The future of payments is global, open, and interoperable

Creators and SMBs embrace global growth

From the creator and sharing economies to e-commerce and traditional brick-and-mortar businesses, this is the year Small and Micro Businesses (SMBs) go global. A shift in mindset, from going beyond the local neighbourhood into new geographies, reflects the aspiration for upward growth among businesses of all sizes. Increased digitisation has also transformed opportunities, both quickening and protecting payments, and enabling growth beyond national borders.

For SMBs, this means reaching new audiences, easily accepting secure payments, tracking and monitoring spending, increasing security and safety, improving efficiencies, and continuing to grow.

Payment innovations grant access to earnings in real-time, making it convenient to receive consumer and business-to-business payments while solutions like virtual cards are enabling SMBs with cashflow, purchasing power and expense management capabilities needed to thrive in today’s digital-first world.

Seamless global money movement through interoperability

With payments players prioritising interoperability, we will soon see global money movement across networks and payment methods, with seamless movements breaking down barriers and bringing myriad benefits to end-users.

In 2024, we will continue to see collaboration across the payments ecosystem – amongst banks, financial institutions (FIs), merchants, technology providers/enablers and issuers – bringing us greater global financial inclusion, accessibility, cross-system compatibility, and interoperability. We expect to see more technologies developed to help both consumers and businesses navigate the intricacies and complexities of cross-border money movement.

Generative AI – A new tool to combat fraud

By analysing and gleaning insights from vast amounts of data, generative artificial intelligence (AI) plays a leading role in addressing fraud. When integrated into the buyer journey, the data-led approach lowers checkout friction, enhances real-time decision-making, and provides a better and safer customer experience.

In the UAE, “overconfidence” has often been cited as key to increased vulnerability of consumers to fraud. Despite claims of being alert to online and phone scams, the fact is that individuals tend to overlook warning signs of online criminal activity. Turning to generative AI can not only detect fraud but also educate consumers about potential threats and help distinguish between fraudulent and genuine transactions.

To harness the full power of data and protect businesses and consumers, insights gained must be shared with businesses and individuals to identify phishing scams, spot errors, and monitor the evolving threat landscape.

Conscious travel

The momentum for travel that picked up well in 2023, is set to rise further in 2024. As travellers add flexibility in planning, accommodation, safe, digital, contactless payment preferences and more, many also actively seek out sustainable travel choices. Climate banking platforms launched by Mashreq in the UAE and Qatar Islamic Bank in Qatar in partnership with Visa and Ecolytiq, for example, will address this growing need and enable users to calculate the carbon footprint of their purchases and receive tips on offsetting carbon impact.

More tailored solutions for consumers

Consumers increasingly expect an experience that is tailored to them, from merchants and banks, as well as financial institutions that service them. The technological innovation to address this demand requires ample resources and can be a complex affair for several organisations. This is where the next trend – collaboration – comes in.

Partner-based solutions are a cornerstone of development for many businesses, to lend flexibility and agility in digital payments, and build trust with the customer. This will impact businesses by introducing the next level of accessibility and adoption, especially to cater to segments such as GenZ and millennials.

Tailored solutions are also being sought to meet the growing demand for installment payments to enhance the shopping experience. Under this solution, all the players involved in payments – the issuing bank, payment processor, merchant, and payment facilitator are integrated into a single, interoperable ecosystem.

Consumers are therefore increasingly using installment payments or (BNPL) solutions for larger purchases, especially in the UAE where 20 percent of consumer credit card purchase volume is now converted to installments.

Sustainable commerce

As sustainable practices and greater environmental consciousness become mainstream, consumers are also looking for sustainable financial options and are keen to understand their environmental impact in spending.

Studies in the UAE show that 64 percent of consumers tend to choose banks with strong green credentials while more than half of the surveyed consumers (51 percent), expect their banks to guide them in making sustainable financial choices. The leaning towards sustainability was higher among young consumers.

Moving forward, the implementation of regulatory policies and frameworks will foster an ecosystem conducive to sustainable practices. Medium-sized businesses equipped with technical knowledge are expected to adopt sustainability standards, propelling the adoption of environmentally conscious financial decisions. Financial institutions will respond by introducing solutions that cater to consumers’ growing demand for sustainable commerce.

Change can be good

With sweeping changes in consumer behaviour and organisational ambitions, the payment trends for 2024 will enhance the scope and size of opportunities for all players in the financial ecosystem. Despite the many changes, the one constant that remains intact is the continued appetite for flexibility, safety and convenience, contributing to a stronger digital payments infrastructure that meets consumers’ expectations for frictionless and secure payments.

With card-based payments on the rise, we anticipate the emergence of new products tailored for everyday spending and peer-to-peer transactions, further diminishing the reliance on cash in the payments sector.