Industry trends update: payment trends around the world

Real-time payments and the global ISO 20022 messaging standard
 

Real-time payments (RTPs), also known as instant payments, are growing more slowly in the U.S. than some observers had predicted, says an IDC Perspective report on the 2024 Nacha Smarter Faster Payments conference.¹ It suggests that more U.S. banks should consider joining FedNow or The Clearing House RTP, reasoning that ACH can’t truly mimic real-time transactions from the end-user perspective, so it's time to transition to true real-time visibility.

Visa Acceptance Solutions connects with various RTP networks so we’re ready whenever or wherever you are.

The report also notes that U.S. banks should consider adopting the global ISO 20022 messaging standard, which is key to RTP networks and is also slated for adoption by other systems, including Swift. And, once a bank has the standard in place for one system, adding it for another is easier.

Payments: their strategic role in the customer experience
 

In a 451 Research, S&P Global Market Intelligence, study of U.S. merchants:²

• 67% said payments were a highly strategic focus area for their company that drives competitive differentiation
• 43% said offering flexible payment options was a high-importance initiative for deepening customer loyalty (limited payment options was ranked as a top payment pain point)
• 65% said payments technology was critical to the success of the customer experience
• Increasing acceptance of alternative payment methods (39%) was ranked as a top-three payment initiative
   

Visa Acceptance Solutions' Unified Commerce solutions are designed to support merchants' unified commerce strategies and help deliver exceptional payment experiences in virtually any channel, on any platform, via any device—offering consumers' preferred payment methods and making checkout easy.

Network tokens: significant value expected
 

The same study² also revealed that network tokens are gaining a positive perspective among U.S. merchants, with those expecting significant value from them increasing by 17 points year over year. This year, 50% said they expected significant value from network tokens (compared with 33% in 2023), and an additional 41% said they expect some value from them. Card-on-file tokens, as they’re sometimes known, help improve the customer experience by connecting payment methods, shopping and checkout preferences, and loyalty programs into one complete view of the customer.

Our card brand-agnostic Token Management Service³—used alone or in the context of a unified commerce strategy—can help merchants boost approval rates for online card transactions and cut fraud, all while reducing checkout friction for customers. At the same time, the service helps protect sensitive cardholder information and supports seamless shopping experiences.

Bank-based payments are popular in Europe
 

Consumers in Europe are ahead of those in many other regions in their adoption of bank-based payments (bank transfers and direct debits), according to a Forrester Data Snapshot.⁴ The most users were in Germany, where 52% of online adults said they had used a bank-based payment to make a purchase during the previous three months, and in the U.K., where 47% said they had done so. Forrester expects other regions to catch up as open banking continues to mature and RTP use cases increase.

AI can boost productivity in payments
 

At Money20/20 Europe 2024, AI was a hot topic, according to a 451 Research, part of S&P Global Market Intelligence report.⁵ However, say the report's authors: "Real challenges remain to be addressed in areas such as commercialization and governance before AI truly transforms the financial services industry at scale."

The report notes that GenAI hasn't yet found many payment-specific use cases, but that it can help with employee productivity. The U.S.-focused IDC report¹ referred to above echoes this view, citing customer service and assisting human-centered manual processes through automation as use case examples.

Payment diversity includes alternative payment methods
 

A variety of payment methods are growing in popularity across Asia-Pacific—and even becoming the default in emerging markets—while cash is increasingly being left behind, says a 451 Research, part of S&P Global Market Intelligence report.⁶ Popular alternative payment methods include:

• eWallets, allowing customers to use prepaid value on mobile phones to make online payments, transfer money, and make in-store purchases using QR codes
• Domestic account-to-account (A2A) transfers for moving money instantly between financial institutions via mobile apps, including scanning QR codes to pay for goods in-store
• Buy now, pay later (BNPL), often used as an alternative to credit cards for online payments
   

Processing payments for locals and tourists in Thailand
 

Reflecting Asia-Pacific's diverse payments landscape, consumers in Thailand use a variety of payment methods, according to a 451 Research, part of S&P Global Market Intelligence, report:⁷

• Credit and debit cards
• Electronic money-based cards and e-wallets
• A2A transfers
   

What's more, Thailand's popularity as a tourist destination in Asia means that payment providers are competing to process inbound volumes. Indeed, the return of tourists is one of the reasons credit card volumes are outperforming debit cards ($67B vs $7B in 2023). Many foreign tourists are from mainland China, so cross-border acceptance efforts tend to focus on facilitating Chinese payment methods.

Both the Asia-Pacific⁵ and Thailand⁶ reports suggest that acquirers and payment service providers (PSPs) need to understand the diversity of the region's payment landscape and consider integrating various payment rails, interfaces, open banking solutions, and transaction channels to meet expectations around domestic and cross-border payment experiences.

Through the uniquely open Visa Acceptance Platform, we can help you build acceptance of global and local payment methods into the payment solutions you create for your merchant customers in Asia-Pacific and beyond.

Payment technology innovations are fast-moving and can be complex. Let us tackle the complexity so you can focus on what matters most: your business. Reach out to our team to discover how Visa Acceptance Solutions and our uniquely open payments platform can help you build the future of payments.

And keep an eye out for our next update for more news and commentary.