His three big trends to keep an eye on in 2022 are:
1. Digital money for digital lives
Interest in Central Bank Digital Currencies (CBDCs) has been growing, fuelled by the rapid European-wide digitisation of payments during the pandemic, as well as growing interest and competition from cryptocurrencies (i.e. Bitcoin) and stablecoins (i.e. Tether).
Digital currencies issued by central and national banks are coming: it is only a matter of time. The underlying technology for digital currencies like the e-Euro or the e-Krona is the same as for cryptocurrencies – in other words, it already exists! We just need regulation to catch up and to ensure the supporting technology does not exclude anyone.
Each member of the value chain is looking to protect and optimise their own interests and presence, but be in no doubt, digital currencies will fundamentally change the global payments landscape. In 2022, expect more national pilots, rollouts and regulatory adjustments to prepare for the biggest shake-up to money in a generation.
2. The time is now for Buy Now, Pay Later
Paying in digital instalments, often without added fees, is forecast to be worth $995bn in 2026. For merchants, the benefits are vast. It boosts sales and drives conversion rates by 20-30%, attracting consumers with more flexible payment options. It tends to increase basket value, trust and loyalty too.
Successful start-ups and incumbents are increasingly offering this solution to appeal to Millennials and Generation Z consumers, who are used to more flexible digital payment methods. The growing popularity of BNPL means that businesses that do not provide this option risk having a significant portion of their potential customers go elsewhere.
To gain an advantage in 2022, the entire purchase journey should be adapted to leverage the strengths of BNPL and the preferences of customers in different markets. For example, in the DACH region, open invoicing – where the consumer typically has 30 days to pay after
receiving their purchase – is king. This has long been the preference of DACH consumers, and by offering multiple BNPL options, businesses can migrate such consumers to familiar – yet more digital – ways to pay.
In 2022, regulators in the EU and the UK are looking to further understand and balance the need for growth and innovation with protection for consumers who love the newer payment methods. Until this is in place, expect BNPL payments to continue their very rapid ascent.
3. Waving goodbye to PINs
Consumers are increasingly becoming the main authenticator for payments. Biometrics are used to secure mobile wallets such as Apple Pay, and biometric payment card trials are taking place to bring the technology into traditional wallets. Such use will grow in 2022 as the technology scales and becomes more trusted and familiar to cardholders.
Largely this will be conducted with fingerprint technology, but ultimately we should expect payments to be authenticated automatically via facial recognition. This will remove friction from the transaction, enabling customers to pay for travel or groceries simply by walking through a terminal or shop, using infrastructure that links their purchases to their wallet.
In 2022, it will be essential to continue to test and evaluate new form factors to address market demands and understand how people perceive and react to non-traditional payment methods, particularly if they have to consider trading privacy for convenience.