Acquirers and processors compete to improve their value propositions Card and Automated Clearing House (ACH) payment networks compete for volume Issuers can rely on customer relationships and data slices to respond to innovation Something is loading.
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Amid economic uncertainty, payment providers are making significant shifts to digitize and innovate as they continue to grow at an expected compound annual growth rate of 8.3% globally between 2021 and 2026, according to Boston ConsultingGroup.
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The changing economic landscape is leading to consolidation and an increased focus on innovation. Both large and small players in the space can adapt their products to meet current market needs and pursue digitalization. Although scanning is increasingly becoming the industry norm, networks like Visa and Mastercard will likely continue to increase swipe fees on the grounds that these fees are integral to the security of funding, innovation and credit card reward systems. As an alternative to networks, we’re seeing strong adoption of Instant Payments (which nearly a third of US retailers are exploring, according to a June 2022 PYMNTS.com survey) and Buy Now, Pay Later (which we expect over 2 in 5 in the United States digital buyers will benefit in 2023).
The rise of digitization and non-card payment methods could pose a significant threat to the revenues of transaction-based issuers. In order to stay afloat, issuers will seek to extract more value from existing customers. That shouldn’t prove a challenge anytime soon, as North American consumers still trust banks more than fintech providers, according to a December 2021 Mastercard survey. However, as the Consumer Financial Protection Bureau takes steps to increase competition through regulation, consumers may find it easier to switch banks in the future. To avoid mass exodus, issuers will leverage customer data to create more personalized offers.
What is abundantly clear is that the diversification of the payments landscape coupled with the threat of new regulation is creating more opportunities for the savvy consumer. In order to stay afloat, players need to focus on their customers’ needs, convenience, and expand their products to include more payment method options. Curious to know more about the evolution of the payment purchase chain? Click here to purchase this report directly from . Want more data? Click here to purchase The Payments Ecosystem collection.