Four Payments Trends for 2023

Casey Klyszeiko, Head of Global eCommerce and Carat at Fiserv

As 2023 begins, businesses are navigating an uncertain landscape. Inflation has remained persistent, consistently exceeding double digit rates across the European Union (EU) and showing up in everyday purchases like energy and groceries, while global tensions also remain high and the supply chain has yet to fully stabilise.

Consumer spending, a major driver of the economy, is creating concerns too. According to McKinsey, nearly 4 in 10 European consumers have reduced spending on nonfood discretionary items. This scenario is compelling businesses that serve consumers, particularly those in the retail space, to invest in the creation of an engaging purchasing experience, which will be a particularly wise investment if spending continues to slow and competition for consumer share of wallet grows.

Embracing technology innovation to streamline operations and better serve customers will help businesses navigate choppy waters while building deeper and more unified relationships for the long term.

Here are four payments trends global businesses will encounter in 2023 and beyond.

1. Payment choice will help businesses meet consumer needs

Consumers prefer, and, in some cases, need, to pay in a myriad of ways, ranging from tapping their digital wallets to scanning a QR code. From enabling people to pay using options like buy-now-pay later (BNPL) or PayPal, to allowing consumers to receive payouts instantly into the account of their choice, businesses increasingly view payments as an opportunity to maximise customer choice and build loyalty.

As consumers navigate economic headwinds in 2023, offering more payment choice will provide much needed optionality and flexibility as they look to pay and be paid using options that best fit their financial needs.

Think of the gig economy worker who wants to access their pay each day, the benefit recipient purchasing food at the local market, or a utility customer awaiting a deposit refund. Each consumer has a unique payment preference driven by a real-life need. Businesses will increasingly invest in payment choice in 2023 to create experiences that drive loyalty as they enable people to navigate their financial lives.

2. Businesses will optimise payment flows to protect against economic uncertainty

In addition to solving for consumer payment needs, companies are taking a hard look at where they can optimise their own costs and investments. Businesses that deliver unified shopping and payment experiences through a single platform can streamline operations and diminish operating costs. Other tactics include encouraging lower cost payment types, reducing manual processes with cloud-based solutions, and tapping into emerging technologies that boost authorisation rates while reducing fraud and risk.

• Encouraging lower cost payment options, such as open-banking enabled payments directly from bank accounts, will allow businesses to reduce their cost of acceptance on a given transaction. That cost savings can benefit the brand’s bottom line and be re-invested to boost the customer experience and increase loyalty.
• Streamlining business to business payments by closely integrating accounts receivable (AR) and accounts payable (AP) payments with enterprise resource planning (ERP) systems will create efficiencies, enhance data protection and optimise collaboration with customers and partners, which improves cash flow.
• And finally, businesses will continue investing in fraud mitigation. During challenging economic times, history shows an increase in fraud. Pairing artificial intelligence and machine learning with robust sets of payments data will be pivotal for businesses needing to secure their digital borders in the next year.

3. Business will move their payments data to the cloud

To unlock new value from their payments data, businesses will tap cloud solutions to achieve new levels of access, analysis, and efficiency. Enabling seamless and secure data transfer via the cloud will modernise how payment data flows to decision-makers and how it guides business decisions across the board.

By leveraging data in real time across business functions, companies can innovate at the speeds expected in today’s rapidly changing commerce landscape. With ready-to-query payments data, businesses also can enhance the checkout process, helping prevent purchase abandonment.

By integrating seamless checkouts with embedded rewards programmes, businesses will also strengthen loyalty. Moreover, real-time payment data will improve decisions for embedded financial services and fortify fraud mitigation.

Similarly, companies will take advantage of enhanced access to timely payments data and use it to identify customer trends that can lead to a competitive advantage.

4. Businesses will enhance digital wallet experiences to deepen consumer loyalty

As competition heats up, businesses will invest in branded digital experiences, turning to their own wallets to create value by streamlining financial experiences and driving deeper customer relationships. One example is how businesses can leverage their mobile applications to streamline payment experiences across multiple wallets within their digital environment. This functionality allows consumers to store and move funds between multiple financial purses, including loyalty, prepaid, financial, and health/wellness, within the business’s digital wallet. Doing so allows businesses to create engaging experiences and offer more services within their digital ecosystem.

To illustrate, a retailer could provide cash back into a stored value account, a healthcare wallet can hold funds to be spent at a pharmacy, or a consumer-packaged goods company can provide rewards into a consumer’s digital wallet for purchasing their product at that retailer.

The ability for large retailers to extend functionality across multiple purses within their digital wallets will help businesses improve customer experiences in 2023, drive loyalty and engagement, and deliver more value to the consumer.

Businesses that invest in payment choice and in an omnichannel platform that unifies and optimises payment methods and purchasing options will be well positioned to accelerate innovation, build better experiences for their customers and stay competitive in a challenging economic year ahead.

Casey Klyszeiko is the Head of Global eCommerce and Carat at Fiserv, developing strategy and delivering solutions to leading brands in areas such as payments, money movement, value-added services, and embedded finance. These include the Carat omnichannel commerce operating system that enables enterprise merchants to create new customer experiences and drive more commerce. His experience includes multiple senior leadership positions across the payments and financial services industry, including roles at Visa and American Express.