How 2023 Payment Trends are Shaking Out
The halfway mark of 2023 is almost here. New reports and consumer surveys are solidifying some of the top payment trends of 2023 and reinforcing many 2022 predictions – from increased digital payment adoption to embedded payment and lending integration – while others, like payment sustainability, are emerging as new topics.
Today we look at how 2023 trends are shaking out and what to watch for in the second half of the year.
Digital payment adoption in B2B and B2C rise
Cash and checks are going by the wayside, which may not be surprising in the B2C market but more B2B companies are now embracing digital payments.
A new report by Citizens Bank surveyed 205 treasury executives at middle-market businesses in February and March 2023. Citizens found that more B2B businesses are now providing online payments, and 80% of B2B transactions are expected to be digital by 2025. Corporate treasury departments are embracing social tokens, real-time payments and virtual cards. But the report also found that B2B has not abandoned checks, automated clearing house (ACH) and physical credit cards just yet.
This differs from the B2C market, where Juniper Research estimates that by 2026, 5.2 billion people will use digital wallets to make payments, up from 3.4 billion in 2022. The research also identified QR code payments as the most popular digital wallet transaction type in 2026, reaching 380 billion transactions globally, and accounting for over 40% of all transactions by volume.
This adoption of digital can be attributed in part to the pandemic, which accelerated interconnected commerce and brought the brick-and-mortar shopping and payment experience online. Consumers are now accustomed to paying digitally and want improved, and expanded, digital channels.
A new report by Salucro demonstrates this trend in healthcare. The company surveyed 1,348 U.S. healthcare consumers this spring and found that 62% of respondents favor patient portals for paying medical bills. This digitalization expands beyond just payments, with Salucro finding that patients’ interest in receiving text message notifications about their medical bills rose by more than 30% in 2023 from 2022, with an additional 51% of respondents saying that a text message reminder would prompt them to pay their bill faster.
|Learn more about the different types of digital payments available in our blog, Demystifying Digital Payments for your ISV and SaaS Platform.|
Businesses get behind real-time payments
Real-time payments (RTP) are about moving money faster than checks and more securely than cash worldwide. According to ACI Worldwide’s March 2023 report, more than 70 countries on six continents support real-time payments, with $195 billion in transaction volume in 2022.
These payments are made between bank accounts that are initiated, cleared and settled within seconds, regardless of day of the week or holidays. Not only does this help consumers manage their money better but real-time payments speed aid in crises. Take the pandemic and issuance of stimulus checks, where the rollout was slow and it took weeks, sometimes months, for consumers to get aid. Payment speed is also key in disaster relief.
Venmo, Zelle and other peer-to-peer (P2P) payment methods are accelerating the adoption of real-time payments, since consumers get instantaneous fund transfer and payment and are now expecting this from their everyday payment methods. According to PYMNTS’ Real-Time Payments Tracker® released in March:
- Four in five Americans are interested in faster payment options when paying businesses for goods and services
- 61% of millennials and 59% of bridge millennials say they are highly interested in real-time payments.
- 23% of consumers interested in using real-time payments find them convenient and easy to use
- 22% appreciate the instant availability of funds
- 14% believe real-time payments could help them better track their financial situations.
Lending options become a standard in the payment mix
There is a new industry term to familiarize yourself with – embedded lending. This allows consumers to get lending tools through non-financial services or products.
The most mainstream and popular form of embedded lending is Buy Now Pay Later (BNPL). The increasing popularity of online shopping and demand for quick checkout is propelling the BNPL market to a 26% CAGR from 2023 to 2030, currently standing at $6.13 billion in 2022.
BNPL brings consumers flexibility with instant credit, interest-free payment terms, shopping via apps and a simple checkout experience. While there is still concern over uncertain economic conditions and consumers’ ability to pay back purchases, regulatory oversight is ensuring that BNPL systems are robust, making them a payment method that is here to stay. In fact, more industries like healthcare, grocery, retail, legal services and grocery are adopting BNPL, making it a mainstream and accepted purchasing method.
SaaS payments are the new normal
Given the evolution of digital payments and one-touch commerce, it should come as no surprise that consumers expect to pay for goods and services in their software applications, whether that is a gym app, a healthcare portal or when booking a massage or haircut online.
Thousands of software companies around the world have either adopted embedded payments or are considering adoption. These payments are “invisible” to the consumer and baked into the SaaS experience. According to Bain & Company, embedded payments (along with embedded lending) will continue to be the fastest-growing categories of embedded financial services.
Embedded payments bring numerous benefits to both consumers and software platforms. On the consumer side, they satisfy the desire for seamless and quick payments in their app or portal. On the ISV and SaaS platform side, embedded payments make companies more competitive and increase revenue by sharing payment profits with the acquirer or processor.
|Payfactory specializes in embedded payment facilitation for ISVs and SaaS platforms. Learn more about the growing need for embedded payments in our blog, Integrated Payments and Embedded Payments: A Trillion-dollar Opportunity.|
The growing interest in sustainability
The 2023 Merchant Payments Ecosystem (MPE) conference had a panel dedicated just to sustainability in payments – and we are poised to see more of these discussions.
The payments industry processes trillions of dollars in transactions every year and there is a growing awareness, both from the business and the consumer side, of the effect these payments may have on climate change and our carbon footprint. A great example is the continued use of paper receipts and what that means for the environment – another factor that is putting digital front and center.
The Paypers reports that MPE panelists who joined the session on sustainable payments in March discussed that informing customers about the sustainability of a payment method is an important first step in promoting sustainable payment practices.
Visa reports that recommerce – resale, returning and redistribution of goods – is also gaining popularity, with 69% of participants in a recent survey saying they would choose retailers based on recommerce activities. A card reward system or loyalty program for choosing sustainable payment options are some of the ideas being floated by processors and merchants.
Additionally, Payfactory believes that consumers will begin demanding real-time refunds - the ability for instantaneous funding of refunds to a consumer card or bank account by pushing funds to their credit card or through their debit card to their bank account. This would allow for 24/7, 365 real-time refunds, fixing a service issue in seconds that normally takes days on the traditional payment refund rails, conserving time and energy.
What’s next in 2023
Consumer demand and preference will continue to drive payment trends. Integrating, embedding and changing the way we process transactions takes time to implement across the payments value chain. But the continued drive toward digital, one-touch commerce and an invisible, convenient payment experience is underway across industries, with more to come from standards including PCI DSS 4.0 and ISO 20022, all of which will make transactions more secure and seamless.
Our CEO, Ruston Miles, a 23-year payments industry veteran, believes that payment facilitation is the future of merchant acquiring and in-line with industry trends for faster, more secure and seamless payments. The result is Payfactory’s payment platform that is plug and play for ISV and SaaS providers, enabling companies to swiftly embed payment processing into their software with minimal work while benefiting from an attractive revenue sharing model. Learn more about how you can start processing payments today with Payfactory.