THE FUTURE

OF FINTECH
13 PAYMENT PREDICTIONS
TOO BIG TO IGNORE
1 A Rapyd Research Report Rapyd.net
 What’s Influencing our Predictions?.................................................................. 4

TABLE OF CONTENTS Rapyd’s 2023 Predictions for The Future of Payments.................................... 6

Interoperability Will Be a Winning Strategy in the Payments Industry..........7

Consumers Will Unsubscribe.................................................................................. 8

B2B Marketplaces Will Thrive.................................................................................. 9

Pay By Bank Will Overtake Debit in Europe..........................................................10

The Rise of Multi-Currency Treasury Solutions................................................ 11

Buy-Now-Pay-Later Gets Reimagined.................................................................12

Regulatory Intervention Will Have Unintended Consequences....................13

“Simplify” Will Become the New Payments Mantra...........................................14

AI Fraud Management Will Struggle with Inclusivity.........................................15

Small Banks Will Continue to Struggle.................................................................16

The End of the Checkout Counter....................................................................... 17

Rapid Adoption of Virtual Cards...........................................................................18

Businesses that Localize Will Thrive...................................................................19

Factors Influencing Your Payment Decisions In 2023.................................... 20

The Only Sure Prediction Is Change................................................................. 21

About Rapyd........................................................................................................ 22

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 NOTHING PREDICTS
SUCCESS
LIKE PREPARATION
The payments industry is rapidly evolving, and it can be challenging
to keep up with the latest trends and predictions. Staying ahead
of the curve is essential for payment providers, merchants, and
consumers alike. In this report, we’ll delve into several predictions
for the future of payments, including the rise of interoperability as a
winning strategy, the challenges that most banks will face in keeping
up with new market entrants and modernization, and the decline of
in-person payments. We’ll also explore the need for standardization
and consolidation due to network and payment method
fragmentation. Whether you’re a payment provider or a business
owner, these predictions can help you anticipate challenges and
market conditions to stay ahead of the competition.

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 WHAT’S INFLUENCING OUR PREDICTIONS THIS YEAR?

The following economic factors and market dynamics are shaping our predictions for the rest of 2023 and beyond.

1 QUICKLY CHANGING CONSUMER PREFERENCES

Innovative businesses and technologies are creating new commerce experiences and new ways of transacting. Many companies are
modernizing national infrastructures and rolling out faster payment networks like UPI in India, Pix in Brazil and CoDi in Mexico. eWallets,
peer-to-peer networks, buy-now-pay-later, and crypto all create new challenges for regulators and businesses that must react to shifting
consumer preferences and expectations. Low-earth orbit satellite Internet is bringing the digital economy to all corners of the world.

APIs from firms like Rapyd simplify integrations to new payment methods globally and give businesses a way to meet consumer preferences
that not only change quickly but are also diverging by country and region.

2 AN INCREASINGLY COMPLEX PAYMENTS LANDSCAPE

Payment leaders are being asked to make decisions that involve more choices and more considerations. Innovative payments
partners that consolidate payment networks and simplify integrations are giving payment leaders and businesses the
opportunity to reduce costs and move quickly to accomplish their goals. Businesses must look for interoperable partners, with
single-source access to collections of networks, rather than trying to cobble together disparate networks and capabilities.
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 WHAT’S INFLUENCING OUR PREDICTIONS THIS YEAR?

3 CHANGING PAYMENTS ECONOMICS

Embedded fintech is changing the way income is generated from payments and is enabling merchants to rethink payments,
shifting them from a cost of doing business to a source of revenue. Businesses are looking for ways to convert their
applications into super apps that lower churn and drive revenue by providing financial services within their applications and
making payments a seamless, friction-free component of transactions.

4 THE CREDIT CRUNCH

During the pandemic, consumers repaid massive amounts of debt and switched from credit cards to debit for many online
transactions. Raising interest rates are pushing more consumers away from financing and purchasing on credit. With
interchange revenue already on the decline, Payment providers are looking to offer additional value-added services to grow
revenue. Consumers are looking to buy-now-pay-later options as an alternative to high-interest rate credit cards.

Bank redirects and other forms of direct bank payments are growing in popularity due to their ability to offer merchants a
lower risk of fraud and chargebacks with still providing consumers with a convenient form of online payment

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 RAPYD 2023
PREDICTIONS FOR THE
6
FUTURE OF PAYMENTS
 PREDICTION #1

INTEROPERABILITY WILL BE
A WINNING STRATEGY IN
THE PAYMENTS INDUSTRY
Companies that focus on controlling the point of access for
customers or the point of integration for businesses to a
collection of networks will scale through interoperability. On the
other hand, companies that remain protectionist will lose out. PROVIDE API INTEGRATIONS
The winners in fintech will be those companies that provide API
integrations to a breadth of networks and services and can
reconcile payments across disparate systems.

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 PREDICTION #2

CONSUMERS
WILL UNSUBSCRIBE
Raising interest rates and inflation will cause consumers to pull
back on spending and resist taking on additional subscriptions.
Businesses will roll out lower-tier services and one-off products
to replace declining subscription revenue. Subscription-based
businesses will seek to compensate with lower-tier offerings, REPLACE DECLINING
short-term memberships, and one-off purchases.
SUBSCRIPTION REVENUE

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 PREDICTION #3

REGULATORY INTERVENTION
WILL HAVE UNINTENDED
CONSEQUENCES
With regulators struggling to keep up with a fragmenting payments
ecosystem, some new regulatory decisions designed to protect consumers
will backfire. The challenges regulators face in keeping up with the pace of
change and complexity in the payments industry are significant.
Fragmented responses to innovations and unintended consequences of
intervention will highlight the need for a collaborative approach to
regulation to protect consumers and promote innovation globally.
COLLABORATIVE APPROACH
As locally-regulated real-time payment networks roll out globally, money will
TO REGULATION
move much faster. Bilateral cross-border partnerships are increasingly
sponsored by governments, such as between the UK and Europe, who
recognize their power in helping the free flow of commerce. These bilateral
relationships will soon evolve into expansive regional regulatory frameworks
necessitated by the fast, free flow of funds.
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 PREDICTION #4

B2B MARKETPLACES
WILL THRIVE
Marketplaces like Alibaba and Amazon already dominate
consumer retail. The shift is on for B2B companies to adopt the
centralized efficiency of the marketplace model and this shift
will accelerate in 2023. Companies like Squarespace and Shopify
will increasingly become one-stop shops for businesses’ entire ADOPT CENTRALIZED EFFICIENCY
ecommerce and online tech stack.

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 PREDICTION #5

PAY BY BANK WILL

OVERTAKE DEBIT
IN EUROPE
Retailers appreciate the ability to receive funds faster and the reduced
risk of fraud and chargebacks that come with direct bank payments. PAY BY BANK PROMINENT
And consumers will appreciate that it is often easier than entering
credit card or debit card information. As a result, “Pay by Bank” will be a ON CHECKOUT PAGES
more common and prominent payment option on checkout pages
across Europe. Companies like Banked are working to expand this
payment method to more merchants across Europe and worldwide.

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 PREDICTION #6

THE RISE OF MULTI-CURRENCY

TREASURY SOLUTIONS
Middle-market businesses looking to expand overseas need cash
management systems that can simplify cross-border commerce.
Expect multi-currency treasury solutions to feature prominently in
their 2023 operational strategy. These allow businesses with
international operations or international expansion ambitions to SIMPLIFY CROSS-BORDER COMMERCE
manage funds globally without the complexity, frustration, and
added expenses of managing multiple banking relationships,
payment providers and funds flows across countries and currencies.

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 PREDICTION #7

BUY-NOW-PAY-LATER
GETS REIMAGINED
Raising interest rates and tougher monetary policy will continue to
drive demand for buy-now-pay-later (BNPL). BNPL originated with high
penalties on missed installments, hidden fees and a requirement for some
percentage of funds to be paid upfront. BNPL 2.0 will bring lower fees and a
better customer experience with more transparency and incentive plans for BNPL BECOMES USER-FRIENDLY
its users. Platforms like Splitit offer a better experience for both customers
and merchants by layering zero-percent interest rates on pre-approved
credit, with instant approvals unlocking existing consumer credit on
payment cards instead of originating new loans.

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 PREDICTION #8

”
“SIMPLIFY WILL BECOME
THE NEW PAYMENTS MANTRA
The payments landscape continues to evolve and become more
complex. Businesses and payment leaders will struggle to make
sense of this complexity. To cope, businesses will seek to streamline
payments by working with platforms that weave disparate payment
networks and methods into unified solutions delivered through APIs. MAKE SENSE OF COMPLEXITY
The businesses that provide these services will look to differentiate
and add value by providing transparency into transactions, fast
integrations, consumer insights and risk management.

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 PREDICTION #9

AI FRAUD MANAGEMENT WILL

STRUGGLE WITH INCLUSIVITY
AI has the ability to revolutionize the way businesses and payment providers
combat fraud. Tens of billions of dollars could be saved by AI tools that find
patterns based on behavior in real-time instead of being taught ahead of
time what to look for. However, AI fraud detection providers will run up against
concerns with diversity and inclusion within systems that increasingly prove ENSURE ACCESSIBILITY TO
to suffer from the same biases as the humans who create them. AI providers
will struggle to provide solutions that enable these tools to achieve their full THE DIGITAL ECONOMY
potential while ensuring accessibility to the digital economy for marginalized
populations worldwide.

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 PREDICTION #10

SMALL BANKS WILL

CONTINUE TO STRUGGLE
As more application providers integrate fintech and payment and embed their own financial
offerings into their applications, smaller banks will be forced to compete with new market
entrants, tech titans, and industry modernization. They will struggle to keep pace with the
rate of change and as a result, will face consolidation or obsolescence.

Elon Musk’s plans for Twitter haven’t always been coherent to the outside world, but one of
his previous comments regarding the acquisition was a stated desire to create a US ‘super
app’, an umbrella app covering multiple different apps/services within it. Super apps are
already big news in Asia, and Musk is not the first to try and replicate them. Uber has long
been trying to mirror the success of Asian super apps such as Grab and GoJek. ADOPT THE IDEA OF SUPER APPS
But it will be financial services, rather than taxis or food delivery, that holds the key to super
app adoption. Alongside bank deposits, securities, crypto, and lending “as a platform”
offerings, super apps will be able to play the role of neobanks, challenging both traditional
and digital banks by delivering a wider range of financial services for customers. They will
also create more ways to engage with existing customers, opening new customer bases via
partnerships, increasing app engagement rates and putting added pressure on smaller,
regional banks who struggle to keep up with the pace of innovation.
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 PREDICTION #11

THE END OF THE

CHECKOUT COUNTER
Clerks will steadily become less relevant as AI-powered passive payments and
device-based permissions and self-checkout kiosks become the norm. By
reading NFC and device-based identification and combining that information
with in-store cameras and AI, progressive retailers will do away with the need
for any type of direct authentication or active transaction at checkout. ADJUST AND ADOPT
Consumers will be able to shop and walk away with their goods while having
their accounts automatically charged. For shoppers that opt out of passive REVOLUTIONARY TECHNOLOGIES
transactions and retailers that are slower to adopt revolutionary technologies,
self-checkout kiosks will grow in popularity as merchants struggle to address
shrinking margins from higher-cost supplies and labor shortages.

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 PREDICTION #12

RAPID ADOPTION
OF VIRTUAL CARDS
Virtual cards will continue to surge in 2023 as they reinvent expense
handling, allowing businesses to wave goodbye to inefficient manual
checks and let accounts payable departments concentrate on their
financial obligations. Industries such as hospitality are seeing
particularly rapid adoption, with the latest breed of virtual cards REINVENT EXPENSE HANDLING
introducing new protection for all transaction participants, and the
market is expected to grow to $60B by 2030.

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 PREDICTION #13

BUSINESSES THAT
LOCALIZE WILL THRIVE
As we look ahead to the future of payments, one prediction stands out: the
need to localize. Tightening monetary policy and rising inflation will likely push
consumers to prefer By-Now-Pay-Later, direct debit and other alternative
options for making payments online.

Payment preferences are forever fluctuating and it can be tough to keep pace
with how businesses and consumers are behaving in different markets. For

LOCALIZE ON A GLOBAL SCALE

example, instant payments are now one of the biggest trends in Latin America,
disrupting the payment options for in-store and online sales. In the UK, 29% of
consumers have used Apple Pay for a recent online purchase.

As a result, retailers will struggle to meet consumer preferences that skew toward
fragmented local and regional technologies. To succeed, businesses must localize
the payment experience on a global scale. This means understanding the unique
preferences and behaviors of consumers in each region and tailoring payment
options accordingly. Retailers who can successfully navigate these challenges will
be well-positioned to capture market share and drive growth, while those who fail
19 to adapt risk losing relevance in an increasingly competitive landscape.
 FACTORS INFLUENCING YOUR
PAYMENT DECISIONS IN 2023
According to the State of Retail Payments, 2022 Study by Forrester and NRF,

KEY CONSIDERATIONS
The overwhelming majority of payment decision-makers within large and
medium-sized businesses are CFOs.

In the current market, Rapyd’s own research shows that these CFOs and other
payment decision-makers are increasingly focused on choosing technologies → Alternative payment methods that meet
that improve productivity and profitability while reducing costs.
consumer preferences: Pay-By-Bank,
Buy-Now-Pay-Later, ewallets
Professionals involved with the day-to-day management of payments will look → Reducing Fraud and Chargebacks
to maximize investments by focusing on mining payment data on consumer
behavior, reducing fees and fees, and minimizing fraud and compliance liability. → Reducing processing fees

→ Single-platform solutions for

To reduce processing fees, merchants are exploring solutions such as debit Omnichannel payments
rail routing. They are also prioritizing implementing new payment types and
supporting omnichannel scenarios.
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 THE ONLY
SURE PREDICTION
IS CHANGE
The future of payments is complex and challenging to navigate. The trends and
predictions outlined in this article have been made to help payment leaders better
position themselves for success. While none of our predictions are certain, it is a
sure bet that the payments industry will continue to evolve, and Rapyd is dedicated
to helping you stay informed and prepared to adapt to the changing landscape.
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That’s why Rapyd clients see an average of 196% return on investment
and spend 70% less time managing payments.

Rapyd is rocket fuel for fintech innovation.

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 RAPYD.NET

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