Recent statistics show that technological adoption has been accelerating at an unprecedented rate.
The total transaction value in the digital payments market is projected to reach $9.46 trillion. This is expected to continue growing as the last five years have seen the growth rate for electronic transactions nearly triple the overall growth in payments revenue.
So, electronic payments will continue to shape the future, offering diverse options for businesses.
Fintechs are also making significant strides, capturing a substantial market share. McKinsey's Consumer Lending Pools data indicates that fintechs have redirected $8 billion to $10 billion in annual revenues that traditionally belonged to banks.
This guide sheds light on the future of payment processing and how iCheckGateway.com (iCG Pay) can help your business adapt and thrive.
Top 2023 Payment Trends
- Mobile and Contactless Payments
- The Rise of ACH Transfers
- Virtual Terminals
- Decentralized Finance (DeFi) and Cryptocurrency Integration
- Hosted Payments for E-commerce Businesses
- Embedded Finance
1. Mobile and Contactless Payments
Technological advancements and the shifting preferences of consumers have driven the growth of mobile and contactless payments.
In 2022, mobile wallets accounted for roughly half of all global e-commerce payment transactions.
As smartphones become more accessible and affordable, consumers gravitate towards simple mobile payments.
Mobile payment apps, such as Apple Pay, Google Pay, and Samsung Pay, have made it incredibly simple for users to store multiple payment methods in one place.
These wallets provide an encrypted, secure environment to save credit, debit, and loyalty card information. Also, apps like Venmo, Cash App, and Zelle have popularized the concept of P2P transfers, allowing individuals to send money to each other with just a few taps on their phones.
There's a significant boost in mobile payment adoption thanks to user-friendly interfaces and secure platforms.
NFC (Near Field Communication) mobile payments are a more recent trend. They have been at the forefront of the contactless payment revolution. NFC's rapid rise in popularity can be attributed to the unique benefits it brings to the table:
- Safety in the Health-Conscious Era: Since Covid, hygiene and safety have taken center stage. NFC payments offer a contactless alternative to traditional transaction methods. Consumers can make purchases without physical contact, reducing the risk of germ transmission.
- Swift Transactions: Apart from health benefits, NFC payments are incredibly fast. Gone are the days of swiping cards, entering pins, and waiting for approvals. With NFC, you tap the phone or card and complete the transaction within seconds.
2. The Rise of ACH Transfers
ACH (Automated Clearing House) transfers have long been a part of the financial industry, facilitating direct deposit payrolls, automatic bill payments, and other bank-to-bank transfers.
However, recent years have seen a resurgence in the popularity and utility of ACH transfers.
One of the significant advantages of ACH transfers is their cost-efficiency. ACH transfer fees are typically lower than credit card processing fees or wire transfer charges. This cost advantage makes them an attractive option for businesses, especially for transactions that don't require immediate settlement.
Also, many often ask, "How long do ACH transfers take?" Typically, ACH transactions are processed within 1-2 business days, making them preferred over traditional wire transfers.
ACH transfers offer many benefits for businesses that utilize subscription models or have recurring payments. Automatic withdrawals guarantee prompt payments and reduce administrative burdens.
Beyond traditional ACH, electronic check payment provides another convenient method for businesses to transact.
Emerging fintech companies are pivotal in the widespread adoption and enhancement of ACH transfers. A prime example is iCG Pay, a Nacha Preferred Partner for ACH solutions and automation.
Our partnership signifies a commitment to offering solutions that align with the current demands, ensuring businesses are equipped with cutting-edge ACH transfer capabilities.
Expert Tip: If you want to try ACH transfers, work with a financial institution or payment processing platform like iCG Pay that supports electronic check payments, ACH credits, and ensures smooth ACH transactions.
While ACH transfers are efficient, businesses should also be aware of scenarios like returned mobile ACH payments and how to handle them effectively.
3. Virtual Terminals
A virtual terminal is an online system that allows you to process credit card transactions without needing a physical point-of-sale (POS) system or card reader.
Instead, you or your employees can enter credit card details manually into a secure web-based interface, facilitating the transaction.
Virtual terminals are accessible from any device with an internet connection. This means you can process payments virtually anywhere, whether in your store, a trade show, or even in your home.
By adopting virtual terminals, you potentially reduce the need for expensive hardware or complex POS systems. You can channel the savings into other essential aspects of the business. They have streamlined credit card payment processing, removing the need for physical systems.
Virtual terminals often integrate seamlessly with other business software, including CRM, accounting, and inventory management systems.
Beyond just credit card processing, many virtual terminals today can handle multiple payment methods, including ACH transfers, electronic check payments, and mobile payments.
4. Decentralized Finance (DeFi) and Cryptocurrency Integration
With the continued rise of cryptocurrencies like Bitcoin, Ethereum, and newer altcoins, businesses are beginning to recognize the potential of accepting crypto as a payment method.
Furthermore, the broader DeFi ecosystem offers tools and services that bypass traditional financial intermediaries, offering new avenues for lending, borrowing, and earning interest.
The blockchain technology market is expected to grow to $94 billion by 2027.
Why are DeFi and cryptocurrency growing at a 66.2% growth rate? Traditional banking systems often exclude significant segments of the population. DeFi and cryptocurrencies level the playing field, ensuring everyone has access to financial tools irrespective of their socio-economic background.
Businesses that proactively adapt and integrate these systems will remain competitive and lead in this brave new financial world.
5. Hosted Payments for E-commerce Businesses
A hosted payment gateway is an online payment solution where customers are redirected to the payment service provider's platform to complete their purchase.
Once the payment is made, they're directed back to your e-commerce website. Your business never directly handles sensitive payment information like credit card details.
Hosted payment solutions are usually PCI DSS compliant, ensuring they adhere to the required standards for payment security. This reduces your PCI scope and takes the burden of compliance off the shoulders of your e-commerce businesses.
At iCG Pay, we offer a hosted payment system that's easy to use and matches the look of your business. You can add things like your company logo, making it feel like customers never leave your website when they pay.
Our team integrates the APIs and gives you a safe link to use, so you don't have to do any extra tech work.
6. Embedded Finance
Embedded finance refers to integrating financial services, like payments, lending, or insurance, directly within other non-financial platforms or apps.
Users can access these financial services without switching between different apps or platforms.
In the United States alone, the revenue generated by embedded finance was $22.5 billion in 2020. The projections are predicting it to be over $230 billion by 2025.
Here are some examples of embedded finance:
- Shopping Apps with In-built Loans: Imagine shopping on an e-commerce platform and being offered a loan at checkout, making it easier to purchase that expensive item you've been eyeing.
- Ride-Sharing Apps with Integrated Payments: Pay directly through the app once your ride is complete.
- Property Rental Platforms Offering Insurance: While listing or renting a property, you can directly purchase insurance coverage without leaving the platform.
By seamlessly integrating financial services into everyday platforms, it's making transactions smoother and more accessible. For your business, this means greater customer engagement and potential for growth.
Partner With iCG Pay Today
At iCG Pay, we’re not just observing this revolution. We’re actively participating in it. Partnering with various entities like ISVs, ISOs, utilities, and financial institutions, iCG Pay strives to facilitate seamless integrations of financial services across platforms.
We offer most of these payment trends and are always looking ahead, ready to bring even more options.
Why just read about the future when you can be a part of shaping it? Partner with us today.
MORE TAGS:ACH Technology, Payment Processing, Credit Card Technology, PCI Compliance, Payments Education, Virtual Terminal, Partners