Endava, a technology service provider, has outlined its expectations for the payments industry in 2023. It predicts that economic uncertainty, growing payment complexity, and the evolution of marketplaces will have a significant impact on the payments industry.
Nick Curran, Head of Endava Middle East and North Africa, explained, “In a digitally empowered payments landscape, consumers are rapidly driving change in technology and engagement models. Organisations across the industry are attempting to improve their agility and level of user personalization while maintaining profitability.”
Inflation will drive the creation of new models
The decline in consumer cash flow will lead to an increase in the use of credit and BNPL (Buy Now, Pay Later) products. However, BNPL popularity may be impacted by changing interest rates. As a result, B2B businesses may turn to alternative financing methods, including cash advances. The trend toward subscriptions will expand to cover a wider range of products and services, including car subscriptions that include insurance and maintenance. In addition, more businesses are expected to enter the foreign exchange and money transfer space, leading to an increase in embedded models that require complex B2B2C and C2B2B systems.
As regulations in the payments industry become more stringent, businesses will increasingly turn to outsource to handle their compliance needs. Companies across various markets must now deal with complex billing and reconciliation processes, as well as prevent fraud. Smaller organisations may adopt pre-packaged solutions, while larger ones will have to adapt to meet strict KYC and anti-money laundering (AML) requirements, leading to new models like embedded lending, finance, and payments. Even established payments providers will need to evolve to keep up with the changing landscape.
The role of gateways in the payments industry is evolving. Historically, gateways served as the connection between merchants and shopping platforms. However, the ownership of customers is shifting from gateways to gateway acquirers, leading to an increase in orchestrators. Marketplaces are becoming increasingly prominent, and as a result, both direct entrants and marketplace technology are growing. With the rise of challenges such as regulation, payment management, and logistics, there will be a growing demand for global marketplace payment service providers.
Endava is a British public-listed software development company, founded in 2000 in London. It has recently expanded in to the Middle East, and serves many retail clients in the region.