2022 was, in many ways, a transitional year.
Most of the countries of the world have returned to a new routine, we have moved from completely remote work to new hybrid models, from a booming economic recovery to a lot of economic uncertainty in the near term, and the global transition from cash to digital payments continues.
As we look ahead to 2023, here are five trends in the payments landscape that we anticipate and follow closely:
The tourists take advantage of the situation for good "deals" (Photo: ShutterStock)
fly, do business and travel the world
During 2022, global travel recovered, borders opened and demand increased, which is expected to continue well into 2023 (Asia Pacific is now loosening its grip as well).
A recent study by Visa found a significant increase in the average total spend per foreign traveler between June and August this year, both in retail and in traditional travel payment categories such as hotels, restaurants and entertainment.
Spending was initially driven by more affluent travelers with longer vacations, but now Growth is cross-border in both retail and other travel expenditures and refers to the entire expanding passenger mix with both shorter and more frequent trip durations.
While business travel has partially recovered, tourists are taking advantage of the situation for good "deals" in business destinations and paying less for hotel stays, in 7 out of 10 business destination cities in the world, compared to 2019. Now, the recovery in business travel is evident and is taking its place again , but the expectation is that the "deals" for the leisure tourists at discounted prices will continue, while the business tourists will pay higher pricing.
In this way, the hotels will be able to fill the gap and fill rooms on free and available days.
Growth in travel and retail spending is likely still expected if and when the Chinese border also opens.
Visa data found that shopping by foreign tourists has fully recovered in 63% of the world's 500 most popular destinations surveyed before the pandemic - a number expected to grow in 2023.
Global Travel Insight November 2022 (visa.com)
The greener is farther (Photo: ShutterStock, Shutterstock)
Consumers are aware and make sustainable choices and circular trade
While this year will see more movement of people leaving home for work, recreation and everything in between, consumers are focusing concerns about sustainability and climate change in their behavior and consumption patterns.
According to a recent study from Skift and McKinsey, 40% of travelers worldwide are willing to pay at least 2% more for carbon-free flight tickets.
But so far, it appears that only 14% of travelers have actually done so.
Therefore, in 2023, we expect that the more availability there is for this type of flight, the greater the demand from the consumer.
Offerings such as Visa Eco Benefits and a partnership with Ecolytiq give consumers access to benefits and information regarding climate awareness and carbon footprint calculations, helping them make more informed and sustainable choices.
Circular commerce (rental, refill, repair, resale, return and redistribution of products), which allows the consumer to make more sustainable choices, is also gaining in popularity: 69% of consumers surveyed by Visa said they would choose retail based on circular commerce.
In the coming year, Visa envisions additional benefits on the card for consumers who make sustainable choices and tools that help consumers visualize the impact of those.
Convenience will also play a key role in sustainable choices in the consumer's daily life.
For example, the ability to pay for public transport with a contactless credit card, debit or prepaid card, or payment-enabled device means that people no longer need to use dedicated public transport cards, or a paper card or reach for cash to pay.
A Visa survey called Future of Urban Mobility found that 91% of respondents expect contactless payments to be part of their travel experience.
We anticipate that contactless payment will become a standard in public transportation - with a more inclusive, efficient and sustainable user experience for both passengers and transportation companies.
Between January and October 2022 alone, the total number of Visa contactless payments in public transportation in the world exceeded one billion transactions, the calendar year will close with more than 1.2 billion transactions and the company does not expect any signs of slowing down.
The paper leaves the circle of payments (Photo: ShutterStock)
Version 3 - BTB
Innovation in the B2B payments industry will fuel another wave of digital transformation.
From 2023 onwards, we will see version 3.0 of B2B payments, the one where global B2B commerce is all digital, secure, fast, flexible and seamless.
We will see an increase in B2B mobile payments, as the preference for businesses to be able to pay and get paid over the phone increases, and the digitization of B2B payments will drive an increase in B2B e-commerce purchases
More B2B businesses than ever before are now providing online payments, and 80% of B2B transactions are expected to be digital by 2025 .
The digitization of the business process will continue to accelerate B2B transactions and integrated payment offers without the use of paper checks and invoices.
Customers are already seeing the benefits of sending electronic invoices and receiving digital payments.
More and more governments are advancing in the digitization of payments, and banks, clearing houses and payment networks also continue to advance in the worlds of virtual cards.
The innovation flywheel will continue as the ecosystem provides more features and functionality to streamline payments and business operations.
Hope that the crypto platforms will also protect us (Photo: ShutterStock)
Crypto winter
Crypto markets have been volatile over the past year.
While it is impossible to predict the future, during the current crypto-winter, we anticipate that some of the weaker concepts will be deleted while those focused on a measured and adapted approach to new technologies will continue to build meaningful web3 solutions for businesses and consumers.
Following the recent failures, we hope that crypto platforms around the world will make efforts to ensure that proper protections are put in place.
In the short term, we see a continued focus by governments, central banks, traditional financial institutions and fintech companies on fiat currency programming and tokenization.
These payments, via web3 that are on the horizon include salary transfers, micropayments and cross-border payments.
We see brands leveraging NFT technology to build new digital experiences, unlocking the potential for commerce, payments and loyalty programs / customer clubs.
These experiences often center on creating unique avatars, digital items that accompany physical ones, and more.
In the coming year, we expect this trend to accelerate as brands look to deepen their relationships and engagement with customers.
There is potential here for more trading experiences, payments, benefits and new loyalty programs between consumers and brands.
Cyber fraud.
It is likely that we will continue to see an increase in cross-border fraud (Photo: ShutterStock)
Fraudsters are adapting to the hybrid world
As the world increasingly embraces a hybrid work-home lifestyle, scammers are also keeping pace and adapting their tactics to where we are while finding new ways to trick them.
With the rapid return to flying and traveling, we will likely continue to see an increase in cross-border fraud.
A recent Visa survey found that more than half (58%) of travelers surveyed reported being concerned about the possibility of fraud on their credit or debit cards while traveling.
Perhaps the newest threat to emerge is synthetic IDs - fraudsters put together a new image from the shards of different identity components.
We expect that small businesses will continue to be targets for fraud because they often do not have the resources or knowledge to prioritize security tools and other safeguards.
All of this together means that confidence and trust will remain critical.
Breakthroughs in next-generation user protection authentication technologies such as EMV 3D Secure (EMV 3DS) help make global e-commerce secure in real time.
Digital payment methods or virtual cards will continue to make it easier and safer - from buying plane tickets to splitting the bill at a restaurant.
Businesses will also become more aware of the importance of investing in security tools to prevent fraud, and as an insurance policy that will help reduce the damage in the event of a security breach.
Gerry Lasky, CEO of VISA Israel, author of the article (photo: Studio Praj 1)
A world in transition
While the transition to digital is already underway - while accelerating during the years of the pandemic - many still remain outside it, such as 29% of adults in developing countries who are not connected to the formal financial system, and 43% of adults in emerging economies who rely solely on cash.
With 70% of the new value created in the global economy based on productivity gains from adopting digital technology, there is still much work to be done.
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