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Digital payments to triple by 2030, report says

Following the changes brought about by the pandemic, there has been a widespread adoption of new digital behaviors, especially related to online consumption. According to the latest PwC survey carried out with financial institutions, fintechs and operators of the payment means industry, 89% agreed that the growth of electronic commerce will continue over the next few years, which will make it necessary invest in solutions and tools that improve the user experience in relation to payment operations.

The report, Payments 2025 & Beyond, also forecasts that by 2030 electronic payments worldwide will almost triple and exceed three billion operations. In addition, the study indicates that, between 2020 and 2025, electronic transactions will grow by 82%, going from one trillion to 1.8 trillion operations, and that, in that same period, this growth will be 61%.

With the consolidation of sales through digital channels, the main challenge for brands will be to transfer that connection to the online environment to enhance agility and personalization in the purchasing process. However, debit and credit cards are becoming obsolete because they have not been designed for large-scale e-commerce and this makes it necessary to improve the user experience with other alternatives in order to increase the conversion. Online commerce has exploded due to the pandemic, and yet 54% of customers abandon the purchase on the payment page, largely due to problems and interruptions when making the payment, according to a study carried out. for TrueLayer and YouGov.

In Spain, the number of ATMs grew until 2008 with a maximum of 61,714 and, since then, it fell to 48,766 available in March 2021. Even so, today our country has almost 5,000 more than 20 years ago. These trends have been accompanied by an advance in point of sale terminals (POS) for card payments, which have gone from 802,698 in 2000 to 2,092,149 in the first quarter of 2021.

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The open banking payments They have been growing for a few years, but that expansion has accelerated in the last year. For example, payments grew 485% in the UK between August 2020 and August 2021, reaching almost 2.4 million successful payment initiations in a single month. And Spain should follow that same path, bearing in mind that its legal framework is delimited by the European directive on digital payment services PSD2, which entered into force in Spain on November 24, 2018, just three years ago.

Digitization can’t be stopped

Spain, like other countries, is highly banked and there is a culture of the entity-client relationship that cannot be ignored. At the same time, open banking places the user at the center, allowing them to regain control of their bank details and offering innovative products and solutions that provide added value, which will favor competition within the sector, as well as a good opportunity for banks to innovate, create different business models and open new markets.

In this sense, the payment disruption posed by fintechs specialized in offering open banking services will inevitably push traditional banking to innovate, which will be forced to change its culture and business model, as well as to adopt an innovative attitude that to this day it does not have.

In light of this analysis, the TrueLayer open banking services platform has developed a review of the trends projected for this sector looking forward to 2022, which addresses digital payments, crypto assets, refund processes and PSD2 regulations.

Dismantling payment monopolies

In 2022, open banking will continue to transform traditional payment methods. Amazon’s decision to stop accepting Visa credit cards in the UK is more than just a bargaining tactic, it is further proof that in a world of instant payments and borderless commerce, the cards are about to expire. For years, they have been incorporated into online payment gateways, creating an invisible web of hidden costs and unwieldy payment structures.

The impact this has on e-commerce cannot be underestimated when it comes to customer experience, either. How many times have we tried to buy something but the card has not been accepted, either due to the wrong data being entered or due to an anti-fraud block? E-commerce has long demanded faster and more profitable user experiences.

Account-to-account payments through open banking are the next necessary step in this evolution, allowing merchants to carry out transactions at a lower cost and in a more secure and convenient way for the customer. In 2022, businesses that choose to implement this type of payment solutions offered by open banking will increase considerably, putting cards as the main payment option in check.

Open banking and crypto assets

Blockchain companies and DeFi protocols they are relentlessly building as complete a financial infrastructure as possible. Although we are still in the early stages of these developments, these companies have the potential to create more open, free and fair financial markets, accessible to anyone with an Internet connection. The intersection between centralized and decentralized finance is going to be a rapidly emerging and growing space: open banking can play an important role as a bridge between both worlds, providing more efficient entry and exit routes between FIAT and crypto.

Refund process improvement

User expectations about returns often collide with the reality of payment methods such as cards. Refunds of online card payments can take up to five days, and in the case of digital wallets (known as wallets), even more. On the other hand, returns using traditional bank transfers can take up to 3 days. In 2022, the possibility of faster repayments will take center stage as the most innovative e-commerce builds a better experience for their customers through instant repayment solutions, made possible by open banking technology. This will become more and more evident in those businesses related to the sale of tickets, events and / or accommodation.

Beyond PSD2 regulation

In 2022, the authorities will take steps to ensure that transfers in the SEPA region are fully covered in the EU. This is key, since open banking providers They prefer to initiate instant payments for the convenience of their consumers, as opposed to SEPA credit transfers (which can take 2 days to arrive).

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