5 Major Payment Trends that Will Transform Banking in 2022
Last year, consumers continued to rely on routine behaviours picked up during the pandemic – and voted for digital convenience and personalization during every purchase. Contactless, installments, platforms, and channel-less journeys have been enduring trends, while checkout-less experiences and membership models have been less significant.
In 2022, brands and consumers will experience digital transformation in familiar and novel ways. So what are the top trends to watch out for in the banking and payments services sector this year?
- The “Person-To-Person Payments” (P2P) Battle
Peer-to-peer payments, whether split at the restaurant, reimbursed to a friend, sent as remittances or used for resale, are a long-established feature of the payments industry. In order to capture market share, companies will have to extend their geographic and demographic reach.
Providers will focus on monetizing their services, especially as the market becomes more crowded. In a move that indicates banks are becoming more interested in mobile, some banks have introduced a system which anybody with a Visa or Mastercard debit card account can use, regardless of the provider of their financial services. Compared to existing P2P market incumbents, this system offers many advantages, including speed. In contrast to most services, which transfer funds to a bank account over the network after at least a day, money transferred through this service is available to the recipient instantly.
- The Prevailing Popularity Of Cards
Debit and credit card transactions still dominate overall, despite the growth of alternative payment methods. It is incredible that cash still ranks third despite the pandemic.
What makes card payments more popular than cash payments? Contactless cards are likely to be preferred by consumers who live busy lives and prefer having most of their necessities bought online. The other factor is that grocery shopping, a common payment need where mobile wallets would normally be used, is now being done online instead. The pandemic has forced many households to turn to buying their groceries and food online, therefore as contactless cards facilitate this, they are the most preferred payment methods among online shoppers worldwide.
- All Encompassing Super apps
A number of financial services and even many eCommerce services have been fragmented, and management has been left to the consumer. One-stop shops these days are attracting customers by bringing together and aggregating the best features of a variety of apps.
Super apps satisfy this desire by uniting lifestyle and financial services functions, allowing users to access and pay for almost anything with ease. Additionally, merchants benefit from this as well, since they get access to an audience and can reduce their costs associated with acquiring new customers.
- Embedded Payments: Expenses You Hardly Notice
Embedded finance gives us the opportunity to bill and pay for facilities with continuous ease, from rideshare charges to gasoline purchases. This is really a subset of the increasing connectedness of automobiles, where data flows back and forth frequently. In the past few years, toll payments have become painless and invisible. Insurers can now adjust insurance payments based on measured driver behaviour through the vehicle itself, allowing for more flexibility in payments. Embedded payments will become more popular as connectivity improves.
- The Continuous Development Of Card Companies
Payment providers need to modernize their legacy systems in order to fully take advantage of new technologies. The two largest payments companies are starting to diverge after decades of nearly identical business models. Mastercard is developing technology for business-to-business transactions while Visa aims to ease the flow of payments among consumers and between consumers and businesses.
In order to meet the new challenges of this market as well as the new consumer expectations, Mastercard and Visa are strengthening partnerships with the entire network of players.
To Conclude
As the pandemic continues to drive innovation in the industry, contactless, online, frictionless, and faster payments will only become more popular in 2022. As a result, the best banks need to step up to the challenge.
As banks are compelled to embrace the changes brought in by the COVID-19 pandemic, we see the institutionalization of that change and the beginnings of a new normal. Customer empowerment is creating a demand for a variety of services, from service fees to sustainability, and new entrants are stepping up their scope of services.
