By Karan Johal, Global Head of Sales at Ecommpay
As we near the end of 2023 it’s time once again to reflect on the successes and learnings of the year, while we plan for the next. In the fintech and payments industry, it’s been a year of innovation, creativity, and consolidation to support businesses and their customers as they navigated increased inflation and the cost of living crisis.
Ecommpay data from 2023 shows us that almost three-quarters of consumers (72%) would abandon items at checkout if their preferred method of payment was not available. So, businesses needed options from their payment providers. From enhancing Open Banking solutions to navigating the usefulness of Buy Now, Pay Later (BNPL) credit options with the potential for overspending if not managed effectively, payment service providers (PSPs) offered not only choice but ongoing support and flexibility to suit each business. Merchants have been conscious of the wider payment process too, prioritising the optimisation of transactions and reducing fraud. Along with meeting increasing demand for local payment methods across Europe, Asia, Latam, and Africa, this enabled businesses to scale their eCommerce offerings and find new ways to grow within a tricky economic climate.
Consumer response to increased payment choice
While it’s an ongoing process keeping up with the latest trends and local payment options, this innovation and customisation of the checkout process has been well-received to date. In fact, one in five consumers have now used Open Banking as a payment method (19%), 14% of shoppers have increased their subscription payment use, and one-fifth of consumers now feel comfortable using crypto (22%), up from only 10% in 2022. Similarly, BNPL services are also experiencing increased use with 39% of consumers saying they are using the credit option more due to the rising cost of living, up from 35% in 2022.
Missing out on sales simply hasn’t been an option for businesses in 2023. Those stats are incredibly encouraging for businesses that face daily headlines of shoppers cutting spending across all retail categories, whilst also navigating supply chain and fulfilment cost increases. Brand loyalty has never been more important and although they will be building their own, it’s clear businesses can also lean on consumer loyalty to payment options to support their growth ambitions.
Navigating new regulations in a new year
As we look at 2024, the challenges will naturally shift with inflation rates significantly lower than they were at the beginning of this year so we can expect APM growth for Africa and Europe, more consolidation of Open Banking providers, as well as in the orchestration space, and a continued focus on regulations.
One of the main hurdles for a lot of the payment options now growing in popularity has been consumer confidence and bringing in robust regulations has been a huge help in making consumers feel more comfortable using them. For BNPL, the 2023 regulations have left almost one-third of shoppers (30%) feeling more comfortable using the credit service.
The next regulatory change to impact the payment industry will be the upcoming authorised push payment (APP) fraud mandatory reimbursement rules. This regulation will see the cost of reimbursement be split equally between the sender and receiver, in an effort to incentivise preventative actions. This will be enforced by the Payment System Regulator (PSR) and come into effect during 2024.
While PSPs, businesses, and consumers alike will welcome more support when it comes to tackling fraudulent activity, this change in who is liable for the cost of fraudsters’ actions could significantly impact the payments industry’s ability to grow next year. It has also been noted that social media and telecoms companies also have a role to play here as not all payments are made via merchant websites.
Many PSPs have fraud prevention rates to be proud of, but regulatory compliance is still essential. So throughout 2024, it’ll not only be flexibility and customisation that’ll lead the conversation but security will also have a huge part to play when it comes to enhancing payment options and improving consumer sentiment.
