The biggest trends in payments for H2 2024

With half the year gone, there are several exciting trends shaping the payments industry and transforming the experiences for customers, merchants and payment firms. Here, we assess where next the biggest changes will come from this year.

This year, Artificial Intelligence has captured the world’s imagination and, every day, people are discussing how it can transform new areas of business and day-to-day life. Payments are no different and people across the industry are excited by how this technology could drive accuracy, speed and cost efficiency throughout sprawling payment chains.

Revolutionised analysis is another exciting application. Payment firms have access to vast amounts of data, which can be time consuming to manually analyse. With AI, actionable and real-time insights can be instantly extracted and help management teams to predict cashflow, detect fraud and analyse credit scores.

Blockchain

Mention blockchain and most people assume this is restricted to cryptocurrencies. However, this technology is now changing the way cross-border digital payments are made.

Traditional banks and payment systems are struggling to keep up with today’s globally connected world with a growing number of digital natives. Blockchain offers something different – a 24/7 solution with negligible costs, full and final settlement and internet access being the only requirement for engagement. The unique nature of the cryptographic identifiers generated in a blockchain also make the technology secure, and the data tamper evident.

Traction is already happening with adoption soaring in 2024. Leading research estimates that blockchain, responsible for $179bn of cross-border payments in 2019, will facilitate $4.4trn of these transactions this year.

Tokenisation

Tokenisation is the act of vaulting a customer’s card and replacing this with a token, a string of numbers and letters. This allows businesses to process transactions without the need to store customers’ card data. That way every transaction from the same card refers to a corresponding token without the need to enter data again. This also means increased security for both customer and company

Last year, it was estimated that tokenisation payments would record annual growth of 74% - reaching an estimated $1trn in total payment value by 2026. Now, major payment providers are increasingly exploring tokenisation. Most significantly, Mastercard recently committed to reaching 100% e-commerce tokenisation by 2030 in Europe as part of a global commitment to phase out manual card entry.

Digital wallets

These smartphone apps are continuing to transform how transactions are executed and have become increasingly popular with customers in all kinds of markets. Not only do these offer greater transparency, but they also reduce processing effort and keep transaction costs low as a result.

Whereas these were once an alternative option for payment, they are now rapidly becoming the mainstream choice for many customers. In 2023, $13.9trn was spent in global transactions via digital wallets – representing half of online sales. This is now forecast to continue gathering momentum, and reach $25trn in 2027.

Interestingly, it isn’t just the private sector and a plethora of fintech apps driving this change. Since 2020 the European Commission has been working on its own digital wallet, called Wero, as part of the European Payment Initiative. This has been designed to eliminate intermediaries in the payment chain and make things cheaper for customers – a development to watch with interest.

Buy Now Pay Later

In recent years, the cost of living crisis has forced more customers to use Buy Now Pay Later cards. There are now more than ever to choose from, and these cards effectively work like micro-credit solutions, giving people the flexibility they need to deal with higher costs.

Inflation may be falling in 2024 but, to the surprise of many, Buy Now Pay Later is expected to continue growing as a trend in payments. Leading research finds the market value was $309.2bn in 2023, but this is forecasted to grow at an annual compound growth rate of 25% until 2026. This suggests that Buy Now Pay Letter solutions are less about supporting customers during times of economic hardship, but instead how payment patterns are changing to reflect evolving customer behaviour.

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