The rise of untapped markets and emerging economies

An incontrovertible key to the rise of e-commerce globally has been payment gateway providers’ facilitation of e-commerce products, services, and purchases in untapped and emerging economies. We expect e-commerce volume and values in emerging economies to grow considerably as technology continues to facilitate merchant supply chains and champion consumer choice.

Advancements in payment technology and infrastructure benefits both merchants and consumers. The proliferation of embedded finance technology combined with digital remittance services will promote e-commerce access globally, increasing cross-border payment volume. Markets in South America, such as Peru and Chile will continue to flourish, as will commercial growth in India and Central Asia. These markets interest gateway providers, merchants, and consumers who all wish to tap into landscapes primed for rising e-commerce activity in the coming years.

A prioritisation toward merchant flexibility

While e-commerce has traditionally focused on supplying consumers with choice, payment flexibility, and security, care for the merchant has often fallen short. Catalysed by merchant demand, the payments sector will have to realign its service offerings to put merchants in control of their financial flows to provide additional visibility, flexibility, and data-driven insights (like Nucleus365 provides).

Aside from merchant demand, a centralised and accessible payments platform can facilitate scale-up by providing detailed information on customer type and geographical specifics – meaning merchants can optimise their businesses accordingly. Additionally, the more merchants understand their finances, the better they can help payment gateways identify, monitor, and prevent risk.

Collaboration between merchants and gateways will be key to sector innovation. The payments space evolving with real-time payment technology, faster and diversified payout methods, and the enablement of cryptocurrency payments are further incoming trends we see for 2023.

Improved fraud prevention protocols

Payment institutions’ accomplishments within security protocol effectiveness will only increase in 2023; reports suggest that, as e-commerce boomed during the pandemic financial crime proliferated. Our sector is experiencing a similar increase now, with experts suggesting this is partially due to cost-of-living increases. Regardless of the reason, it is the responsibility of payment gateway providers to reduce risk as much as possible.

We expect to see further innovation and improvement within risk negation systems, the payments landscape has not yet rested on its laurels, and so an increasingly proactive approach to even better financial crime protection will be a key challenge in 2023.

Alt-fi payments facilitation

Payment gateways can only efficiently serve customers (merchants) if they maintain flexible and adaptive operations. One of these adaptations, which will become rooted in the payment landscape in 2023 and beyond, is the use and facilitation of alternative finance payments.

Alternative finance offers consumers just that; a method of payment-making existing in asset classes outside of, or as an extension of traditional banks. Alt-fi services, such as open banking, will experience increased consumer demand for embedded financial services; benefitting consumers who require speed and efficiency, whereby unbanked populations who struggle with access to traditional banking channels or are reliant on cash-based economies will have access unlike they’ve seen before.

Alt-fi technologies, such as Blockchain, are increasingly investigated and utilised by trad-fi institutions. Taking advantage of the technology benefits for transaction, clearing, and reconciliation use cases, trad-fi institutions will continue to increase in focus, investment and application of alt-fi technology. Strictly alt-fi services, such as Klarna, we imagine will continue to utilise emerging technology to introduce new products with the view of targeting more businesses/corporates.

The horsepower of alternative finance for accelerating payment accessibility and optionality for consumers is yet to be fully realised. However, with increased merchant and consumer demand, payment organisations will continue to support and facilitate the option of alternative finance in 2023 and beyond.

David Lambert, CEO of Nucleus365