Let’s talk 2023: what does our team have to share?
A new year brings fresh opportunities. The team at kevin. stays on the pulse of trends and how best to help businesses when it comes to payments. In 2023, what might we expect to see? To answer this question, we turned to a few of our team members who can offer unique insights.
Gintarė is responsible for data analytics and insights, business intelligence, governance, strategic innovation, and forecasts, amongst other duties. With data, she works to understand probable future conditions and events, guiding the organization’s strategies and tactics.
Where is data security in payments likely headed in 2023?
There are a few trends that will carry over and affect all players in the market, such as moving money quickly from the consumer to the business, the possibility to reduce costs, and the drive towards less fraud. From the banking side, banks may continue the digitalization of payments, decreasing cash use and the resulting load on physical branches.
Consumers have adopted the use of internet bank payments at a higher rate. But reassuring them of security measures is necessary, which gives the consumer greater confidence in using this form of payment.
Are there other factors than security at play?
Yes. Consumers and businesses alike want simplicity, too. Thanks to new technologies like those kevin. offers, we can combine the two. Wallets are being increasingly replaced by mobile phone payment options, thanks to ease of payment and the high level of safety with biometrics often being required to complete a payment.
Where does kevin. stand on security?
Security is a cornerstone of what we do at kevin. We go beyond open banking, which is already highly regulated. But we use API-based open banking. That means we have the most secure connections to the banks themselves, overseen by regulators. Open banking can also be based on screen scraping or reverse engineering, which don’t involve the high level of safety that using an API offers.
Thanks to this level of detail when it comes to safety, more consumers and businesses alike are adopting and benefiting from what kevin. has to offer.
Aleksejus has a depth of knowledge in what shoppers are looking for in payment methods, as well as upcoming regulations and trends that will affect users and business owners alike.
Can you make any comments on 2023 and what we may expect to see when it comes to payments?
As the share of online shopping continues to grow (though perhaps not as strongly as the peak of the pandemic), shoppers will demand a safer and faster payment method. On the other hand, merchants are interested not only in security, but also in the price and the speed of receiving money into their accounts.
Therefore, most likely, the search for an ideal alternative payment method (APM) will continue, and since the account-to-account (A2A) payment infrastructure is improving and growing in Europe, it should occupy a significant part of this segment.
Most analysts believe that the future is in “payment without payment.” It’s like when you order a taxi and at the end of the trip, the exact amount will be deducted from your account without any action on your side. It’s already in the works with cards, but not yet available through open banking.The concept of a one-click payment would be very close to this scenario. It is even easier to implement if mobile phones and mobile payments are used.
The demand from new types of merchants is turning into the need for embedded payments, when payments become an integral part of service provision. Sometimes, it’s difficult to distinguish how and where such a service provider earns money, so embedded payments will definitely be a factor in the future.
Any shifts that can be predicted within open banking?
We’re already waiting for a lot of them, actually. First of all, a change will come into effect in March 2023 that will allow open banking payment tokens to be stored not for 90 days, but for 180 days. This will allow a business’s regular (repeat) customers a faster and more convenient payment for a longer time.
In 2022, talks began about the introduction of mandatory instant payments in and between EU countries, along with price limits for such kinds of payments. That means money can travel between banks and the countries more quickly and inexpensively. As a result, merchants using payment initiation services (PIS) will be able to manage their cash flows more conveniently, because they will receive the money instantly instead of waiting several days or weeks, as is the case with the card payments.
All market participants are waiting for the formalization and implementation of these initiatives as soon as possible.
More open banking-based products must appear, such as periodic payments, direct debit payments, multi-currency transactions, etc.. This meets the additional needs of merchants, like when they are selling subscriptions or when the currencies of the buyer and seller do not match. With all these, we are closer and closer to the ‘payments without payment’ idea.
What trends do you think might either increase or slow down?
From the open banking perspective, banks’ APIs will continue to improve. That means all market players can provide a higher quality of service. As a result, unfair competitor’s projects based on the dangerous practice of screen scraping will reorient or disappear.
Open banking’s infrastructure as a service (IaaS) may become a traditional use case for traditional financial institutions (like banks), because more and more market players understand it is no longer worthwhile to create all the connections themselves - but they can use partners and have excellent quality faster, and at a lower price.
It’s expected that a compromise between PSD2, GDPR and AML regulation will be found and written down (officially approved), so that the provision of services is not overburdened with requirements that are mandatory for all parties and all countries.
I believe, in the future, unique products based on open banking will be highly relevant, because the price of traditional PIS and AIS services will continue to decrease.
Marius offers a great deal of expertise on areas such as user interaction, changing and evolving technologies and trends, and how kevin. stays on top of it all.
Will we see new players in the finance and payments industry in 2023?
I think so, yes. Big Tech - companies like Google, Apple and Meta will be continuing to make strides into finance. Since they’re close to the user, they can provide a great user experience. Right now, though, they only use well-established card networks for payments, which limits them.
That’s where players like kevin. come in. As a partner, we can really add to these companies’ capabilities. We’ve built the technology ourselves, and others can get the benefits that come from that.
What about from a user perspective?
How users interact with purchasing is definitely changing. Think about virtual reality or augmented reality, which Big Tech can help facilitate. Those are gaining popularity, along with real-time shopping that you can find on social networks. The consumer has the ability to make continuous decisions in real-time, which is far more effective than watching a pre-recorded video.
It’s also worth talking about how users prefer different payment methods. They don’t only want to use cards as in years past. Some new companies try to build on top of the card infrastructure, but there are new solutions that have been built separately.
More and more, we’re seeing embedded finance. That means when a user purchases, for example from your e-shop, they don’t need to be directed to another website to complete their payment. I think we’ll see businesses understanding the advantages that offers from a conversion perspective and wanting to take advantage of them.
It sounds like a heavy focus on the customer. What else might they want in 2023?
I think user experience (UX) will be at the forefront in 2023. Users become quickly accustomed to it, and that means they’ll come to expect it. Some apps allow for instant feedback, where the user can leave instant feedback or just say what they want and get it. Machine learning answers you straight and to the point, taking only seconds to get the user what they want. I think that consumers will expect that to be the norm, eventually. Regardless of the industry, I believe they’ll want quick information and access.
Big Tech will also allow that creativity to be brought to UX. So it’s all about that fluidity of the experience, which relates back to the idea of embedded finance.
So how can kevin. fit in to better help businesses meet users’ expectations in 2023?
kevin. can enable those fluid experiences, like one-click payments. The current card infrastructure leaves a huge gap there. Users expect a variety of payment methods. That’s nothing new, but payment methods continue to change and evolve over time. They want payment to be easy, simple and quick - and kevin. fits the bill of all three.
Filippo is on the front lines of speaking to business owners and industry experts alike each day as a part of his role, bringing a keen understanding of trends, shifts, demands and regulations on all things payment-related.
What do you think 2023 might bring when it comes to continuing trends?
Embedded payments will continue to grow as a part of the merchant ecosystem. When a user pays, it won’t be connected to the bank or another payment provider. kevin. already offers a white-label, in-app payment option, and I think businesses will increasingly be looking for this.
I think we’ll also keep seeing more players in the open banking market. Europe will continue to adopt open banking for payments, and we’ll see strides in regions like the UAE and Australia. And in the U.S., we might see some changes in the popularisation of open banking and account-based payments.
What can we expect to see change with point-of-sale devices in 2023?
A big trend will be using your phone as a POS device. Apple made an announcement earlier in 2022 that this would be coming. Google and Huawei will likely follow. Why would a business want this? It means eliminating the cost of expensive POS devices, not to mention the environmental cost of producing this equipment.
Plus, POS devices aren’t typically easy to update, while updating your phone is pretty simple. This will definitely be a payment method trend to watch in the next year.
What do you think consumers want?
Increasingly, consumers are looking for real-time payments. That’s a huge advantage to businesses, since they can receive money from the consumer right away. In Asia, WeChat has a one-second payout time. Businesses are used to receiving lump-sum payments from transactions every week, or even every other week. Real-time payments mean real-time liquidity for the merchant.
Also, since consumers want convenience, I think conversations about the digital Euro will continue to evolve. 2023 may see a more concrete announcement with the next steps for that.
What upcoming regulations might affect the payments industry?
PSD3 should be happening in 2023. Toward the end of the year, expect to hear talk about the new scheme, SPAA, which is slated to partially replace SEPA. This has to happen in conjunction with PSD3 to be most effective. PSD3 will bring about increased security for consumers, moving open banking even closer to being the perfect payment method. The new scheme will regulate current and the new type of bank transfers and give open banking a huge boost in Europe.