The payment world today is nothing like it was at the start of the last year, let alone as it was in years before that. Consumers are far more willing to try new payment technologies, particularly if they’re faster and more sanitary (i.e. contactless). As consumer expectations for innovation continue to rise, this rapid rate of change will continue on a worldwide scale in 2022.
This year, we see three major trends to observe:
For Digital Life, There’s Digital Money
The fast digitization of payments across Europe during the epidemic, as well as growing interest and competition from cryptocurrencies (like Bitcoin), as well as stablecoins (i.e. Tether), has fueled interest in Central Bank Digital Currencies (CBDCs).
It’s only a matter of time until central and national banks create digital currencies. The basic technology for digital currencies such as the e-Euro or the e-Krona is the same as that for cryptocurrencies – it already exists! All that’s needed now is for regulation to catch up and to ensure that the accompanying technology doesn’t discriminate against anyone.
Each component in the value chain is trying to preserve and improve its own interests and visibility, but there’s little doubt that digital currencies will profoundly alter the global payments landscape. Expect more national trials, deployments, and legislative changes in 2022 as the world of money undergoes the most significant transformation in history.
Now Is the Chance to Buy Now and Pay Later
In 2026, it’s estimated that paying in digital installments, frequently without additional costs, will be worth $995 billion. The advantages for merchants are numerous. It increases sales by 20-30% and increases conversion rates by luring customers with more flexible payment alternatives. It also has the effect of increasing basket value, trust, and loyalty.
This option is increasingly being offered by successful start-ups and incumbents to appeal to Millennials and Generation Z customers who’re accustomed to more flexible digital payment methods. Because of the growing popularity of BNPL (buy now, pay later), businesses that don’t provide it risk losing a big share of their potential clients.
To obtain a competitive edge in 2022, the entire buy journey should be changed to make use of BNPL’s capabilities as well as client preferences in various countries. This applies not only to the actual paying for stuff but also for online money transactions for services, such as gambling online (no wonder the popularity of Dash casino sites and similar other gambling platforms putting up-to-date payment methods at disposal to its clients are on the rise). Open invoicing, for example, is popular in the DACH region (Germany, Austria, and Switzerland), where customers often have 30 days to pay after receiving their product. DACH customers have historically preferred this method of payment, and by providing several BNPL options, businesses may help these customers transition to more familiar – yet digital – payment methods.
In 2022, EU and UK regulators will seek to better understand and balance the need for growth and innovation with consumer protection for those who choose newer payment options. Expect BNPL payments to continue to rise at a breakneck pace until this is in place.
PINs Are Being Phased Out
Consumers are increasingly serving as the primary payment authenticator. Biometrics are already being used to protect Apple Pay (and other mobile wallets), and fingerprinting smartcards experiments are underway to incorporate the tech into traditional wallets. As the technology matures, users will feel more confident and comfortable with it, utilization of that kind will expand in 2022.
The majority of this will be done with fingerprint technology, but we may expect payments to be confirmed automatically by facial recognition in the future. Customers will be able to pay for transportation or supplies just by walking through a gateway or store, using infrastructure that connects their purchases to their wallet, removing friction from the transaction.
In 2022, it will be critical to continue testing and evaluating novel form factors in order to meet market demands and gain a better understanding of how consumers perceive and react to non-traditional payment methods, especially if they must trade privacy for convenience.
