The first in our series, A Deeper Dive in Payments 2024 that further explores the four key focus areas outlined in our Future of Payment’s Top 10 List based on the ongoing evolution of the payments industry.
Focus Area #1: Industry/Vertical Specialization
The ongoing movement toward “specialization” will see payment solutions being tailored specifically for different industries, such as healthcare, retail, or hospitality, addressing their unique transactional and operational needs. It will be essential for payment organizations’ technology communities to continue to develop/enhance their API toolbox/integration protocols that cater to specific industry standards, ensuring compliance and seamless interoperability with various industry-specific systems. The trend towards specialized financial services tailored to specific industry sectors is expected to continue beyond 2024; but, the potential winners will emerge/solidify their positions over the coming year.
In response to competition from specialized providers (and exemplified by major financial institutions offering comprehensive banking and acceptance services), legacy/new providers are moving beyond traditional “vanilla” card/payment acceptance to offer custom solutions for different sectors. One dominant theme around industry/vertical specialization is personalization through data analytics/tools that are fundamental for building comprehensive customer profiles. Developing data strategies to offer personalized/relevant customer engagement is a primary business need and payments entities will continue to emphasize AI-powered personalization for customer assistance/credit risk evaluation as valuable near-term opportunities. Additionally, new value added services will continue to drive incremental growth far beyond the basic transaction processing economics.
There will continue to be an emphasis on growth opportunities in POS systems/ecosystems, integrating not just payment processing but also inventory management and customer relationship management (CRM) systems. The focus is on cloud computing and IoT integration in POS hardware, along with machine learning algorithms for data analytics and customer behavior insights. The point-of-sale (POS) terminal market is projected to grow significantly, with an estimated compound annual growth rate of 8.3% from 2023 to 2030. This resurgence is partly due to the recovery of retail traffic, which had plummeted during the COVID-19 pandemic (except for certain sectors) and created new technology solutions for POS acceptance (devices, software, integrated offerings, etc.)
To adapt to these trends, businesses should invest in new technologies and focus on customer-centric solutions. The overarching themes for 2024 emphasize speed, convenience, and security in payment processing.
