Payment Trends That Are Expected to Shape 2022

We live in an eventful time that requires flexibility and innovation. In the past few years, we’ve seen many spheres of our lives undergo significant changes, from healthcare and education to retail and logistics. The payment industry is a link between all these key areas, so it keeps adjusting alongside them.

Here, we will review the main payment industry trends that are forecasted to affect both businesses and consumers in 2022.

9 Major Payment Trends of 2022

Further Development of Real-Time Payments

Real-time payments are sure to continue being an important trend in 2022, as modern consumers expect faster financial transactions, especially when it comes to refunds and claims.

This is clear to see as RTPs keep gaining traction globally. For instance, the Pix network in Brazil accounted for 78% of nationwide bank transfers within the first two months from its launch. Besides, in 2022, the P27 Nordic Payments network will be launched, followed by the FedNow service in the US in 2023.

2. Alternative Payments Are the New Mainstream

Merchants globally are adopting alternative payment methods with great enthusiasm - digital wallets, BNPL, and A2A transactions are commonplace alongside traditional options, and evolving. For instance, a recent study predicts the number of digital wallet users to reach 4.4 billion by 2025.

Due to being secure, easy-to-use, and convenient, digital wallets have already been actively utilized before 2022. However, this year we are likely to see them become a payment method accepted by the majority of merchants.

What’s more, some businesses decide to restrict traditional transactions. Amazon, for one, announced stopping the acceptance of Visa cards in the UK from 2022 due to the increase in the transaction fees.

Besides, Omdia’s survey with Payment Issuers/Acquirers found that the spend on technology for alternative payments is likely to exceed that of traditional payments within the next 18 months.

3. Rise of Embedded Finance

Embedding payments into services and apps not related to finance is among the hottest payment trends of 2022. This means that an increasing number of consumers will be able to get a financial product without leaving an app they're using, making the process simple and seamless.

This trend will be mainly powered by two factors:

• Progression of the Wallets-as-a-Service (WaaS) concept - it allows non-financial businesses to introduce multiple payment methods through a single integration.
• Evolution of 5G - it will let more IoT-enabled technologies introduce financial elements into their user experience.

Embedded finance has already grown into a $43 billion industry and is proclaimed by experts to be the future of FinTech.

4. Noticeable Shift Toward Super Apps

We can already see payment industry giants trying to incorporate more and more services into one platform. A great example is PayPal that redesigned its app in September 2021 by enriching it with features, such as:

• Direct Deposit
• Shopping hub
• PayPal Savings solution
• Generosity Network crowdsourced fundraising

This tendency is likely to be followed by other well-known companies, such as the recently rebranded Block.

5. Increasing Popularity of BNPL

The Buy Now, Pay Later concept has earned popularity with the pandemic and seems to be here to stay for 2022 and beyond.

BNPL transactions are estimated to reach a market value of $995 billion by 2026. Besides, startups dealing with this payment form claim to receive tens of thousands of new clients every week.

6. Continuing Dominance of Card Transactions

A survey conducted in November 2021 with a pool of nearly 3,600 respondents demonstrated that while alternative payment methods are increasing in popularity, they are still not big enough to overshadow debit and credit card transactions.

The findings show the following consumers’ estimated total monthly payment amount:

• Credit cards - $192 billion
• Debit cards - $179.7 billion
• Cash - $52.4 billion
• PayPal - $42.0 billion
• Apple Pay - $12.9 billion

Other research displays that the credit card payments market revenue worldwide equaled $138.43 billion in 2020. It is forecasted to hit $263.47 billion by 2028, growing at a CAGR of 8.5% in 2021-2028.

Thus, as of 2022, it is safe to assume that card transactions will remain a predominant payment method on a global scale.

7. AI and Machine learning Progress

AI applications based on machine learning algorithms are able to process large volumes of data and optimize payment processes. Besides, this technology has a lot of potential when it comes to payment security.

With the advancing of fraud in retail, businesses are highly reliant on AI and ML, so it is only natural that the industry is expected to be worth over $17,440 million with a CAGR of 17.9% by 2027.

8. Steady Need for Cross-Border Payments

The cross-border transactions market is booming and is expected to reach $156 trillion in 2022.

One of the reasons for high expectations toward the development of international transactions is the global banking network SWIFT. Its representatives mentioned in a press release summarizing 2021 that the company helped “lay the groundwork for the transformation of cross-border payments in 2022”.

SWIFT is planning on accelerating some of its key initiatives this year, such as SWIFT Go and Payment Pre-validation. Way to go!

9. Heightened Focus on Cybersecurity

The advancement of cybersecurity is sure to be one of the trends in the payment industry during the upcoming year.

According to a Capgemini report, the catalysts of this tendency are:

• Growth of non-cash transactions volumes
• Increasing popularity of internet banking
• Continuous payment innovations
• Cyber fraud sky-rocketing due to the pandemic

Debit and credit card fraud is estimated to cause over $400 billion in losses to the industry, so spheres like data analytics, cloud technology, AI, and ML will be focusing on the development of higher cybersecurity standards.

Besides, almost ⅔ of businesses that participated in Experian’s survey are also planning to raise their spendings on fraud detection.

Final Thoughts

Nowadays, innovations are fundamental to the customer experience and transaction security. Thus, it comes as no surprise that 2022 is predicted to boast plenty of upgrades in the payment industry.

With the knowledge of the upcoming trends, you are one step closer to being prepared for what this year brings. Are you as excited as we are?