Payment Trends in 2024 and Beyond: The Future of Transactions

The 2024 global economic outlook highlights rising geopolitical risks, unstable interest rates, and increased focus on counterparty issues. However, despite these challenges, the global payments sector is undergoing an exciting transformation fueled by new technologies and evolving consumer behaviors.

For example, cash is quickly becoming outdated—between 2019 and 2023, cash accounted for just 20% of transactions in Europe, and only 11% of in-store payments in the US used cash in 2023. Instead, electronic and mobile payments are becoming popular because of how convenient they are.

But what does the future hold for payment trends in 2024 and beyond? How will emerging technologies impact transactions?

Payment Industry Trends to Keep an Eye On

Digital payment trends in 2024 are driven by new technologies in payment that are transforming the financial sector. Consumers are increasingly leaning toward seamless, secure, and efficient payment solutions. Whether it’s tapping a phone to pay, sending cryptocurrency across borders, or paying for products in installments, the future of payments is all about convenience and personalization.

On-chain Payments and Cryptocurrency

Crypto and blockchain technology are no longer the niche interests they once were. Bitcoin, Solana, and other digital assets have made headlines, not only as investment opportunities but as future transaction methods. Blockchain technology—the decentralized ledger that underpins cryptocurrencies—offers secure, transparent, and fast ways to process transactions without intermediaries.

The globalized nature of today’s economy means more consumers are looking for ways to send and receive money internationally, and cross-border crypto payments offer a tantalizing solution. Unlike traditional payment systems, cryptocurrency allows for faster, cheaper, and more transparent international transactions. As a result, we’re seeing more businesses and governments begin exploring the benefits of stablecoin payments and other blockchain-based systems.

According to Deloitte’s Survey, 64% of customers want to pay with crypto, while more than 75% of retailers plan to incorporate crypto payments in the near future. This growing demand for digital currency transactions is reflected in the rise of global cryptocurrency ownership. As of 2024, Triple A estimates that 6.8% of the global population—over 560 million people—own cryptocurrency.

As more businesses integrate cryptocurrency into their payment systems, we’ll see the line between fiat and virtual currencies blur. Merchants are warming up to the idea of accepting cryptocurrencies, and as consumer demand grows, so too will adoption. If more people hold crypto, expect to see it offered as a regular payment option, from ecommerce to physical stores.

Financial Inclusion: Banking the Unbanked in a Digital World

Financial inclusion remains a critical challenge worldwide. While digital payment systems are spreading, millions of people still lack access to basic financial services. Fortunately, the rise of mobile and digital payments is helping bridge this gap. According to a report from the World Bank Group, 76% of adults now have a bank or mobile account, up from just 51% in 2011—a significant leap in financial inclusion.

Digital wallets, in particular, play a significant role in this transformation. Services like Alipay, MTN MoMo, and Orange Money offer ways for the “unbanked” to access financial tools without needing a traditional bank account. 

This growth has been especially impactful in developing economies, where account ownership increased from 63% to 71% between 2017 and 2021, driven largely by mobile money services, according to research from Georgetown University and MIT.

In 2024 and beyond, businesses and governments alike will need to focus on ensuring financial inclusion as economies continue their march toward cashless societies. If done right, this can open up enormous opportunities for growth and economic development.

The Rise of Digital Wallets

If you haven’t used a digital wallet like Apple Pay or Google Pay recently, you’re part of a shrinking minority. As ecommerce payment trends shift, digital wallets are emerging as the leading way to make purchases, both online and in-store.

Consumers love the convenience of tapping a phone or smartwatch to make a purchase. This trend shows no sign of slowing down, especially with mobile-first economies such as China and regions across Africa already relying heavily on these platforms. In fact, according to Statista digital wallets accounted for half of all e-commerce transactions worldwide in 2023.

As more merchants and payment processors integrate digital wallets into their systems, the days of carrying around physical credit cards may soon be behind us. The rise of mobile wallets reflects a larger trend toward contactless, seamless, and secure payments that fit into our increasingly digital lives.

CBDCs: Government-Issued Digital Money

One of the hottest topics in banking today is central bank digital currencies (CBDCs). CBDCs are digital versions of fiat currency issued and regulated by governments. The appeal of CBDCs lies in their ability to combine the simplicity of digital payments with the trust and stability of traditional currency.

In 2024, 134 countries and currency unions—representing 98% of global GDP—are exploring a CBDC, a dramatic increase from just 35 in May 2020. Currently, 66 countries are in advanced stages of CBDC exploration, ranging from development to pilot programs or full-scale launches. 

Among these, China’s digital yuan (e-CNY) remains the largest CBDC pilot in the world. As of June 2024, the total transaction volume reached 7 trillion e-CNY (approximately $986 billion), spanning 17 provincial regions and being integrated into sectors like education, healthcare, and tourism.

The benefits of CBDCs are clear: reduced transaction costs, increased efficiency in cross-border payments, and improved transparency for combating financial crimes such as money laundering. Notably, even the U.S. has joined a cross-border wholesale CBDC project called Project Agorá in collaboration with six other major central banks.

CBDC trends could be the solution to the wild swings of cryptocurrencies, all while harnessing the benefits of blockchain technology. They will play a key role in updating our financial systems and connecting traditional money with the digital world.

BNPL: A New Era for Credit

Over the past few years, Buy Now Pay Later (BNPL) services have surged in popularity, particularly among millennials and Gen Z. BNPL lets you shop now and pay in installments, often without any interest. It’s a great way to handle big purchases, especially when money is tight.

The rise of BNPL has been fueled by ecommerce payment trends, where consumers are increasingly seeking flexible payment solutions. From clothing retailers to tech giants, many companies now offer BNPL as part of their checkout process. Among BNPL users surveyed by The Motley Fool Ascent, 53% use BNPL more often than their credit card, and 62% trust BNPL providers more than credit card companies, underscoring a substantial shift in consumer preference.

Looking ahead, BNPL is likely to become an even bigger player in retail. With inflation and economic challenges ongoing, this service will continue to help shoppers manage their finances while giving businesses a great way to boost sales.

Better Cross-Border Payments

Cross-border transactions can be a real hassle—slow processing, high fees, and tricky currency conversions make it tough for both businesses and consumers. However, thanks to emerging cross-border crypto payments and new standards like ISO 20022, the landscape is changing.

These innovations allow faster and cheaper cross-border payments, particularly through blockchain. Digital currencies and wallets simplify money movement across borders without requiring traditional banks to do so. This trend is especially significant for ecommerce, where international transactions are growing.

Looking to the future, as digital currencies and blockchain adoption grow, the inefficiencies of cross-border payments will continue to decrease, opening up new opportunities for cross-border business.

Payment Security: Fighting Fraud in the Digital Age

With the surge in digital payments comes the inevitable rise in payment fraud. While more and more people embrace digital transactions, scammers and fraudsters are finding new ways to exploit their vulnerabilities. However, the payments industry is fighting back with cutting-edge payment security technologies.

Artificial intelligence (AI) and machine learning play a major role in identifying fraudulent activity before it can cause damage. Advanced algorithms can now analyze transaction data in real-time, flagging suspicious behavior and preventing fraud before it happens.

As digital payments continue to grow, security measures will evolve as well, with new technologies like AI leading the charge in protecting consumers and businesses.

Other Emerging Trends in Payments Technology

As the trends mentioned above shape the payments landscape, exciting new technologies are also paving the way for the future of payments:

Payments as a Service (PaaS)

Businesses are changing the game by outsourcing their payment processing through PaaS. This allows them to offer advanced payment solutions without the hefty investment in technology, making it a smart and cost-effective choice for companies of all sizes.

A2A Payments

Account-to-account (A2A) payments allow money to transfer directly between bank accounts in real-time. Bypassing traditional payment rails, A2A payments are gaining traction globally, with systems like FedNow in the U.S. and Brazil’s PIX leading the way.

Biometric and Contactless Payments

Biometric payments — featuring facial recognition and fingerprints — are becoming the new norm. Plus, contactless payments are booming, thanks to mobile devices and wearables. Expect even more developments with new technology like augmented reality (AR) and the Internet of Things (IoT).

Blockchain Beyond Cryptocurrency

Blockchain technology is stepping out of the crypto shadow. It’s also the foundation of decentralized finance (DeFi), which allows for services like lending and borrowing outside traditional banks. After a recent dip in the market, DeFi is set for a rebound as the technology grows and connects with established financial systems.

Open Banking and Open Data

Open banking allows third-party developers to access consumer financial data (with permission) to create more personalized and innovative financial services. This trend is driving competition and fostering innovation, particularly in regions like Europe, where it’s becoming mainstream. Open data further empowers consumers by giving them control over their financial information.

AI in Payments

Artificial intelligence is changing payments with automation and personalization. It helps improve customer service with chatbots and enhances fraud detection. In the future, AI will keep transforming the market, providing more efficiency to companies and customers alike.

Conclusion: Preparing for the Future of Payments

For businesses, staying on top of these trends is essential to stay ahead of the competition and meet consumer demands. For individuals, knowing the trends in digital payments can help you navigate a world where money is increasingly digital and decentralized.