Top-7 Payment FinTech Trends for 2023

Tokenized payments, buy now, pay later, crypto wallets… All these payment methods emerged as soon as the financial sector has gone online. 

As modern tech-savvy users increasingly conduct financial operations from their smartphones, digital payments have grown into a huge, actively developing industry that goes hand in hand with modern technological advancements.

The digital payments industry has witnessed exponential growth in the past couple of years because of several important drivers: 

• The massive transition of user operations to mobile and online.
• Advancements of innovative technologies (blockchain, Web3).
• Development of e-commerce platforms.
• Increasingly interconnected digital payment ecosystems due to the rise of API use. 
• Growing financial inclusion across the most rapidly growing economies globally.
• Improvements in UX for digital payments (tap-and-go, frictionless payments).

Modern users are treated to the convenience, affordability, and ultimate user-friendliness of online payment solutions. Everyone can choose a robust mobile payment app to send and receive digitized money, get loans, and buy crypto assets. 

Given these benefits of digital payments use by both businesses and retail customers, the industry is destined for continued rapid growth, which you can use to your advantage. 

This article examines the online payment industry from its grassroots to the modern day and singles out the key 7 digital payment trends to take advantage of in 2023.

A Brief History of the Digital Payments Industry

The first roots of digital payments can be traced to the 1990s, the time of massive Internet adoption and the start of its use by laypersons. The Stanford Federal Credit Union provided its clients with the first online payment system in 1994, ushering in a new era of transactions beyond the bank office. 

The next grand change happened in 1998, with the launch of PayPal, changing how payments are made. eBay bought PayPal in 2002 and gave it a strong head start with a global presence and multi-million user base.

The next glorious steps in the history of digital payments were: 

• Coca-Cola’s first mobile wallet (payment for beverages via text messages from cell phones). 
• Google Wallet’s launch in 2011.  
• Digital wallets of Apple and Samsung released in 2015. 

Things are moving much faster these days after the introduction of AI, blockchain, and other disruptive technologies into the digital payment sphere. 

See Figure 2 showing the ever-increasing volume of digital payments in the past 5 years and the growth estimates for the coming year.

As you can see, the sector is experiencing massive growth right now, with the future of digital banking offering bright prospects. So, if you’re considering a new banking software project and looking for software engineering services, it’s high time to start. 

If you’re still undecided about what niche to choose, here is an expert overview of the Top-7 leading FinTech trends for 2023 and beyond.

Trend #1. BNPL and Installments

The BNPL, which is an installment loan, is one of the most popular banking trends today. An acronym for Buy Now, Pay Later, the BNPL feature is often associated with a BNPL provider (like Klarna, Affirm), a particular eCommerce (like Amazon, Grab), or a financial institution (a bank or card network).

Users can buy such items as a piece of electronics, furniture, etc., and their purchase price is divided into several equal installments, charged from their credit or debit card. This financial niche has advanced recently, reaching $150+ billion in 2022 – see Fig. 3 below.

Experts say that the major driving force of BNPL adoption and spread was a sharp increase in FinTech and digital technology use during the COVID-19 pandemic. 

Overall, while BNPL is not a brand-new financial technology, its use has grown due to the rising accessibility of BNPL programs via mobile payment apps and FinTech products. The BNPL niche offers immense growth potential and is expected to continue the upward market trend. 

Regardless of whether you’re a banking business or a merchant, BNPL is definitely a trend worth looking into. You may either build your own BNPL program or integrate one of the existing options in your business offering.

Trend #2. eWallets

eWallets are a massive segment of the digital payments industry, as these software apps can be easily downloaded to user devices for safe, versatile use in online transactions. 

Users can link their credit and debit cards to eWallet accounts, transfer funds to other system users, pay and split their bills, and set up many other payment options. 

The size of the worldwide mobile eWallet market was estimated at $6.2 billion in 2021, and it is anticipated to increase at a CAGR of 27.4% from 2022 to 2030.

Modern eWallets are much more than digital payment channels. Many cutting-edge software products have also assumed the personal assistant features to store digital analogs of the user’s documentation, public transport passes, gift cards, and even cryptocurrencies. 

Thus, having an eWallet solves many administrative tasks for the user and promises remarkable universality in use.

Trend #3. Mobile Point of Sale (mPOS) Systems

mPOS companies create software or portable POS terminals that transform smartphones into cash registers. This way, a small business doesn’t need to invest in costly hardware and equip its staff with POS terminals. A quick and user-friendly POS app download to a smartphone or tablet allows convenient payment receipts. 

The top players in the mPOS market are SumUp and Block (formerly known as Square), so you can review their success stories to see how to streamline your mPOS business development in 2023. 

Fintech Futures experts hold favorable opinions about the mPOS market, predicting its growth to $100+ billion by 2032. See more financials in Fig. 4.

One of the remarkable examples of mPOS payment systems from tech market leaders is the Tap to Pay technology by Apple. With its help, payment apps have not received an opportunity to process contactless payments from credit and debit cards, Apple Pay, and a variety of eWallet directly via iPhones, without additional equipment. 

This payment option has been positively accepted by consumers who know Apple well and trust in the safety and functionality of the company’s offerings. 

It’s possible to make optimistic forecasts for the mPOS technology. If Apple’s into it, you can surely bet on the quick, confident growth of this digital payments niche.

Trend #4. Crypto Payments

Some time ago, using crypto in digital payments was seen as sci-fi. Today, the online payments market is steadily moving toward cryptocurrency integration in the available payment options. 

Tech giants in the financial industry invest money in crypto projects, which is a sign of a firm belief in cryptocurrencies’ future. 

For instance, PayPal purchased Curv, and Nuvei acquired a crypto payment startup Simplex, paving the way to embedding the crypto payment feature in their functionalities. 

DeFi and blockchain technologies are also adopted in the FinTech industry, helping payment providers boost liquidity, cut operational costs, and ensure better stability. 

So, crypto payments are here to stay, and their adoption in mainstream finance is expected to grow in the coming years. We recommend that all businesses keep an eye on the crypto sector’s development, as it’s quickly expanding and posing a real threat to traditional card payments.

Trend #5. Embedded Finance

Embedded finance is also among the top-tier digital payment trends worth your attention. It is a special kind of technology that allows non-financial businesses to embed financial tools into their digital resources without extensive software architecture changes. 

This makes the purchase process simpler for users, who can choose from several payment options (e.g., PayPal, Amazon Pay, Apple Wallet, etc.) and complete a transaction with ease.

B2C businesses also find this option very convenient, as they get additional revenue streams, enhance their UX, and improve customer loyalty without extensive investments in the financial infrastructure. The most widespread use case for embedded finance is lending of all sorts, with businesses allowing users access to various lending programs and initiatives. 

The present-day market is full of embedded finance options, such as embedded lending, payment, and insurance functionality. The companies that have already managed to take the lead in the embedded finance market include Stripe, Balance, FundThrough, Resolve, TreviPay, Bukalapak, and Greensky, among others.

Trend #6. Contactless Payments

Modern businesses and their clients want one thing – convenience and speed. Thus, one-click mobile payment integration is a handy feature that boosts revenue streams for hi-tech businesses and improves user experiences. 

The technology is completely safe, as it allows one-click payments only to registered returning customers, reducing the risk of fraudulent or unintentional purchases. 

It’s enough to have a look at Google Pay and Apple Pay technologies to see that contactless payments rule the sector today, with unrivaled convenience, speed, and security of transactions. Only in 2022, transaction volume via Apple Pay exceeded $6 trillion, and Google Pay was accountable for another $2.5 trillion. 

The contactless payments market is predicted to grow to $4.6 trillion by 2027, with a CAGR of almost 20.01% during 2020-2027.

The best thing about this innovation is that FinTech providers of one-click payments tokenize and protect sensitive card data, thus creating a safe space for e-commercial transactions. The sector is doomed to blow up, and forward-looking businesses should jump on board today to catch this fast-moving train.

Trend #7. Frictionless Payments and Biometric Authentication

Biometric data is widely used in modern digital products for additional authentication security and protection of sensitive user data from hackers. Biometric authentication is a vital means of ensuring business compliance standards, so it can serve as an effective tool for fraud prevention and fast, frictionless user verification. 

With a CAGR of 14.1%, the market for biometric systems is projected to increase from $42.9 billion in 2022 to $82.9 billion in 2027. Just take a look at the speed of this technology’s adoption by tech giants, e.g., face IDs in the Apple ecosystem, self-service checkouts in Amazon stores, and the like.

Biometric checks are non-demanding and convenient, allowing users to access their funds or personal profiles with one tap or face scan and reducing the user abandonment rate. 

How to Choose a Reliable Provider of Digital Payments Software?

Now that you know which financial services technology trends to follow in FinTech this year, it’s time to choose a reliable provider of digital payments solutions. It’s short-sighted to underscore the importance of your software developer‘s FinTech expertise or to search for the lowest price on the market.

Here is a list of vital parameters for making a wise choice and finding a dedicated partner in your digital transformation. 

1. Determine the planned product’s main goals, expectations, and technical specifications. 
2. Research several companies or freelance experts to compare their characteristics. Look through the team’s portfolio and discuss the company’s relevant experience. Don’t be hung up on the lack of expertise in one area or another.
3. Voice your expectations and discuss their reasonability with the team before the development process starts. 
4. Negotiate all project details and collaboration terms, the procedures of deliverables’ approval, revisions, and the project’s finalization conditions. 
5. Choose a team with which you find it easy and pleasant to interact.  

Final Word

Now that you’re ready to proceed to your next payment software project and follow the promising online banking trends, RNDpoint can assist you with top-class digital payment solutions. 

We have a team of 250+ software experts on board to help you choose the right technology stack, develop your FinTech software from scratch, and guide you from day one to a successful market launch. 

Whether it’s a digital wallet or an advanced trading platform, RNDpoint can help you build a winning product of any complexity. 

FAQ

How does digital payment work?

Digital payments involve the use of digital analogs of the user’s credit or debit cards on their smartphones or laptops. Using a digital payment method, one can make a transaction without attending a physical bank office or using their banking card or cash. Digital money is transferred from the sender to the merchant via secure payment gateways, with the transaction’s status change and the verification of the full sum’s coverage.  

What is a digital payment agent?

Digital payment agents are entities that handle financial transactions for SMEs. They are also referred to as merchant services partners or resellers. The main scope of digital payment agents’ work is offering a large ISO’s services to small and mid-sized businesses for a fee for successful contracts. 

Agents find and contact potential ISO clients with appealing business offers, answer all related questions, and accompany the process of ISO integration to the target merchant’s system. 

What is a digital token-based electronic payment system?

The token-based e-payment system presupposes buying tokens from a verified token issuer and using those tokens to exchange for goods and services in the online space. In this system, a user’s tokens are equivalent to cash at the rate established by the issuing bank. Tokens can be cash equivalents, debit or prepaid cards, and credit or postpaid cards. 

What is the most popular digital payment app in the USA?

Apple Pay is the most popular digital payment app across the USA. The current user base only in the USA exceeds 43.9 million people, and the global number of users is way higher. The popularity of Apple Pay is explained by the high percentage of iOS device users across the United States of America and the availability of this payment system on iPads, iPhones, and Apple Watch. 

How profitable are digital payments compared to other methods?

The financial aspect of digital payments definitely speaks in favor of using this option compared to cash-based payments or traditional bank transfers. 

First, they are more convenient because of 24/7 service availability and the possibility to send and receive transfers on the go. Second, digital payment providers compete for users and offer low commissions, stunning interfaces, and rich sets of in-app features. 

Thus, having a digital payment system is a must for every modern business with sustainable growth and expansion in mind.