Alexander Berrai, Deputy CEO, emerchantpay
Next year, I expect payment trends to revolve around the topics of open banking, further adaption of card scheme tokenisation and biometrics being introduced into payments. In addition, the issuance of digital currencies by central banks, along with a wider adoption of digital currencies for institutional cross border payments will play a role in changing the payment landscape. Here are my predictions for the year ahead.
- The adoption of Biometrics as a security feature in Multi Factor Authentication (MFA)
Merchants as well as players involved in the payment flow need to ensure that consumers data is secure. This will likely continue to be a concern, due to fraudsters becoming more sophisticated as technology develops. Cybersecurity threats include card data breaches and phishing attacks, where malicious actors steal sensitive data, typically through spoofed emails and websites.
By including Biometrics in Multi-Factor Authentication (MFA), the security of payment data can be improved. Biometrics as one of the factors in Multi-Factor-Authentication provides an opportunity to increase payment security and to reduce fraudulent activities by adding an extra layer of protection to the authentication process.
Consumers will be required to provide multiple forms of verification before they can access their payment accounts or initiate a transaction. This will include the three currently already mandated factors; things they know (such as a password or PIN) and things they possess (like an authenticated device) as well as something unique to their identity (such as a fingerprint or iris scan) in the future.
By including Biometrics during the authentication process, cybercriminals will have a harder time gaining unauthorised access to accounts. When one factor is compromised, such as a password, the other factor(s) cannot be accessed and the attempted payment will not be processed.
Payment Providers and merchants need to be on top of these developments to fight threats and improve security measures, ensuring the right tools, insight, software and solutions are in place.
- 2024 – The year of Open Banking?
Open Banking has been a hot topic over the past years. Major players in the payment space, including the card schemes, have invested heavily into the technology, but adaption hasn’t fully met expectations yet – but we might see a change in 2024.
Many payment service providers, gateways and fintechs have implemented Open Banking in 2023 and we can slowly see more products being rolled out to the market based on open banking rails. We expect that in 2024, especially in Europe, Open Banking will start playing a more important role, as a payment method and as the technology behind other front-end, consumer facing payment products such as wallets, Buy Now Pay Later and, to a certain extent, direct debit payment products.
While for consumers, the change will not be as impactful, merchants might benefit from more competitive pricing compared to other payment methods in the market and decreased risk through AIS services.
- Digital Currencies, blockchain and Cross-Border Payments
After the initial crypto hype a few years ago, digital assets have been on the backseat and ignored by many. In the background, several blockchain projects have been working on making cross-border payments quicker and more affordable.
Currently, remitting funds cross border takes time, is costly and in many cases time-consuming to implement. Several blockchain digital asset projects are trying to change this and with more and more large international banks adapting these technologies, we might see some interesting changes coming in 2024, making international cross border remittances in the b2b sector fast, cheap and easy to use.
Furthermore, in October 2023, the European Central Bank has decided to enter the preparation phase for the launch of the Digital Euro. In addition, the US, the UK and over 120 other jurisdictions are currently evaluating the launch of their own Central Bank Digital Currency (CBDC).
So, while Cryptocurrencies and Blockchain technology are not as hot a topic as it was a few years ago, 2024 will be a very interesting year for an increased adoption of blockchain-based technologies.
