Payment Trends Shaping the Retail Landscape for 2024

The payments industry is experiencing rapid evolution. Consumers are adopting new payment methods and driving changes, and your clients will expect you to provide solutions for implementing them. Here are the payment trends ISVs and VARs need to factor into their plans for 2024 and beyond:

AI and Machine Learning

As generative artificial intelligence (AI) entered the mainstream with OpenAI’s launch of ChatGPT and DALL.E models, business applications for AI and machine learning rapidly integrated across industries and applications. The payment space is no exception. AI in payments increases efficiency, lowers costs, and provides loyalty-building customer experiences. Those outcomes are possible, in part, because AI can analyze massive amounts of data in microseconds, speeding up transactions and processes while more effectively and accurately identifying markers and patterns indicative of fraud.

Surcharging

As economic uncertainty and rising prices continue, your clients will look at every option for controlling operational costs. More are taking a serious look at credit card surcharging. This option allows merchants to pass credit card processing fees on to consumers and can reduce their expenses by thousands each year. The Strawhecker Group found that 23 percent of small merchants surcharge, and 58 percent of merchants are familiar with the option. Educate yourself about how to offer compliant surcharging programs to meet the demand.

Android-Based Terminals

Another payment trend to watch is expanding the functionality at the payment terminal with Android. Payment platforms based on this open operating system enable integrating new apps that allow merchants to create unique experiences, for example, with integrated loyalty, customer surveys, digital receipts, and alternative payments. Solutions providers can also manage Android-based terminals remotely to optimize performance and increase uptime.

Buy Now, Pay Later

Reminiscent of layaway models, buy now, pay later (BNPL) allows consumers to pay for larger ticket items through three or four interest-free installments. The key differentiator is that consumers receive the product after the first installment before it has been paid in full. The U.S. BNPL market is set to increase to $80.8 billion in 2024 and increase by 8.1 percent in 2025. Merchants without BNPL integrated with their payment solutions will undoubtedly lag behind those supporting BNPL services, especially since more than 55 percent of consumers are leveraging this payment option. Beyond meeting consumer expectations, BNPL integrated solutions help merchants boost sales while reducing e-commerce cart abandonment rates.

Mobile/Digital Wallets

In 2023, more than half of U.S. consumers used a mobile wallet, and by 2027, it’s projected that over 64 percent of the U.S. population will be mobile wallet users. Watch this payment trend as it evolves to include super apps that streamline banking, payments, messaging, and more into one multifaceted application. More consumers may adopt mobile wallets as they expand to include digitized driver’s licenses and student IDs and even to replace physical car or hotel keys.

Tap to Mobile

Contactless payment trends will continue to evolve in 2024 with tap-to-mobile. Tap to mobile allows merchants of all sizes to accept payments directly on Android or Apple smartphones – no payment terminal required. This means more merchants will be able to deliver the contactless payment experiences that 61 percent of consumers prefer.

Biometric Payments

The payment trends list for 2024 wouldn’t be complete without a nod to the biometric payments market, expected to grow at a CAGR of 19 percent through 2026. Cybercrimes and the severity of security threats are driving consumer demand for ultra-secure payment technologies that use fingerprints, facial images, and palm vein scans to authenticate payments.

Importance of the Right Payments Partner

ISVs and VARs need a partner with solutions that line up with these payment trends to help merchants remain competitive in a space that is evolving at a rapid pace. Work with a partner that stays ahead of trends and enables you to offer solutions that are in demand.