In the modern landscape, merchants constantly face new forms of payments to accept and new solutions to incorporate. Because merchants aren’t payments experts themselves, they look to their service providers for help in optimizing their payments operations.
Payments solutions are only going to grow more complex in 2024 and beyond, meaning service providers must be ready to help merchants take full advantage of all the new tools they’ll be able to access. In his report titled 2024 Trends and Predictions: Merchant Payments, Daniel Keyes, Senior Analyst of Merchant Services at Javelin Strategy & Research, identified three important trends that are likely to unfold in 2024.
The Promise of Paze
Paze is Early Warning Service’s (EWS) version of a digital wallet, backed by seven major financial institutions. It’s intended to compete with PayPal, with the goal of making online guest checkout less painful. Although we’ve seen similar products in the past, Keyes is bullish on this one. “I went in pretty skeptical, and I came out thinking it has actually a chance to succeed,” he said.
This is not the first consortium of companies to undertake such an effort. The Merchant Customer Exchange was an attempt by top retailers, including Target and Walmart, to offer their own app and become a digital wallet and mobile payments player.
“That attempt fell flat because they had trouble getting adoption from both merchants and consumers,” Keyes said. “But because Paze has those owner banks, they have a much greater chance of success when they launch next year.”
Because the banks involved are top issuers, Paze will be able to add 150 million credit and debit cards almost immediately. EWS already has relationships with thousands upon thousands of merchants and can push them to accept Paze. If the digital wallet is suddenly accepted at a wide variety of retailers and is easily accessible to consumers, there’s an opportunity for it to succeed very quickly, especially with older consumers. “If Chase says, ‘Hey, we’ve added your card to Paze,’ people will think it’s obviously safe,” Keyes said.
Tap to Phone
Tap to phone has been available for a while through technology companies like Stripe and Adyen, but JPMorgan Chase recently announced that it will roll out its own version. That promises to give a significant boost to the technology. Because it allows merchants to accept payments with just a smartphone, tap to phone has a great deal of appeal to small businesses.
With Chase and other major acquirers supporting it, the technology will become more widely accessible in a short amount of time.
“We’re going to quickly see a lot of merchants, not necessarily restaurants, but more retail merchants add the technology,” Keyes said. “They will still have their traditional registers, but they will also have employees walking around with standard smartphones that they can accept payments on. I think that’s going to pick up very quickly. You will start seeing it regularly over the next year or so.”
Several technology companies and merchant services companies are rolling out these solutions and putting a strong push behind them. Once they become more widely available, merchants are going to be very interested in discovering whether the solutions will help cut costs. Even if we see a decline in inflation, merchants will always want to find new ways to lower their expenses. That will create a real appetite for this kind of technology, especially when it’s combined with greater availability from major merchant services providers.
Payments Orchestration
Finally, expect to see a rise in payments orchestration.
“Payments orchestration has been a huge buzzword for a year or two now, and some people have it confused with payment gateway and don’t know exactly what it is,” he said. “They think it’s important, but they don’t know what they’re looking at.”
Keyes thinks 2024 is going to be the tipping point, when businesses begin to understand how payments orchestration can provide real benefits. Merchants have an increasing array of options to offer, from digital wallets and buy now, pay later solutions to A2A payments. Orchestration is key to helping merchants handle that complexity. An orchestration layer can ensure that no matter what type of payment is accepted, it goes through a unified platform managed by the orchestration solution.
“As more new payment types start being accepted, orchestration should help merchants keep things running smoothly no matter how many alternative payment methods they need to consider,” Keyes said.
The coming year will likely see orchestration solutions become more competitive. Companies in this space will not only work to optimize payment operations but also apply the information from that optimization to benefit other parts of a merchant’s business.