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What should we expect for the future of payments?

6 min read

Future of Payments

The COVID-19 pandemic changed how we pay for goods and services for the foreseeable future. Being unable to go into a shop and use cash hastened the move to a cashless society. Things might have been very different if COVID-19 had happened in the 1970s. However, the ‘digital-first economy’ saved the commercial world by offering a way to continue trade. In the 1997 book “The Digital Economy: Promise and Peril In The Age of Networked Intelligence,” author Tapscott describes how the age of networked intelligence is not just about the networking of technology; it must encompass the networking of humans through technology. Payments are where humans and technology converge, and the future of payments, post-COVID-19, has created an exciting payments landscape.

The globalization of payments

The 2021 McKinsey Global Payments Report sets out a scene of a payment landscape with some unexpected results. McKinsey predicted a contraction of the payments market due to the pandemic, but this turned out to be less than expected, with a 5% decline. McKinsey now predicts that by 2025, global payments will be worth $2.5 trillion. The paper also discusses the drivers influencing payments, including a return to global economic growth. However, the paper was written in October 2021. Since then, the War on Ukraine has impacted this growth: the United Nations have downgraded global expansion. The global economy is expected to grow by only 3.1% in 2022, down from 4.0% in January. Still, the digital-first experience persists. With this in mind, what are the likely trends in payments in the near and mid-term?

Five trends in future payments

Payment trends offer an essential insight into the role of a business within the landscape. Whether your business is a payment provider or a payment consumer, knowing what the future holds in terms of payments can help you position your organization to ensure you stay ahead of the curve. Here are five likely trends that will buck the global economic downturn:

Digital inclusion

The World Bank states that 2.5 billion adults, around 31% of the world’s population, have no access to formal financial services. Digital inclusion is a significant social movement described in a G7 publication as necessary to “boost economic growth and industrialization, alleviate poverty and improve people’s lives .”This market also offers hope and the potential to encourage economic growth across the planet. The World Bank has set out four requirements for digital inclusion:

  1. Digital transactional platforms
  2. Devices, e.g., wallets and phones
  3. Retail agents
  4. Additional financial services via the digital transactional platform

Bringing these payment rails together requires a significant infrastructure enhancement. However, this is underway. Moreover, companies that have made headway in delivering payment services are profiting from this expanding market. For example, the mobile money platform, M-Pesa offers African users the ability to use a SIM card to transfer money; the company has seen profits increase by 40% to March 2022.

One of the issues that will raise its head in financial inclusion is the exploitation of these new markets and technologies for fraud. The World Bank recognizes this and expects that key regulatory issues related to agents, anti-money laundering, and countering financing of terrorism (AML/CFT) rules will occur. The regulation of e-money and payment systems will require effective, cross-jurisdiction collaboration with regulators. It will also require advanced technologies such as the Eastnets SafeWatch Screening platform to provide the technology to enforce checks and sanctions. 


Cryptocurrency has been a rocky ride for investors; however, it may have potential as a payment mechanism. A McKinsey 2021 survey of U.S. digital payment trends asked respondents why they held cryptocurrency. The answers showed that 43% had bought crypto as an investment, but 21% held them to make purchases. Cryptocurrencies are expected to play a role as a global payment mechanism and move out of investment mode only. Whether cryptocurrency can challenge traditional fiat payment mechanisms is likely to be a driver of innovation in the payments area in the coming years. However, several things hold back cryptocurrency uptake in a more general payment market, including transaction speed and a lack of global regulation.

Regulation is vital to enabling cryptocurrency payment systems, but crypto-regulation is coming. The biggest hurdle is the global nature of crypto platforms. However, as more governments attempt to own the currency and add a state stamp to its use, the move of crypto into the payments arena should be expected.

Banking APIs

The development of APIs (Application Programming Interfaces) has driven the digital economy. Fintech companies such as Stripe and Truelayer have a bunch of APIs that provide payment functionality to allow third parties to link to banking data. This Lego-brick approach to payments is a crucial enabler of digital payments. Regulation such as the E.U.’s PSD2 has solidified the need for banking APIs by writing them into the regulation. Open Banking data access now impacts over 50 countries and 10,000 banks.

Banking APIs are part of a broader ecosystem, acting as rails to deliver financial transactions and account data. Banks are already working with orchestration vendors to look at a more general use of banking APIs to interoperate with government services and eRetailers. A report from U.K. Finance predicts that Open Banking will be a significant part of the payments sector delivering choices for customers and more accessible and faster payments for retailers.

Faster and instant payments

A fast world needs faster payments. Consumers and retailers alike are driving the need for fast and instant payment mechanisms to deliver transactions. These fast payments are likely to become a normal mode of transacting with a retailer; they are simplified and convenient, but they attract fraud. APIs, including banking APIs, will drive the uptake of instant payments. Support and enablement of cross-border payments from the SWIFT ISO20022 standard should be in place by the end of 2022. However, faster and instant payments must be cross-checked with modern anti-fraud tools that use advanced methods to spot fraud as it happens. This is only achievable with technologies such as machine learning that can detect fraud as it happens and learn to spot emerging threats.

AI-driven anti-fraud tools for a cashless society

Cashless transaction volumes will double by 2030. This increase will require a major shift in the structure of the payment rails; this may be achieved using the cryptocurrency platforms and banking APIs but will require supportive measures such as anti-fraud technologies and cross-border regulations. Unfortunately, the cashless society, backed by faster and simplified payments, opens the door to fraud. Payment fraud is expected to increase to $40.62 billion by 2027, a 25% increase over 2020. If the world wants digital payments to thrive, payment systems must deeply integrate with intelligent, AI-driven anti-fraud tools. It is no longer enough to use hard-coded rules to deter fraud; behavioral monitoring and smart data analytics must enable the cashless society to prosper.

The future of payments is an exciting area. Digital payments have the potential to harden the world against the impact of pandemics and war. But fraudsters love digital payments as much as customers and retailers do. So as payment services continue to innovate, they must be shored up with advanced anti-fraud technologies to prevent exploitation by the bad guys.

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