The future of payments will focus on experience

In 2024, firms that make a lasting impact will be those that create value or utility in payments. Indeed, the payment experience, as much as the payment itself, is becoming increasingly significant. For years, consumers, merchants and ecosystem players have solely focused on the payment – how to make it more cost-effective, more accessible and more embeddable. But this is only a means to an end. Instead, it should be about the value-added services around the payment.

The wallet will be about everything but payments

One way we will see this happen is through non-payment use cases of the digital wallet. Indeed, in 2024, we expect non-payment use cases such as identity, ticketing and passport and licence storage, along with retail loyalty, to be behind 75 per cent of digital wallet announcements, as consumers, governments, retailers and businesses finally see beyond mobile payments. As a result, wallet usage is set to increase by 20 per cent in Europe and North America.

Networks will amplify the value of B2B payments

Forrester also believes that, in 2024, more than half of B2B business will flow through B2B payment networks. While consumer payment networks have been around for a while, no B2B payment network has reached a similar scale and effect. Now, however, we are seeing new business models, changing customer demands and tech innovations that are helping B2B payment networks to thrive.

In addition, we will see greater use of advanced data and network intelligence as CFOs and payment teams increasingly need not only seamless digital payment experience but improved operational efficiency. For example, AI and analytics will be crucial in building sophisticated network intelligence such as buyer and supplier relationship analysis.

Account-to-account payments will thrive

Account-to-account (A2A) payments will also flourish in 2024 and beyond. In Europe, PSD2 payment innovation is bearing fruit, and in 2024, payment initiation adoption will more than double, spurred on by the EU’s instant payments proposal.

By late 2024, hundreds more banks and payments services providers will launch account-to-account faster payments capability built on the recently launched FedNow. Merchant sensitivity about card fees acts as an accelerant, and banks will turn to A2A to deliver payments solutions that turn open banking insight into executable action for their customers.

Micropayments will have a breakthrough

The future of payments will also include micropayments breaking out of their niche and become an alternative to subscriptions. Indeed, sometime in 2024, we predict a major content provider to formally offer micropayments to offset rising cancellations from rigid subscription plans.

Offering micropayments as a pay-as-you-use option will offset this lost revenue by enabling on-demand micro-consumption, taking the utility of micropayments beyond influencer and social platforms, niche media platforms and the gig economy.

The payments sector will increasingly focus on the payments experience, and in particular on amplifying value for customers. Future leaders that think creatively, and shift focus from the payment to anchoring greater value and opportunity around it, will reap the rewards.