Innovative payment trends such as virtual cards, embedded finance, as well as biometric payments are forecasted to surge in the next few years, according to Research and Markets.
Embedded payment methods and instant payments are steadily gaining momentum as preferred payment methods
The outbreak of the Covid-19 pandemic led to a shift in the way consumers and businesses globally made payments, increasing the dependence on newer payment methods such as BNPL, one-click payments, as well as real-time payments. Convenience and speed of transactions enabled by the various payment methods that fall under the umbrella of embedded finance have benefited both consumers and businesses.
The market size of embedded finance is forecasted to see a double-digit CAGR from 2021 through 2026, reaching billions of euros by 2026, as stated in the report. However, more than half of surveyed respondents globally expressed concerns about being charged the wrong amount when using embedded finance solutions, and some respondents indicated having limited knowledge about the concept as of April 2022. The growth of instant payments has also accelerated due to the shift toward digital payment methods. The market size of real-time payments is projected to see a double-digit CAGR from 2022 through 2028, reaching billions of euros by 2028. Large firms are modernizing their payment ecosystems to streamline instant transfers.
As of July 2022, close to three-quarters of firms globally using real-time payment systems regarded their capabilities as highly important. In the U.S., instant payments are expected to see a double-digit CAGR between 2022 and 2026, with more than half of surveyed financial professionals identifying improved customer and vendor experience as the main benefit of the instant payment system.
Despite the growth of instant payments, more than half of surveyed financial professionals in the U.S. identified a lack of skills and priority given to other initiatives as the main challenges hindering instant payments as of June 2022.
In Europe, the launch of SEPA has led to a change in payment infrastructure, enabling the smooth functioning of credit transfers and direct debits in the EU. The adoption and usage of SEPA Instant varied across nations, with Luxembourg, Malta, and Italy having the highest share of respondents claiming access to SEPA Instant, while Greece had the lowest share, as per the yStats.com report.
Innovative consumer trends such as virtual cards, in-car payments, and voice-based payments are set to change the conventional nature of the payment market
With the number of connected vehicles in service globally on the rise and forecasted to witness a double-digit CAGR between 2023 and 2027, the demand for car-based payments among consumers and businesses is increasing. The number of in-car payments globally is forecasted to exceed one billion by 2026, according to data cited in the publication. Stakeholders within the payment industry and OEMs are collaborating to expand the scope of in-car payments, including partnerships such as Visa and Mercedes.
Virtual cards are another technology trend that has gained consumer appeal. The market size of virtual cards is forecasted to witness a double-digit CAGR between 2022 and 2026, reaching a value in the trillions of euros by 2026, while the number of virtual card transactions is projected to reach billions by 2027. Although more than one-third of online shoppers claimed to know about virtual cards but had never used them, the share of online shoppers who claimed to know and have used virtual cards was less than one-third as of Q4 2021. Research and Markets