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Trends forecast to shape payments sector in 2024

Staff Writer
By Staff Writer, ITWeb
Johannesburg, 21 Dec 2023
Automating payments processes to speed processing will remain a top focus in 2024.
Automating payments processes to speed processing will remain a top focus in 2024.

With payments increasingly moving online, 2024 is forecast to see an explosion of authorised push payment (APP) fraud, as financial institutions battle to reverse fraudulent real-time payments.

This is one of the key trends expected to shape the global payment landscape in 2024, as identified in a report titled: “5 Payment Trends to Watch in 2024”, compiled by global data and analytics firm LexisNexis Risk Solutions.

The report provides a forecast of key payments trends to keep an eye on as 2024 unfurls – from reducing payments failure, to banking-as-a-service (BAAS) gaining even wider adoption.

Over the past decade, a wave of innovation has swept through all corners of the payments landscape, altering habits and expectations, says LexisNexis.

As a result, the needs of market participants have evolved, and they continue to do so at a substantial pace.

In terms of financial fraud, the report forecasts APP fraud to become more prevalent than ever.

This type of fraud is perpetrated when fraudsters use social engineering techniques such as impersonation scams to trick unwary consumers into sending a payment to them.

“APP fraud is currently the number one fraud threat globally, surpassing card fraud and identity theft. Combatting APP fraud will remain a challenge in 2024 because it happens in real time and cannot be reversed. We expect wider adoption of confirmation of payee (COP) and similar controls to temper APP fraud going forward. The cost of all types of fraud to financial institutions worldwide is forecast to be an estimated $40.2 billion by 2027,” according to the report.

COP systems shows users that the funds are going into the intended account before they are transferred.

LexisNexis Risk Solutions experts forecast these trends to dominate the payments ecosystem in 2024:

  • Account-to-account payments soar

Account-to-account (A2A) payments bypass intermediaries such as credit card and payment processors, enabling money to be transferred directly from one party’s account to another account instantly. That makes them faster, more convenient and less costly than traditional bank transfers.

“Although A2A payments are not new, API technology and the move to open banking have provided the payment rails for A2A payments to take off. We expect rapid growth to continue in step with further adoption worldwide of instant digital payment solutions for retail and corporate use.”

  • Banking-as-a-service to gain momentum

With a compound annual growth rate of more than 15%, BAAS is expected to gain even wider adoption next year and beyond.

Banks are transforming their payment service operations and diversifying revenue by offering real-time payments capabilities to corporate and other customers through application programming interface (APIs).

“This BAAS approach enables banks to become a channel partner and resell payment routing solutions to end customers, providing companies with a holistic solution to manage the growing complexity of payments routing.”

  • Reducing the cost of payments becomes imperative

A confluence of factors – from high interest rates, to volatile credit markets are driving up the cost of payments and making liquidity management ever more challenging. Compliance controls, which are especially high for international payments will further increase costs.

“Automating payments processes to speed processing, reduce failed payments and prevent fraud will remain a top focus for businesses looking to reduce costs in 2024.”

  • Corporates strive for payment efficiency

Corporates are increasingly bringing payments operations in-house to gain greater control and deliver a better customer experience. This has fueled the growth of corporate treasury management systems that are able to manage liquidity and deliver efficiency gains by offering a centralised hub for all payments activity, including payment routing.

“With the faster processing and real-time visibility these systems offer, LexisNexis expects the number of companies who manage their own payment operations to increase significantly in 2024.”

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