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The five payment trends that will shape your business in 2023

Payments in recent years has undergone a metamorphosis – driven by changing consumer behaviour and the proliferation of fintech innovation. 


2023 is an exciting time in the world of payments as the industry approaches a state of maturity amongst the ‘big tech’ players across global fintech hubs along with a growing number of Australian fintechs in a post-revenue stage. At the same time, new innovations in real-time payments and blockchain-based solutions are set to make a significant breakthrough in the industry.


While facing challenging and uncertain economic conditions, coupled with changing business models, investments and regulatory framework, we can still expect payment providers to continue demonstrating steady growth and innovation.  


Here are the top five payment trends that businesses should be ready for in 2023.


1. Cross-border payments innovation


Banks have traditionally dominated the cross-border payments market due to the complex operational requirements needed – a ubiquitous network of trusted partners, supporting infrastructure and sufficient liquidity.


New players are emerging onto the scene to provide more instantaneous, efficient and cost-effective solutions to compete with banks at scale. These cross-border payment providers leverage new technologies such as blockchain and artificial intelligence to create a seamless, automated end-to-end payment process from compliance checks to receipt generation. 


According to Juniper Research, business-to-business (B2B) cross-border payments are expected to exceed USD $42.7 trillion by 2026. Over 25% of this estimated amount is being driven by the mass adoption of eCommerce marketplaces in recent years. 


Another key driver for cross-border payments this year is the adoption of ISO 20022, a globally developed methodology for transmitting data which provides a consistent messaging standard for payments. According to the Reserve Bank of Australia (RBA) and AusPayNetwork, replacing the legacy SWIFT messaging to the ISO 20022 messaging will be complete by the end of 2024. The result of this migration will allow Australian consumers and businesses to benefit from faster payment times and lower costs in line with a richer, internationally harmonised payment system.

 

2. Increased focus on cybersecurity


Payment security has been an ongoing concern in recent years, largely driven by the acceleration in eCommerce, digital payments and cyber attacks. According to the ACSC Annual Cyber Threat Report 2022, cybercrime is on the rise with costs to businesses increasing by 14% on average in 2021–22 compared to 2020–21


The shift towards digital payments and open banking are also opening new doors for all types of financial crime, particularly within payment apps, digital wallets and peer-to-peer services.  Cybercrime is becoming increasingly more sophisticated, with payment-specific threats such as Authorised push payments (APP) and crypto-related scams. Payment providers that conduct B2B cross-border transactions are also at risk in enabling sanctions evasion and money laundering.


Payment providers and fintech disruptors need to position cybersecurity as a top priority by having a robust strategy and investing in newer and more advanced security infrastructure and services. In 2023, we expect to see more financial institutions leverage AI-powered technologies for fraud prevention and biometrics as the default form of authentication. 


At Novatti, we’re tackling this growing challenge by partnering with Royal Melbourne Institute of Technology, Hashkloud, thankQ Solutions and Swyftx to develop an innovative anti-fraud and anti-money laundering crypto platform. The solution will align crypto transactions with traditional payment options such as credit cards and enable consumers, merchants, and exchanges to acquire, verify and transfer crypto with trust and scalability while conducting daily business. 

 

3. The next evolution of digital wallets


Australia is set to be one of the fastest countries to become cashless with strong uptake of digital payments accelerated by the pandemic and global eCommerce.

According to the FIS Global Payments Report, digital wallets are on track to overtake credit cards as the leading online payment method in Australia by 2025. It is predicted that digital wallets will account for more than 50% of all eCommerce payments worldwide by 2024, with account and QR-code based transactions leading the way.


Looking ahead, the future of digital wallets will shift away from its role to store only and allow payments but also provide on-demand access to alternative payments like Buy-Now-Pay-Later (BNPL) and digital currencies. Digital wallets can potentially integrate BNPL as a feature and evolve into a full-service ‘banking’ product. 


With ownership of crypto and other digital assets on the rise, innovations in digital wallets can also make it easier for merchants to accept crypto payments from customers, such as Novatti’s PayxCrypto solution.


4. Embedded finance becoming stickier for small to medium size businesses


The embedded finance phenomenon has been largely driven by consumers, merchants and fintechs becoming more savvy in delivering faster and more frictionless financial services.

According to the 2022 Embedded Finance Survey, the embedded finance industry in Australia is expected to grow steadily at a compound annual growth rate of 29.4% until 2029, where it is estimated to reach nearly US $16 billion.

Consumers today expect to pay and be paid seamlessly without leaving the environment they’re in and through a brand they trust. As such, more companies are embedding financial products and services, namely ‘plug-and-play’ solutions, into their business to improve their customer experience or create a differentiated product or service.

In the coming years, we will see embedded finance unlock new solutions to help small businesses access a broader range of financial services more easily in the tools and platforms they already use. Some of the benefits and use cases include easier access to funding, supplier payments to business workflows.

 

5. From New Payments Platform to PayTo – next generation in real-time payments

 

Since its launch in 2018, New Payments Platform (NPP) has paved the way with a real-time payments (RTP) system in Australia with more than 110 financial institutions offering this service to their customers.


With over a billion transactions valued over $1 trillion processed in Australia last year, NPP use continues to grow with more uptake from companies and consumers’ expectations of instant payments.

Building on the infrastructure of NPP is PayTo, which is hailed as a revolutionary change to payments and is set to make a significant breakthrough this year. PayTo is the new way for businesses and merchants to transact in Australia by initiating real-time bank payments from customers’ bank accounts. In a nutshell, PayTo enables users to set-and-forget direct debits and credit card payments with pre-authorised real-time payments.

Across the board, PayTo will deliver greater transparency, efficiency and security of payments, particularly for the online, retail and subscription sectors.

More than 40 banks including Commonwealth Bank, Bendigo and Adelaide Bank and Great Southern Bank are already gearing up to implement PayTo ahead of the RBA’s target delivery timeframe of April 2023.

Outside of Australia, the global adoption of real-time payments includes Faster Payments Service in the UK, Fast and Secure Transfers in Singapore and FedNow in the US (still in pilot). From a global payment market perspective, the challenge will be to interconnect the various RTP systems developed country-by-country to achieve real-time initiation and settlements of funds globally.


Novatti, pay and be paid as your end-to-end payments partner


At Novatti, we are constantly looking for new and better ways of enabling our customers to pay and be paid from any device, anywhere.

Our solutions capture the complete payments value chain including merchant acquiring, billing, issuing, cross-border payments, alternate payments and banking (via International Bank of Australia Pty Ltd (IBOA) under a Restricted Authorised Deposit-taking Institution licence).

Keep up-to-date with company news, events and industry research by joining the Novatti mailing list at: https://www.novatti.com/subscribe

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Who We Are

Novatti enables businesses to pay and be paid, from any device, anywhere. From corner stores and startups to global organisations, our solutions will unlock your ambitions.

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