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Financial services

Top Trends in Payments: 2022

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2021 was a year of transition for the payments industry as we moved towards Payments 4.X − an evolutionary, COVID-19-sparked era that’s fueling even more industry consolidation and attracting tech-expert ecosystem players.

As part of this phase, payments are becoming an enabling function that is embedded and invisible to provide an immersive, seamless, and frictionless customer eXperience.

This analysis provides an overview of the new technology trends, permanent changes in customer behavior, unparalleled need for next-gen payment methods, and increased focus on nimble payment solutions for B2B and SMB segments, which are paving the way for tomorrow’s payments landscape.

The Covid-19 pandemic necessitated the payments industry undergo a facelift, sparked by novel approaches from new-age players, fostered by industry consolidation, and customers’ demand for end-to-end experience. Crossing the threshold, the industry is entering a new era – Payments 4.X, where payments are embedded and invisible, and an enabling function to provide frictionless customer experience. As customers make a permanent shift to next-gen payment methods, Digital IDs are critical for a seamless payment experience.  The B2B payments segment is witnessing rapid digitization. BigTechs, PayTechs, and industry newcomers are ready to jump in with newfangled solutions to help underserved small to medium-sized businesses (SMBs).

As incumbents struggle with profits, new-age firms are forging ahead to take the lead in the Payments 4.X era by riding the success of non-card products and services. The new era demands collaboration, platformification, and firms can unleash full market potential only by embracing API-based business models and open ecosystems. Data prowess and enhanced payment processing capabilities are inevitable to thrive ahead. The clock is ticking for banks and traditional payments firms because the competitive advantage is not guaranteed forever. As industry players seek economies of scale, consolidations loom, and non-banks explore new territories to threaten incumbents’ market share. While all these 2022 trends are at play, central bank digital currency (CBDC) is emerging globally and might open a new chapter in the current payments landscape.