In 2024, the relentless pursuit of convenience, security, and efficiency is as alive as ever, and the landscape of payment technologies is evolving day by day.
In this comprehensive overview, we’ll highlight the key trends and technologies shaping the payment industry in 2024 and make predictions as to how payment technologies may shape in 2025.
We’ll start with the types of payment technologies we have at the moment. Some of them play such a huge part in our everyday lives that we rarely pay attention to their existence as advanced payment technology. Then, we’ll move on to predictions we can make about the future of payment technologies based on ongoing research and development.
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Contactless payments
Contactless payment methods, facilitated by Near Field Communication (NFC) technology, have gained widespread acceptance. Mobile wallets, smart cards, and wearables enable users to make transactions by simply tapping or waving their devices near a compatible terminal. This technology has become a staple in both retail and online transactions, enhancing convenience and reducing physical contact.
The most common forms are contactless credit/debit cards (e.g., Visa payWave, Mastercard PayPass) and mobile payment apps supporting NFC (e.g., Apple Pay, Google Pay).
Contactless payments ensure speedy transactions, reduced physical contact, which became so in demand during the COVID-19 pandemic, and generally improved user experience.
However, there are also some limitations to this technology. Most notable are security concerns such as unauthorized transactions through skimming and the potential for accidental payments in crowded spaces.
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Mobile wallets
Mobile wallets are more than NFC technology, so it’s reasonable to talk about them separately. Mobile wallets continue to dominate the payments landscape, with services like Apple Pay, Google Pay, and Samsung Pay leading the way. There are also mobile payment apps like Venmo that specialize in peer-to-peer transactions, which are also mobile wallets. They are used for splitting bills, sharing expenses, and making informal payments among friends.
These platforms securely store users’ credit card information and allow for seamless transactions through smartphones. Integration with loyalty programs and the ability to link multiple payment methods contribute to their popularity. However, you might find that they are not popular in some regions, while some regions are so used to them. For example, in Africa, only Morocco and South Africa support Apple Pay as of 2024. Mobile wallets also depend on device compatibility. As you might expect, you can only use Apple Pay on iPhones, Samsung Pay on Samsung phones, and so on.
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Payment gateways
Payment gateways, such as Stripe, PayPal, and 2Checkout provide businesses with the technology to accept and process online payments. They enable electronic transactions by securely transmitting payment information between a merchant’s website or application and the financial institution that processes the payment. Payment gateways integrate seamlessly with websites, mobile apps, and point-of-sale (POS) systems. APIs (Application Programming Interfaces) are commonly used for smooth integration into various platforms.
E-commerce, service providers (subscriptions, utilities, memberships), the travel and hospitality industry (handling reservations and bookings for hotels, flights, and other travel services), and digital products, software, and online content all rely on payment gateways to work.
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Blockchain
The use of cryptocurrencies like Bitcoin, Ethereum, and others has become more mainstream. Blockchain technology, the underlying foundation of most cryptocurrencies, is being explored for its potential to enhance security and transparency in traditional payment systems. Central bank digital currencies (CBDCs) are also gaining traction as governments explore digital alternatives to traditional fiat currencies.
The primary use for blockchain as payment technology remains digital assets for online purchases and investments. The challenges are plenty: volatility of cryptocurrencies, regulatory uncertainties, and limited acceptance by merchants
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Internet of Things (IoT) payments:
The proliferation of IoT devices has led to the emergence of IoT payments. In 2023, the rapidly growing market of IoT payments was expected to reach $27.6 billion. Retail, automotive, smart city and smart housing markets will all benefit from this.
The IoT enables seamless connectivity between the device and payment networks, facilitating secure and real-time transactions. This means smart appliances, wearable devices, robots, drones, and connected vehicles can initiate and authorize payments autonomously. For example, connected cars can make toll payments, and smart fridges can autonomously restock and make payments.
For both consumers and business users, these technologies offer a genuinely smooth experience, simplifying repetitive or low-value transactions, saving time and effort, and minimizing the chance of inventory shortages caused by delayed purchases.
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QR code payments
QR code payments have become a ubiquitous feature in various payment apps. Merchants and consumers can complete transactions by scanning QR codes, providing an alternative to traditional point-of-sale systems. This technology is especially prevalent in emerging markets, as QR codes provide a simple and inclusive payment solution. Because of low infrastructure costs and easy adoption, QR codes are well suitable for small businesses.
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Real-time payments
Real-time payment systems, such as the Faster Payments Service (FPS) and the Single Euro Payments Area Instant Credit Transfer (SCT Inst), enable instantaneous fund transfers between banks. These systems allow for instant fund transfers and cause improved cash flow for businesses.
Systems like the ones mentioned about are most suitable for cross-border transactions: SCT Inst is particularly useful for individuals and businesses conducting cross-border transactions within the SEPA region. They can also be used for e-commerce payments to ensure customers instant payment options for purchases. Finally, they are used for emergency payments.
What can we expect from payment technologies in 2025?
While predicting specific technologies for 2025 is speculative, we can point out trends and potential developments in the payment industry that may shape the landscape in the coming years. Here are some possible new technologies that could emerge in 2025:
Decentralized Finance (DeFi) integrations
Decentralized Finance (DeFi) integrations are not a traditional payment technology in the conventional sense. Instead, DeFi represents a broader paradigm shift in the financial industry, leveraging blockchain and decentralized technologies to create alternative financial systems. While payment transactions are a component of DeFi, the scope of DeFi extends beyond simple payment processes.
However, this technology’s payment processes will enable users to access financial services such as lending, borrowing, and earning interest directly through decentralized platforms. This will mean increased financial inclusivity and reduced reliance on traditional banking infrastructure.
Central Bank Digital Currencies (CBDCs)
CBDCs are digital forms of a country’s national currency issued by the central bank. Unlike cryptocurrencies such as Bitcoin or Ethereum, CBDCs are legal tender and are issued and regulated by the central authority of a country. CBDCs are a digitized version of traditional fiat currency, and their introduction is often seen as part of the broader evolution of the financial system in response to digital advancements.
Some designs of CBDCs explore the idea of programmability, which could enable the automation of certain financial processes and transactions. CBDCs are also seen as a tool to enhance financial inclusion by providing a digital payment method accessible to a broader population, including those without access to traditional banking services.
Augmented Reality (AR) payments
AR is coming to make payment systems more fun and user-friendly. In retail environments, AR can augment the physical point of sale. Customers might use AR-enabled devices to view product information, prices, and promotions by simply pointing their devices at items in a store. This could extend to making payments directly through AR interfaces. AR payments can also transform the shopping experience by allowing users to virtually try out products before making a purchase. Customers could use AR to visualize how a piece of furniture looks in their home or how clothing items fit, and then proceed to make payments within the AR environment.
Another use for AR payment technology is visualizing digital wallets and cryptocurrency holdings in the real world. Users might see their virtual assets floating in space through AR glasses or displayed on their smartphone screens.
Sustainable and green payment solutions
Finally, just like all technologies should be doing, payment technologies are getting greener and more sustainable. In 2025, it’s expected that the development of eco-friendly payment technologies will take place. Sustainable and green payment solutions will prioritize energy efficiency and reduce the environmental impact of digital transactions.
As you can see, payment technologies are experiencing remarkable growth and diversification. Let’s see what the future holds and how we will pay for goods and services in the years to come.
