What were the Payment Trends in 2024?

Change in Payment Trends

The global pandemic has accelerated the existing trend of less cash usage and more digital payments. In 2024, the payment trend saw this shift towards digital and contactless payments further strengthened. A 2021 study by McKinsey found that Covid-19 had caused the shift to digital payments to leap forward by 3-5 years. Contactless payments saw a massive surge with lockdowns and social distancing norms. 

10 New Payment Trends in 2024

1) Growth of Contactless Payments

Contactless payments using technologies like tap and go cards, mobile wallets, and smartwatches are expected to grow in 2024. More retailers are adopting contactless payment options at both physical and online stores due to their convenience and increased hygiene aspects without needing physical cash or touching payment terminals during the pandemic. 

Advancements in NFC and Radio Frequency Identification (RFID) technologies have expanded the range of devices capable of making contactless payments. Everything from wearable tech, like smartwatches, to IoT-enabled devices can now facilitate payments with a simple tap.

2) Buy Now Pay Later (BNPL) 

Buy Now, Pay Later, or BNPL, has seen tremendous growth over the past few years and is expected to continue its strong growth trajectory in 2024. BNPL allows consumers to split the cost of a purchase into multiple interest-free instalments over time. The provider’s easy signup and flexible repayment terms have made BNPL appealing to consumers.

In 2024, more retailers are expected to integrate BNPL into their payment options, which will further drive the adoption of this payment method, especially for big-ticket discretionary purchases. The BNPL market is expected to grow over 3X to reach a transaction value of $260 billion based on Business of Apps – Connecting the app industry.

3) Cryptocurrency Payments  

Cryptocurrency payments are expected to gain more traction in 2024. With the rise in the value of popular digital currencies like Bitcoin and Ethereum, more merchants are open to accepting cryptocurrency as a payment option. Major payment platforms are predicted to integrate crypto payment gateways in 2024 to allow customers to pay directly using their digital wallets. 

Adoption may still be limited compared to traditional payments, but cryptocurrency payments will likely grow in popularity among younger consumers and in specific industry verticals like e-commerce. Overall, 2024 could see a significant rise in cryptocurrency usage for retail transactions.

4) Biometric Payments 

Biometric payments such as fingerprint, facial recognition, and iris scans are projected to grow in popularity in 2024. These types of payments use unique human characteristics and behaviours to authenticate transactions instead of passwords or cards. 

With rising concerns about payment security and fraud, biometric technology provides additional protection by ensuring only the actual user can complete a purchase. Major payment brands are investing in using biometric data to make checkouts faster and easier. 

5) Central Bank Digital Currencies (CBDCs)

Several major central banks worldwide have already started testing CBDCs; some have pilot programs running. CBDCs would be digital sovereign currencies issued and governed by central banks. They would give consumers a safer digital payment option than private money forms like cryptocurrencies. 

CBDCs could reduce transaction costs and reliance on cash. More countries exploring the feasibility of CBDCs in 2024 may help establish global technical and policy standards for interoperability between different CBDCs. This would facilitate cross-border digital payments.

6) Embedded Finance and Payments

Embedded finance integrates financial services directly into non-financial platforms, applications and marketplaces. In 2024, embedded payments are expected to grow significantly as more businesses look to offer financial products and services to their existing customers without needing a separate payment process. 

Many retailers and e-commerce platforms will offer embedded payment options built directly into the checkout flow. This embedded model creates a more streamlined payment experience for users while opening up new revenue opportunities for companies in different industries to capitalise on financial services.

7) International Payments

International payments are expected to proliferate in 2024 as cross-border commerce continues to increase. As more people shop online from overseas retailers and send money to friends and family abroad, the volume of international transactions will rise. 

Payment methods that facilitate international payments safely and seamlessly will become more popular. This includes technologies that allow for easy currency conversion at the time of payment. Digital wallets that support multiple currencies will also grow in usage. Faster and lower-cost international cryptocurrency payment options may start gaining more traction in 2024.

8) A2A or Account-to-account Payments

A2A or account-to-account payments refer to direct funds transfers between bank accounts without physical cash, checks or payment cards. It allows users to send and receive money directly from their bank accounts to other individuals’ bank accounts through online and mobile banking platforms. 

This is expected to grow significantly in 2024 as more people adopt digital payment methods for P2P transfers. A2A payments offer convenience and are nearly instantaneous as funds can be transferred between accounts 24/7 from anywhere. They also eliminate transaction fees associated with payment modes like credit/debit cards.

9) AI and ML Payments 

Artificial Intelligence and Machine Learning technologies will transform payments in 2024. As AI and ML systems are trained on massive transaction data sets, they will be able to identify patterns and detect fraudulent activities much faster and more accurately than existing human-based systems. 

Payment providers will increasingly adopt AI to power features like real-time fraud detection, predictive analytics, personalised recommendations and cognitive chatbots. AI makes payments more seamless by enabling face/voice recognition and predictive shopping carts. Machine learning algorithms will learn customer preferences to offer more tailored payment experiences over time.

10) Card Tokenisation 

Card tokenisation refers to replacing sensitive card details like 16-digit card numbers with unique digital identifiers called tokens. These tokens are then used to initiate and process transactions. In 2024, more merchants and payment processors will adopt card tokenisation to improve payment security. 

When a customer makes a payment, their card number is tokenised, and the token is then used as a proxy for the card number for future transactions. This eliminates the risk of card data being stolen since the tokens have no value except for the merchant to which they were issued. With rising fraud, card tokenisation is seen as an important payment security trend in 2024.

Adapting payment trends in 2024 with NTT Data Payment Services:

NTT DATA Payment Services offers a complete payment solution to advance both your offline and online businesses. From online payment gateway and mPOS to IVR payments and Bharat QR Scan and Pay, we ensure maximum convenience and safety for all your payments. 

Conclusion:

The payment trend in 2024 promises to witness many innovations that will further drive the shift towards digital and contactless payments. Technologies like digital wallets, BNPL, biometric payments, and voice payments are expected to see wider consumer adoption. 

The evolution of payments will be exciting, with new players and business models emerging. Adapting payment systems to support emerging trends will be necessary for businesses to provide seamless customer experiences. 

FAQs

1) What are the key payment trends expected in 2024?

The key payment trends expected in 2024 include growth in contactless payments, buy now pay later (BNPL), cryptocurrency payments, biometric payments, central bank digital currencies (CBDCs), embedded finance and payments, international payments, account-to-account (A2A) payments, use of artificial intelligence and machine learning in payments, and card tokenisation.

2) Why is contactless payment expected to grow?

Contactless payment using technologies like tap cards, mobile wallets and smartwatches is expected to grow due to its convenience and increased hygiene without needing physical cash or touching payment terminals. More retailers are adopting contactless payment options due to the pandemic.

3) What is driving the growth of BNPL?

BNPL allows consumers to split payments into interest-free instalments, making purchases more affordable. Its easy signup and flexible repayment terms have made BNPL popular. More retailers 

4) What is card tokenisation, and how does it improve security?

Card tokenisation replaces sensitive card details with unique digital identifiers called tokens. The tokens are then used to process transactions, eliminating the risk of card data theft since tokens have no value except to the merchant. This is seen as an essential payment security trend.

5) How will AI transform payments in 2024?

AI will power real-time fraud detection, predictive analytics, personalised recommendations and cognitive chatbots for faster and more accurate fraud detection. Machine learning will learn user preferences to offer tailored payment experiences over time.