Six key payments trends to look out for in 2024

As expectations for an intuitive and seamless customer experience and payments process continue to grow, businesses across industries should be planning ways to leverage any new developments that prioritise customer satisfaction.

Just over a month into 2024, we explore the upcoming payments trends businesses should keep top of mind this year and beyond. 

1. Open banking expands

If 2023 provided a testing ground for broad open banking initiatives and bank APIs, 2024 will likely be the year open banking ingrains itself in the financial ecosystem. We'll see the launch of more bank APIs that can enable the secure exchange of data between institutions and fintechs, with the ultimate goal of expanding on their value propositions and meeting customer demands.

In addition to the growth of bank-to-bank payments among consumers, as seen with the increasing popularity of Capitec Pay, we expect to see more use cases for open banking take shape that can enable better, more efficient, user experiences. 

2. Contactless payments and digital wallets remain popular

According to our latest report on the payments landscape in South Africa, data shows that South Africa has the highest penetration rate for contactless payments in Africa - accounting for 50% of all digital transactions. On a global scale, research from Juniper Research predicts that the total number of unique contactless mobile payment users will reach 1 billion, rising from 782 million in 2022, representing a growth of 60%.

Contactless payments and digital wallets are expected to continue to grow in popularity due to their inherent convenience and speed, particularly as omnichannel retail takes centre stage. With increasing smartphone penetration in emerging regions, we could begin to see NFC payments shift further to the forefront. 

Payments professionals should ensure that their systems are equipped to handle these contactless and digital wallet payment transactions securely and efficiently, with dedicated support for these systems and a seamless omnichannel experience.

3. A breakout year for cryptocurrency acceptance and stablecoins

Popular cryptocurrencies like Bitcoin and Ethereum are gaining wider adoption, and we will see more merchants incorporate crypto acceptance into their platforms, as more consumers express demand for using their crypto in day-to-day transactions.

Beyond these cryptocurrencies, the past two years have seen immense growth in the stablecoins. As the crypto market continues to mature and new regulatory policies take effect, consumers and businesses are beginning to recognise the value stablecoins can offer - a combination of stability, security and speed in financial transactions.

In South Africa in particular, we’ll see the first crypto FSP licenses awarded, and likely more to come, as regulators work to prevent fraud and keep consumers safe. Payments professionals should keep an eye on regulatory developments and consider adding crypto payments as a way for customers to pay for goods and services. 

4. The continued rise of Pay by bank and A2A payments  

Pay by bank remains one of the most cost-effective ways for consumers to pay and for merchants to get paid, bypassing expensive interchange fees associated with card payments. Thanks to its low cost and ease of use, the payment method has become more and more prevalent in markets around the world, with businesses focusing on cultivating a competitive Pay by bank user experience.

In South Africa specifically, Pay by bank continues to creep up on card as a preferred digital payment method. 

Widespread instant account-to-account (A2A) payments would enable consumers to pay anyone, anywhere, directly from their bank account, simultaneously making it easier for merchants around the world to accept instant payments. Getting that user experience right will separate merchants from their competitors and encourage repeat customers. 

5. Expansion of Variable Recurring Payments (VRPs) capabilities

Many anticipate that 2024 will finally be the year we realise the full potential of variable recurring payments. VRPs offer a means to accept recurring payments with more flexibility in terms of timing and amount and transfer funds quickly and securely, providing more financial control to consumers.

Ideally, consumers should have greater visibility over when and how regularly scheduled payments occur directly from their bank accounts. This year, we expect to see the rise of commercial VRPs, which aim to solve for fixed or variable recurring payments beyond personal account transfers and enable users to review, change or even cancel any subscription with a few clicks in their banking app. The goal behind this is to give customers more control over their subscription payments and improve their financial health. 

6. All eyes on payments orchestration

The growth of new payment methods and rising demand for greater consumer choice has necessitated the need for businesses to integrate and manage numerous payment methods. With this comes the need to expand their regular in-house financial operations functions to stay on top of the necessary reconciliation and reporting requirements.

Payments orchestration platforms like Stitch PayOS are seeing a significant rise in demand as an answer to the challenge of building and maintaining payments systems effectively, particularly for large enterprises operating across markets. It represents a shift from a reactive payment system management to a proactive, strategic approach that aligns with the agility and efficiency needed in today’s dynamic business environment.

Choosing your payments partner for 2024

Globally, the payments ecosystem is undergoing rapid transformation, and businesses that embrace these emerging trends will be better positioned for success. Continuously assessing your payments systems, adapting to technological advancements and prioritising the customer experience will be key to smashing your business goals in 2024.