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Digital Payment Trends in 2022

Digital Payment Trends in 2022 1

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eCommerce grew at a turbocharged pace during the Covid 19 pandemic as customers were driven out of brick and mortar stores and pushed to make frequent purchases online. While the biggest jump in growth occurred in 2020, last year still saw growth of 14.2 percent.

Supporting this growth are sophisticated payment solutions working behind the scenes to help merchants reach new customers, improve checkout conversions, and offer a frictionless buying experience.

But with so many options and emerging payment trends, it can be difficult to keep up. To keep you up to date, here are some digital payment trends to keep an eye on in 2022.

Buy Now Pay Later (BNPL) continues to boom

Buy Now Pay Later redefines consumer financial decisions during checkout. Because it allows customers to pay for products or services over a determined period, BNPL is a good alternative to conventional credit cards. This has pushed banks and the credit card networks to partner with BNPL providers or create proprietary BNPL products to keep existing customers.

Once a customer places a deposit for the purchase, they can clear the balance in installments over an agreed period at no interest. Many BNPL products provide this credit decision in minutes and are easy to get approval compared to credit cards or other loans. Overall, consumers experience a smooth checkout and have access to practicable payment options.

Although BNPL products gained traction during the Covid-19 pandemic, statistics show they are here to stay for the long-term. BNPL transactions are estimated to hit $680 billion by 2025. And with inflation on the rise, more consumers are expected to embrace buying through installments.

The evolution of payment orchestration

Consumers often have different expectations and prefer different payment methods. To cater to these differences, merchants are often forced to integrate different payment processors. These fragmented layers can be a pain to manage and scale within one geography, let alone multiple markets.

What is Payment orchestration? It helps to simplify global payments by integrating different payment service providers, banks, and acquirers in a unified layer that serves as a ‘one-stop shop’ platform that enables and optimizes international payments.

With AI-based tools like intelligent routing, the payment orchestration systems avoid payment failures. Since merchants lose 62% of customers who experience a failed transaction, adopting payment orchestration will help increase sales and customer satisfaction.

Payment orchestration is expected to post a 26.7 percent CAGR in revenue and its market size is expected to reach a high of $1.98 billion by 2026.

Mobile wallets mass adoption

As mobile wallet adaptation continues to grow exponentially, using smartphone apps to complete purchases will continue to grow.

The coronavirus pandemic drove consumers to use contactless payment apps, which in turn inspired the use of a range of mobile wallets in different markets. Strong growth markets included Africa, India, Latin America, and Eastern Europe.

The shift to mobile wallets is partly driven by merchants looking to save steep card swipe fees from credit card companies while appealing to younger consumers who love such payment options.

MarPay technology develops

Traditional loyalty schemes are paving the way for new digital payment solutions that benefit merchants and customers – enters MarPay technology. Its goal is to connect eCommerce platforms with loyalty program members who want to increase their spending power at checkout.

Conventional loyalty programs operate through affiliate marketing which is hard to navigate and measure. With privacy regulation changes, tracking is even more difficult. Add to this reward point registration, and it’s clear why customer engagement has dropped.

On the flip side, MarPay platforms connect merchants to loyalty programs directly. This allows customers to earn and spend points at checkout, thereby paying less for more.

MarPay technology helps merchants increase shopping cart values and capture a larger share of what customers are ready to spend. As consumer spending power is reduced by rising global inflation, BNPL and MarPay technology platforms have a bigger role to play in 2022 and the future.

Improvements in cross-border P2P payments

Using traditional banking systems to transfer money between countries is time-consuming and expensive. P2P payment solutions and other digital options have piqued consumers’ interest in searching for faster and easier cross-border transfers.

We got a sneak peek of the future of cross-border payments with the launch of Facebook’s Novi digital wallet pilot in Guatemala in October 2021. Based on using the USDP (Pax Dollar) stablecoin, the idea was to serve hundreds of thousands of customers without bank accounts and free them from traditional check cashing and money transfer businesses. While the idea seems to have yet to find its groove, it does show the possibilities posed by digital wallet technology.

Cryptocurrency for eCommerce payments

About a decade ago, cryptocurrency was a novelty. But in the past couple of years, crypto has evolved into a viable payment option.

Cryptocurrency has many advantages over traditional payment options. At the top of the list is that P2P crypto payments cannot be charged back. This has become increasingly attractive to merchants as cases of friendly fraud have spiked.

With how easily a merchant can lose their MID by having a high chargeback ratio, it’s understandable why more merchants accept crypto payments.

Research shows that 48 percent of businesses are committed to integrating crypto payments soon, while 53 percent of those companies say they are already able to accept crypto payments or plan to integrate within the next year.

Real-Time Payments (RTPs) becoming a reality

Real-time payments are growing fast. They are a network or platform solution that consumers use to transact in seconds. Ideally, these platforms or networks should operate 24x7x265. Banks looking to leverage RTP technology require 24×7 backend systems.

Real-Time payments operate in an open-loop system so any payment method can be used without being part of the system. The payments are connected to bank accounts instead of prepaid balances. This is a key characteristic since it allows payment transfers to anyone with a bank account around the world.

Although these systems sound a bit futuristic, they already have decent market share. Like most payment trends in 2022, Covid-19 played a role in RTP growth. In 2020, Real-time transactions numbered 70.3 billion, a 41 percent increase from 2019. RTPs real-time share of global electronic transactions in 2020 was 9.8 percent and is expected to hit 17.4 percent by 2025.

Final words

These payment trends benefit merchants and customers alike and they show no signs of slowing down. Expect to hear significantly more about them before the year is through.

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