location. The seamless and effortless system is not likely to go away anytime soon as the world still struggles with the pandemic.
Embedded payments for a smooth experience
Last but not least important payment trend is embedded payments. It seems like the most logical option for any online store. With the entire customer journey provided by the merchant, embedded options truly are the future. Dealing with money in a direct way is a thing of the past, everyone wants to get through the process as fast as possible. Moving through different platforms and dealing with several levels of approvals is not the most efficient way to make a consumer into a paying customer.
As Jens Bader pointed out: “true embedded finance means never seeing behind the curtain.” In a world where time is money, customers do not have time to fully understand how their payment works. Hence, the merchants cannot afford either to spend too much time perfecting a flawed system when the customers have a clear cardless preference.
The beginning of fully flexible payments
2022 started off strong and is showing big potential for merchants to increase their business volume. Some of the payment trends are already taking a swing in the market. Customers are aware of their value and will ask merchants to provide the best service possible. With the focus being put on customer touchpoints, the one uniting element to all trends is the flexibility and adaptability of merchants. Customers now expect to be accommodated and to have their local payment option readily available. And you know what they say – the customer is always right.
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