Payments Blog • 7 MIN READ

Top 6 Payments Trends Shaping 2023

The digital payments industry is undergoing immense transformation fueled by rapid technological advancements and growing consumer demand.

In fact, the digital payment market is expected to be worth USD19.89 trillion by 2026, representing a compound annual growth rate (CAGR) of 24.4%. Smartphones, QR codes, digital wallets, and a growing number of payment apps have enabled this growth, making payments almost invisible and providing immersive, seamless, and frictionless payment experiences.

We’ve put together the top six trends we predict will shape the payments industry in 2023, but first, we need to take into consideration some of the challenges and complexities facing today’s global economy, including:

  • The potential threat of a recession and inflation could challenge growth.
  • A high level of income disparity and widespread income volatility.
  • Ongoing global supply-chain interruptions.
  • Geopolitical tensions leading to increased trade sanctions.

So, with that in mind, what can businesses expect from the payments market in the next twelve months?

Trend 1: Roll-out of next-generation real time payments schemes

According to Fintech Futures, the real-time payment market growth is expected to reach an impressive USD86.89 billion by 2028, representing an estimated CAGR of 32% from 2022 to 2028.

In 2023 we can expect to see:

  • New payment rails enable faster, more efficient real-time payments for business-to-business (B2B) transactions, which will continue to have a transformative effect on businesses.
  • The global implementation of the ISO 20022 messaging standard has a positive effect on real time cross-border payments and enhances security and compliance
  • The increasing automation of treasury functions such as risk management, reporting, and forecasting, provides CFOs access to richer, more up-to-date data thanks to real time processes.
  • New instant payment schemes, such as the US FedNow payment service launching in 2023, provide customers with more next-generation, innovative, instant payment offerings. Ultimately, we expect to see banks taking strategic steps towards infrastructure changes to ensure enough flexibility to cope with next-generation, real-time payment types.

Trend 2: Continued growth of Embedded Lending , and Buy Now, Pay Later

According to cloud banking platform Mambu, there will be a spike in the use of embedded lending in 2023 as many businesses look at integrating financial services.

Companies are embracing embedded lending as one of the newest fintech strategies for business growth. In the US the embedded lending industry is predicted to grow at a CAGR of 27.5% in the coming years to top nearly USD $200 million by 2029. Buy Now, Pay Later (BNPL) platforms are at the forefront of embedded lending for B2C businesses and are expected to outperform all other forms of unsecured lending soon.

According to Statista, the global BNPL market is expected to top USD576 billion by 2023, a huge growth driven by the increasing popularity of online shopping and the demand for convenience. With increasing numbers of consumers using BNPL platforms, an uncertain economic climate prompts growing concerns about consumers falling into increasing debt. The BNPL sector will be subject to more regulatory oversight in the coming years.

Trend 3: The focus on privacy and security will increase

In 2023, there will be an increased emphasis on cybersecurity in payments, driven by the expansion of eCommerce, non-cash payments, and cyber threats. According to a 2020 report by Argus Research, cybersecurity losses could reach USD10.5 trillion by 2025.

A 2021 publication by market research company Nilson, highlighted chargebacks as a major issue, where fraud is predicted to cost the debit and credit card industries more than USD400 billion in damages over the next ten years.

Watch our webinar 2023 Payments Trends Uncovered

Trend 4: Merchants will encourage ‘pay by bank’ at checkout

A growing number of retailers are encouraging shoppers to ‘pay by bank’ in real-time, and experts predict this will become a bigger option in 2023.

For banks, this translates to a revenue hit, as merchants can avoid the ‘swipe fees’ attached to card use. Pay by bank is also referred to as account-to-account payment.

We’re already seeing this trend unfold in Australia, with the National Australia Bank’s venture capital fund investing in London-based fintech, Banked, to bring ‘pay by bank’ to retailers in the country.

The technology allows merchants to take payments directly from the bank accounts of customers, without a debit card.

Trend 5: Electronic transactions volumes will only continue to grow

A study by Juniper Research reveals mobile contactless transaction volumes will significantly exceed contactless card volumes by 2023. Transaction volumes for mobile payments will grow from 26 billion in 2021 to 49 billion in 2023, representing a growth of 92%.

While electronic transaction volume will increase across all payment methods, Point of Sale (POS) debit and credit card volumes will continue to grow organically.

Digital brick-and-mortar payment volumes will continue to encroach on card-present payments, but minimally.

Trend 6: Data standardization and interoperability via ISO 20022

ISO 20022 will be rolled out globally in March 2023. With it comes an increased ease to cross the divide between Retail and Wholesale payment environments, allowing for further interoperability between domestic and international payment systems.

This means financial organizations will have the ability to create products such as real-time international payments as well as other bundled financial products to further support more immersive, seamless and frictionless payment experiences.

How IR can help

Keeping on top of emerging trends, technologies, regulatory changes and the introduction of new international payments standards can be challenging. With IR Transact, you can simplify the complexity of managing your entire payments environment.

IR Transact helps capture the right data, that delivers deep real time visibility, making it easier to track performance of ecosystems, and turning that transaction data into actionable insights.

Discover more about what IR Transact can do for your business in the coming months. Book a Demo today

Topics: Banking Finance Payments Transact Transaction analytics High Value Real time Cards

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