Top 5 Digital Payment Trends to Look for in 2023

In-store and online payment processing is due to undergo significant changes in 2023. Consumers are embracing contactless payments, while more merchants are waking up to the benefits of mobile point-of-sale systems. However, as the lines between digital and physical blur, the need for robust cybersecurity is becoming even more apparent. Below, we spotlight the biggest digital payment trends to watch out for in the year ahead.

Physical and Digital Merging into “Phygital”

For many retailers, so-called “phygital” business models are the way forward. In short, phygital blurs the line between physical and digital. This innovative approach benefits both customers and merchants, but it’s ultimately about improving customer experience. If you’ve ever shopped in an Amazon Go store before, you’ll have enjoyed the benefits of phygital enterprise. Customers can walk into a brick-and-mortar store, add items to their cart, and then leave without having to worry about making a contactless payment, using e-wallets, or dealing with cashiers. All you have to do is scan a QR code.

In 2023, expect phygital experiences to become more commonplace and replace conventional payment processing solutions. Online retail has led to many businesses shutting up shop, however, phygital payments will help entice customers back to the high street.

Accelerated Shift to Contactless Payments

Touch-free payment processing solutions have become the norm in recent years. Most banks have switched to contactless-only cards, with NFC-enabled credit and debit cards now the standard. In the past, relatively low payment limits have made contactless cards impractical for most consumers. However, the past 12 months have seen most banks revise these limits, giving customers free rein when it comes to how much they spend when choosing to pay contactless.

Although less widely used than contactless cards, mobile wallets like Samsung Pay and Apple Pay are also driving the shift toward contactless payments. Although the vast majority of the population has access to contactless cards, not every vendor has the payment processors to accept contactless payments. However, online payment processing is finally becoming more accessible.

Increasing Demand for Mobile Point of Sale

While many payment trends will make life easier for consumers, merchants are also set to benefit from emerging technologies in 2023. One of the most exciting trends in online payment processing is the rise in mobile point-of-sale (mPOS) systems. In 2018, approximately 22.9% of people in the United States were mobile payment users. In 2023, it’s thought as many as 40% of the population will embrace mobile payments.

For merchants, the benefits of mPOS systems are obvious. Smartphones can be adapted to serve as mPOS systems, although dedicated systems can still prove more affordable than traditional payment processors. Not only is the hardware more affordable, but overall fees are low. They’re easily integrated, support a wide variety of payment methods, and speed up the transaction process.

The dominance of E-Wallets and New Features

E-Wallets aren’t exactly new but, up until now, they’ve tended to be used for online transactions. In the US, card and mobile payments remain the preferred method for offline and online payment processing. In fact, only around 11% of POS transactions are made with e-wallets. Insiders expect this to rise to as much as 15% in 2023. Meanwhile, it’s thought as many as 60% of people worldwide will be using digital wallets by 2026.

Services like PayPal and Apple Pay are becoming increasingly attractive, with both offering buy now, pay later options with no hidden fees and interest payments. They’re also allowing consumers to dabble in the cryptocurrency market. In the US, PayPal users can send, transfer and receive cryptocurrency payments with their account.

Intensification of Cybersecurity

Data breaches dominated the news in 2022. The need for cybersecurity has never been more important, so expect digital payment providers to beef up their cybersecurity credentials over the next 12 months. Real-time payment processing is expected to become more commonplace when it comes to everyday transactions.

More payment providers are certain to embrace technologies like biometrics. While two-factor authentication has provided robust protection for online transactions, biometric solutions will make life easier for everyday consumers and facilitate swifter transactions in-store and online. Ultimately, 2023 is likely to see a downward trend in conventional authentication methods. While passwords and PINs aren’t going anywhere fast, these methods are becoming increasingly invulnerable to sophisticated cyber threats.

The digital payment landscape is evolving rapidly. Expect contactless debit and credit card payments to become even more commonplace now that limits have been relaxed. More people will also be using mobile payments, with even smaller merchants needing to adopt mobile point-of-sale systems to accommodate them. 2023 is also likely to see a significant upswing in the number of e-wallet users, with the likes of PayPal offering embedded finance products and services.

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