What to Expect from the Payments Ecosystem in 2022
The end of 2021 witnessed a turn toward a sense of normalcy, at least among consumer purchasing levels. However, recent payment trends, including QR codes, contactless payments, and other financial technology innovations, have created a payments ecosystem that would have been inconceivable even a few years ago.
A significant shift in consumer financial behavior has also led to a decline in cash payments in favor of point-of-sale contactless payments and online digital payments, primarily due to the ongoing COVID-19 pandemic. Fintech companies and savvy players in the traditional banking sector have recognized and embraced these changes in payment processing trends.
Digital and Contactless Payments
Software as a Service (SaaS) has been traditionally associated with cloud-based anti-virus, data storage, and related computer subscription-based services. However, SaaS financial providers, such as PayPal and Stripe, have been leaders in promoting worldwide acceptance of alternative payment methods, such as digital wallets, QR codes, and touchless payments. Likewise, many merchants have adopted exact change only or no-cash policies, partially in reaction to the pandemic but also because of an ongoing shortage of coins.
With the ongoing coronavirus pandemic, consumer desire for increased availability of contactless payment options will continue to increase. These alternative payment methods will continue to grow in use. Consumers will continue to expect merchants to accommodate the usage of digital wallets, contactless payments, and QR codes as payment options. Even after the pandemic has ended, digital payment gateways and touchless options will continue to be important ways to attract consumers away from their computer and mobile screens and back into brick-and-mortar stores.
Shared Data and Open Banking Trends
Perhaps influenced by the prevalence of social media, individuals of all ages are increasingly willing to share data. Younger consumers are especially receptive to adopting financial technology to conduct their banking and shopping transactions. Regulations in the United States are less stringent regarding alternative payment gateways than in Europe, and fintech companies like PayPal and Intuit have formed collaborative relationships with conventional banks.
These open banking trends point to an acceleration in digital payments for 2022 and beyond. As of 2020, contactless payments for point-of-sale transactions exceeded cash and card payments for the first time worldwide. By 2024, digital payments are projected to account for one of every three in-store transactions. Cryptocurrencies are also gaining traction, with more merchants accepting cryptocurrency as payment.
As open banking trends continue to increase, the result will be more competition among players in the financial sector and improved payment options for consumers. Mainstream financial institutions that fail to adapt will face reduced customer numbers – and the risk of becoming obsolete and ultimately going out of business.
Solutions that streamline payment offerings make payments simple and easy for your customers, often translating into higher sales and greater customer loyalty. The payment professionals at PayTech Trust work to create unique customized solutions to meet the needs of our merchants and partners. Contact us for more information on how we can help you. Contact Our Sales Advisors