Businesses are facing unprecedented challenges and opportunities in the rapidly evolving landscape of the payments industry. From payment trends, regulatory shifts to technological advancements, it’s imperative for businesses, especially those in high-risk verticals like Crypto and BNPL, to adapt strategically.

To delve deeper into this, we speak with Kailash Madan, Head of Global Sales, Primer, who also shares his perspectives on collaboration opportunities, pricing models, fraud management, and the impact of popular platforms like Apple Pay.

With the payments industry witnessing significant shifts, how can businesses in high-risk verticals like Crypto and BNPL adapt to increased regulation and compliance, considering the predicted trend of consolidation?

Regulations and compliance requirements exist to ensure that payment processes are safe and secure. These regulations allow businesses to sustain in the long run, while ensuring a layer of safety for consumers and users. High-risk verticals that are open to learning the latest compliance updates and engaging in strategic partnerships or conversations with industry stakeholders can set themselves on the path to resilience and success. 

You highlighted the evolution towards open, scalable payments infrastructures. How do you foresee collaboration opportunities among payment service providers to meet the growing demand for flexibility from businesses and merchants?

Businesses are moving towards open, scalable payment infrastructures as it has become more than accepting a payment. With more stakeholders involved, payments no longer operate in silos. 

Payment service providers continue serving businesses well but external market factors such as cost optimisation, internationalisation and better customer experience has forced businesses to look at ways to involve multiple providers in their payment stack. 

There is a huge collaboration opportunity for providers to tap into the expertise of agnostic platforms and, in turn, will present a new revenue stream for payment service providers.  

The rise of contextual commerce is evident with embedded payments and smoother mobile experiences. How can businesses, especially smaller merchants, leverage this trend, and what steps can they take to integrate contextual commerce into their customer interactions?

Smaller merchants with a smaller pool of resources may indeed face challenges in enabling embedded payments and smoother mobile experiences for their customers. This gap can be bridged easily by partnering with or on-boarding integrated infrastructures that allow for the application of any platform or tool of their choice for a smoother customer experience from check out to delivery and returns. The application process for these tools is extremely straightforward and user-friendly, rendering the process effortless even for small businesses. 

Usage-based billing models charging per transaction volume are becoming more prevalent among fintechs. How can this pricing model benefit smaller merchants by lowering upfront onboarding costs, and what impact might it have on the overall revenue in the fintech industry?

Usage-based models where customers are charged on their usage of the software or services can be extremely valuable for smaller merchants, who no longer need to commit to large upfront lump sum payments that may impact their cash flows or budgets. At the same time, it can mean a smaller lead time to onboarding, which would be beneficial for smaller merchants for whom time-to-market has a direct impact on revenue. 

With the lowering of entry barriers for customers, which expands the addressable market for the payments industry, this model also represents a tremendous growth opportunity for fintech players.

As alternative payment methods like QR payments, E-wallets, and A2A become mainstream, what challenges do businesses face in managing fraud and transaction risk within the digital payments ecosystem, and how can they address these challenges effectively?

The growing prevalence of fraud and transaction risk is a by-product of greater transaction volumes facilitated by new payment methods, rather than the new methods themselves. As with any paradigm shift, businesses will have to evolve their risk management methods. This could mean allocating new headcount to risk management or businesses could also onboard an integrated platform with experts to facilitate secure payments against bots and fraud schemes. Most importantly, with the rise of AI tools designed to scalp for data, it is crucial to fight data with data. A complete overview of data, protected and integrated with the right technologies, can enable merchants to identify abnormal activities easily. 

The Black Friday, Cyber Monday Weekend saw a substantial increase in transactions, especially within the Retail and E-commerce space. How can businesses capitalize on the rise of contextual commerce, especially considering the “want-it-now” mentality of shoppers during live commerce?

The rise of the “want-it-now” mentality became popular thanks to the uptick in mobile devices and internet connectivity, which spurred the growth of digital wallets. This greatly reduced friction in the process and allowed the consumer journey to take place entirely on the phone or screens without the need to engage in any physical transaction. This, together with combining entertainment with commerce, has given rise to the emergence of social media as a popular marketplace. In the first quarter of 2023, TikTok logged the highest app store spend across the US, UK, France, Germany, and Indonesia, and is eyeing a $20 billion target in merchandise sales.

Businesses who want to fully capitalise on the trend must understand and be prepared for the speed and volume of sales that can result from the optimal marrying of marketing and sales content with contextual commerce and should first ensure that they have the right systems in place to fulfil the customer journey from payments to delivery and returns. 

Apple Pay emerged as the most popular option, witnessing a significant jump in usage over cards, particularly in the travel sector. How can other digital payment providers respond to this trend, and what strategies might they adopt to compete with the growing popularity of Apple Pay?

Apple Pay emerged as a popular method of payment thanks to its biometric-enabled security and its convenience. Digital payment providers can emulate the security that Apple Pay offers, giving users a peace of mind, including a robust 3DS system, fraudulent transactions alerts and more. This is important as cybercrime is constantly evolving, so payment providers must be ahead of fraud movements with stronger tools and orchestration flows which is possible with an integrated infrastructure. Digital payment providers can also expand their partnerships across more verticals and with more partners, to allow their payment method to be available at home or even abroad. Apple Pay’s cross-border use case and availability on multiple platforms are strategies to learn from. 

With the observed hesitation among businesses to embrace contextual commerce due to technical gaps and resource challenges, what actionable steps can retailers take in 2024 to overcome these obstacles and align with the evolving shopping habits of consumers?

Retailers must first meet their customers where they are. If most of their customers do indeed prefer to shop online, it would be wise to make the first step towards engaging with them on social media, or implementing one extra payment method that consumers can use on the go – such as Apple Pay or Google Pay. 

We understand that for businesses, sometimes even taking small steps can be a big challenge, more so if they don’t already have the expertise on board. In the absence of relevant expertise across the whole customer journey, businesses can partner with an integrated platform such as ours to ensure a seamless transition towards contextual commerce. It bears noting that contextual commerce is only the latest evolution in the fast-moving payments space and early adoption can mitigate greater technical gaps down the line and jumpstart the business for new revenue streams. 

Considering the trends discussed, how can fintechs and merchants drive growth in 2024, and what specific opportunities or challenges should they be mindful of in adapting to the evolving payments landscape?

Payments is a huge lever of growth and will continue to be in 2024. In the evolving payment landscape, more businesses, in their pursuit for seamless and safe transactions, will begin to recognise payments as a gateway to capture more revenue and to help push for better customer journeys and operational efficiencies. In turn, there are many opportunities that businesses can tap into as they adapt to the landscape, from payment stack and authorisation rate, to returns and reconciliation. As a result, more stakeholders, from engineers to marketeers, will also play a role in boosting the payment methods as they tap into the payments data to ramp up on the approach and sales strategies of the merchants.