How Are E-Payments About to Change in 2024?

E-Payment Trends: What to Expect in the Near Future

Author: Inza Khan

The payments industry has undergone significant changes in the past years that altered how we manage money, conduct transactions, and participate in the global economy. From traditional cash and cheque payments to digital wallets and cryptocurrencies, technology has rapidly transformed payment methods. Emerging companies have been driving this transformation, focusing on convenience, security, and efficiency to make payments faster and more accessible.

The growth of the digital payments sector has been substantial, with transaction values projected to reach $14.78 trillion by 2027, highlighting its importance. The payments industry is ready for further advancements in 2024, with the following trends set to reshape the e-payment model.

Major E-Payment Trends in 2024 and Beyond

A2A Payments

Account-to-Account (A2A) payments are set to change how we make online transactions, cutting out the need for credit or debit card providers. A2A payments involve direct transfers between bank accounts and have already hit $525 billion in e-commerce transactions, according to the Global Payments Report 2023. They make online shopping smoother, increase customer satisfaction, and help businesses sell more. A2A payments are cheaper, settle faster, and offer better security, which is why more merchants are getting on board. People are switching from using cards to A2A payments as a major part of online transactions in 2024.

Digital Wallets

E-payments are changing due to the widespread use of digital wallets. These virtual wallets allow easy money storage, transfers, and various mobile payment options, shaping the future of electronic transactions. With projections indicating over 5.2 billion users by 2026, businesses and financial institutions are adapting their processes to accommodate this shift, leading to a decline in traditional payment methods like credit cards and cash. This reflects a growing preference for convenient, secure, and efficient payment methods. Looking ahead to 2024, digital wallets will evolve more to meet user needs and promote global financial inclusion.

Buy Now Pay Later (BNPL)

The changes are expected in the e-payment methods due to the increasing popularity of Buy Now, Pay Later (BNPL) services. With the rising cost of living, BNPL has become a favored option for consumers seeking flexibility in their purchases. This payment method allows shoppers to divide their payment into equal parts, with the first installment due at checkout and the remaining balance spread out over time. Offering advantages like minimal or 0% financing and no initial credit check, BNPL has gained traction, especially in North America, particularly for larger purchases. The significant growth of BNPL loans from 2019 to 2021, as highlighted by the Consumer Protection Financial Bureau, shows the increasing popularity of this payment model.

Cryptocurrency Payments

Cryptocurrency, operating independently of traditional banks, works through blockchain technology, offering a decentralized payment system. Examples like Bitcoin, Ripple, and Ethereum provide users with accessibility, security, and privacy, appealing for diversification from conventional finances. With businesses adopting digital currencies for enhanced efficiency and market access, the expansion of cryptocurrency payments into mainstream e-commerce is obvious. Advances in blockchain technology address security and scalability concerns in cryptocurrency. Evolving regulations aim to provide clarity and protection for consumers, legitimizing cryptocurrency as a valid payment method globally.

Advent of Web 3.0 in Payments

In the coming years, e-payments are changing with the emergence of Web 3.0. This new phase of the internet will bring advanced intelligence to payment systems, utilizing technologies like blockchain and Natural Language Processing (NLP) to streamline and secure transactions. While currently on the sidelines of finance, by 2024, Web 3.0 is expected to play a prominent role in payment traffic. This shift will be facilitated by APIs bridging traditional and decentralized web platforms for a more unified financial ecosystem. Businesses are advised to explore partnerships or invest in research and development to understand and integrate the benefits of Web 3.0 into their payment services.

Integrating AI into AML Strategies

E-payments are set to change by the integration of Artificial Intelligence (AI) into Anti-Money Laundering (AML) tools. The financial industry is preparing for an investment in regulatory technology, with global spending expected to increase by 150% from 2023 to 2028. AI is playing a central role in this investment, offering a powerful solution to enhance AML and Counter Financing of Terrorism (CFT) compliance. By incorporating AI into regulatory tools, financial institutions can improve the efficiency and accuracy of their compliance processes, making them more cost-effective and less labor-intensive. Financial institutions are advised to prioritize the adoption of AI in their AML strategies, which involves investing in AI technology, training staff to work alongside AI systems, and staying updated on regulatory standards.

Rising Cybersecurity Challenges

Digital transformation has expanded the vulnerabilities in various sectors, including payments, with near-field communication technology introducing new risks in digital transactions. Cybercriminals are actively targeting these transactions to steal sensitive customer information, leading to a substantial increase in payment fraud, with 71% of businesses experiencing such incidents in 2021. Securing digital payments is crucial for companies in 2024 and beyond to protect customer data and maintain trust. Payment processing solutions with robust security features, such as advanced encryption, tokenization, and machine learning algorithms like anomaly detection and predictive modeling, are essential for preventing data breaches and fraud.

Conclusion

The e-payments are set for changes in 2024 due to emerging trends and technologies such as A2A payments, digital wallets, Buy Now, Pay Later services, cryptocurrency transactions, AI integration into AML strategies, and the emergence of Web 3.0. These developments promise to revolutionize transactions, offering consumers and businesses a more seamless, secure, and efficient payment experience.

However, cybersecurity remains a critical concern, highlighting the need for robust security measures to protect against cybercrime. As the e-payment ecosystem evolves, businesses must stay proactive in leveraging innovations to ensure a safe digital payment environment for all.