Industry trends update: predictions for 2024

In its 'Top 10 Trends in Commercial Banking and Payments, 2024'¹ report, Datos Insights discusses how modernization is driving opportunities across the industry on a global scale. We picked out three trends to focus on for 2024 and beyond.

Regardless of where a bank is on its modernization journey, Datos Insights sees the integration of automation tools and real-time payments (RTP) capability as critical to meeting business customers' demands. Reporting settlement speed as their biggest payment gap, many businesses are turning to fintech providers for connection to RTPs.

To help boost their market opportunity, Datos Insights indicates that banks need to move towards a modernized infrastructure that connects them to real-time rails, and allows capabilities such as receivables and payables automation with intelligent payment routing based on series of preferences like speed or cost.

Visa Acceptance Solutions connects with various RTP networks—ask us about the solutions we can provide.

Open banking allows the linking of corporate software platforms—like enterprise resource planning (ERP) systems—to core bank systems using APIs, enabling more effective and secure access to and management of financial data and transactions. As with faster payments (discussed above), banks need to attract and retain enterprise customers who have more choice than ever, by providing services that are faster, more integrated, and easier to use.

One option for banks, suggests Datos Insights, is to use APIs to offer services through the software systems enterprises already use. Doing so transitions enterprise customers from online banking to embedded banking—enabling them to seamlessly access banking services directly from platforms like ERP without switching to online banking.

Find out more about how Visa is working to unlock the power of open banking and enable the creation of new experiences across the globe.

Financial institutions have tended to target consumers and corporate customers with their transformation and modernization efforts. Now, says Datos Insights, the push to serve small-to-midsize business (SMB) customers is on and will continue to rise in 2024 and beyond.

To date, incumbent banks have been successful in the SMB market owing to their physical presence and online and digital capabilities, and, in the case of smaller banks and credit unions, their more personalized service.

Yet, 65% of SMBs report they currently go outside their bank to meet at least one financial need; and a growing cohort of SMBs see modern, digitally forward banking capabilities and value-added services as essential. Many banks are therefore looking to enhance their SMB proposition with enhanced online banking, cash management tools, vertical sector focus, improved payment capabilities, and the kind of embedded banking services described above, to compete more effectively in the SMB market.

In its '2024 Trends & Predictions: Merchant Payments,'² Javelin Advisory Services comments on topics including increased adoption of Tap to Phone and solidification of the industry's definition of payments orchestration.

Javelin believes that increased adoption of Tap to Phone, which some call SoftPOS, technology by acquirers and merchant service providers will make it popular with merchants, who will see it as a way to help streamline the in-store experience. Tap to Phone allows merchants to accept contactless payments on a standard smartphone, with no need to invest in a terminal. So, it will be easier for merchants to switch payment providers, who will need to rethink how they keep their merchant customers loyal.

Javelin indicates that Tap to Phone is set to change how payments are made in store, pushing shoppers towards contactless cards and mobile wallets. By untethering checkout from a fixed location, the technology allows shoppers to pay anywhere in the store and gives merchants new flexibility when designing checkout experiences. Javelin expects that SMBs’ enthusiasm for Tap to Phone technology will be the key driver of growth and expansion across the U.S. and abroad.

Tap to Phone is just one of the next-gen in-person payment options we offer through Cybersource.

Javelin predicts that the payments industry will develop a consensus definition for the term 'payment orchestration' this year. It considers this a critical step as the payments landscape becomes increasingly complex owing to factors such as the growing popularity of alternative payments and merchants' interest in selling online internationally. Javelin anticipates that merchants will need to use a payment service orchestration layer to handle all this complexity and keep payments running smoothly, regardless of where transactions originate and the processors, acquirers, gateways, networks, and other stakeholders that may be involved.

As well as agreeing on a definition for the term, Javelin suggests that payment service orchestration solution providers will also need to put more effort into their messaging to attract merchants to their solutions. AI is a critical enabler of such orchestration solutions—read our blog on the rise of AI in payment acceptance.

The 'IDC FutureScape: Worldwide Payment Strategies 2024 Predictions'³ looks beyond 2024 with 10 predictions for 2025 and beyond. We've picked out the following three:

IDC indicates that many retailers and restaurants plan to invest in technologies to improve the checkout experience for customers. Payment/POS vendors are moving to offer unified payment and POS solutions that can support the ongoing drive towards better experiences. Benefits include:

• The ability to add new payment types more easily
• A more efficient checkout with shorter transaction times
• Access to data insights on customer behaviors and preferences unavailable with siloed data, which can help drive customer loyalty and enhance merchant competitiveness
   

IDC says that embedded payments are blurring the boundary between shopping and payment in ecommerce. Previously, product selection and payment typically took place on separate platforms, leading to a jarring shift that could result in abandoned carts. In contrast, embedded payments allow for a more fluid shopping journey, and are becoming more prevalent as increased availability of APIs simplifies integration of payment gateways into ecommerce platforms. Customers enjoy a continuous checkout process that can improve conversion rates, enable capture of impulse purchases, and increase satisfaction and loyalty.

Visa Acceptance Solutions can enable embedding of payments into ecommerce solutions via a single integration with the Visa Acceptance Platform, which offers banking-grade reliability and connects you to a marketplace of payment and technology leaders. Through our modular payment capabilities, we can work to embed nearly any part of the payment journey in a non-finance-based platform.

In the structured world of payments, machine learning (ML) and artificial intelligence (AI) processes have found strong use cases, especially in fraud prevention. A case in point is our Decision Manager platform, which uses ML and AI to detect fraud in seconds.

IDC expects that, as digital payments become more complex—with more payment types and options, and more data inherent in every transaction—the case for adopting ML to optimize payments will become stronger for banks and payment processors.

In many cases, modernization of digital payments involves adoption of ISO 20022 message formats (mentioned above) that carry much more data. IDC sees an opportunity to leverage that increased data by using AI to analyze payments more carefully and create more flexible and precise decision models, which can result in better decision-making and improved authorization rates.

We'd love to talk with you about these and other trends and innovations in the payments industry. Feel free to reach out and discover how Visa Acceptance Solutions and our uniquely open payments platform can help you build the future of payments.

And look out for our next Update for more news and commentary.⁴