“How would you like to pay?” For today’s merchants, the answer is growing increasingly complex as consumer preferences expand across new payment methods and apps. While cash and cards still dominate globally overall, mobile wallets and online payments are rising in market share.
Merchants must adapt checkout and billing experiences to match these consumer shifts - or risk losing sales to nimbler competitors. This is no longer just a “nice to have” but a necessity as alternative payments gain adoption.
Two-thirds of consumers chose to make an online purchase at a specific merchant instead of another because that business accepts their chosen mobile wallet, according to Pymnts.
This article explores the most important global payment trends and developments that all merchants should understand and outlines why businesses must embrace the consumer demand of having multiple payment options to serve today’s omnichannel customers and maintain a competitive edge.
The Expanding Payments Pie
Last year, consumers worldwide paid using credit and debit cards, a vast array of mobile wallets, bank account transfers, cash, cryptocurrency, buy now pay later services, and more. As consumer payment behavior shifts, alternative methods are increasingly displacing traditional payment formats.
While card payments remain the leading in-person payment method globally when ranked by the number of transactions, according to Worldpay’s Global Payment Report 2023, more and more consumers are choosing the alternative payment route. An incredible 43% of consumers chose competing online payment services in surveys conducted between January to September in the US last year, and this number is forecast to continue its rising trend, with mobile payments projected to rise in market share across both online and brick-and-mortar merchants.
Understanding what's driving this expanding payment choice supports merchants to better serve their customers.
PayPal, now the 6th most valuable fintech in the world, continues to lead digital wallet usage internationally with 40.52% of the global market share, while other local champions also thrive, including WeChat Pay in China, Klarna across Europe, and PIX in Brazil. This proliferation of options provides opportunities for merchants to cater to local customer preferences.
Source: Statista 2023 figures.
Expanding Payment Opportunities for Merchants
Incorporating traditional and alternative payment methods, from cards to wallets and more, requires a dedicated infrastructure for facilitating the smooth flow of money between consumers and businesses, often across borders too. For customers accustomed to frictionless one-click payments, transactions are increasingly becoming commoditized.
Checkout UX and customization to localized preferences are emerging as the new competitive battleground, and consumers expect every online merchant to not just facilitate transactions but to enable their preferred way to pay everywhere worldwide specifically.
*Merchants looking for these payment solutions should visit our Contact Us page. Praxis’ payment solutions come pre-integrated with over a thousand payment methods, saving you integration time, costs, and the effort.
Tracking Emerging Payment Trends
With the payment landscape shifting rapidly, staying informed on the latest developments, consumer preferences, and regulatory impacts is critical for merchants looking to offer better transactional experiences. This section highlights key trends worth monitoring and offers strategic resources for merchants.
Open Banking Advances Account-to-Account (A2A) Transactions
Open Banking, the innovative technology that provides third-party financial service providers access to consumer banking, transaction, and other data from banks and non-bank institutions through APIs, continues opening new opportunities for A2A payments. This brings speed and lower fees while ensuring equal security standards relative to cards. Read more in our blog here.
Buy Now, Pay Later (BNPL) Usage Accelerates
Meanwhile, BNPL services enabling installment financing plans for online purchases have continued seeing truly staggering global transaction value growth recently. According to management consulting firm Accenture, existing BNPL users are so satisfied that a full 62% believe these flexible repayment apps could completely replace their credit cards for payments. We’ve gone in-depth on the latest BNPL trends for 2024, available on our blog here.
Apple Complies with EU Competitive Rules
Begrudgingly, tech giant Apple announced planned changes to its iOS, Safari, and App Store agreements in the EU to comply with the incoming Digital Markets Act (DMA). Among the many changes, which include expanding app analytics and alternative browser engines, Apple has added options for developers to opt out of using Apple’s in-app payment system, which charges commissions of up to 30%. However, as summarized by Reuters, developers who choose to do so will still be required to pay a “core technology fee” of 50 euro cents annually per user. This also comes with a rather alarming warning to the customer.
Main Takeaways for Merchants
Payments now compete not just on transaction costs, but also on whether they’re in line with the consumers’ chosen payment methods.
The expanding payment landscape introduces complexity but also great opportunities for merchants to meet the diverse consumer payment needs worldwide. As a payment technology firm with its own payment orchestration platform, Praxis Tech supports online merchants to integrate various alternative payment methods into their checkout experiences. Contact us to learn more about how we can support your business’ payment strategy and operations.