By Tommaso Jacopo Ulissi - Head of Strategy, Transformation and Capital Allocation at Nexi Group
New generations (Gen Z) are super digital. They do not know the analogue world and they are not looking back. Younger people prefer convenient mobile-enabled payments, driven by a broad variety of wallets that are providing value on top of the payment.
These payments often offer a quick “tap and go” experience and increasingly in 2024, more payments happen invisibly, without the friction of a tap or indeed any manual initiation of the payment. Instead, payments will take place in the background within the terms that you have agreed by identifying you as a person, such as a voice command, or scanning the registration plate of your car.
Already during next year, we expect to see more merchant stores, that are cashier less where the payment process is fully automated e.g. based on biometrics.
Invisible, frictionless payments
New generations (Gen Z) are super digital. They do not know the analogue world and they are not looking back. Younger people prefer convenient mobile-enabled payments, driven by a broad variety of wallets that are providing value on top of the payment. These payments often offer a quick “tap and go” experience and increasingly in 2024, more payments happen invisibly, without the friction of a tap or indeed any manual initiation of the payment. Instead, payments will take place in the background within the terms that you have agreed by identifying you as a person, such as a voice command, or scanning the registration plate of your car. Already during next year, we expect to see more merchant stores, that are cashier less where the payment process is fully automated e.g. based on biometrics.
What’s next for wallets?
Latest European regulation and the already growing penetration of available national solutions and instant payment solutions is pushing adoption of A2A and wallets throughout Europe. More digital wallets will emerge, driven by merchants, banks, and big tech players, making payments via mobile simpler and more convenient, providing more choice and value to the consumer.
Apple Pay and Google Pay may be the best-known examples today, but more payment wallets are on the way in 2024:
- The European Payments Initiative (EPI) will launch “wero”, its ground-breaking digital wallet solution. This is designed to deliver a European digital payment solution that meets evolving payment needs and provides a seamless, user-friendly payment experience to consumers and merchants across the continent.
"wero" will use an account-to-account infrastructure to enable faster payment flows with value-added services, including person-to-person (P2P) transactions, online shopping, loyalty programs and more, as it aims to fill gaps in the European payment ecosystem to become the digital wallet of choice.
- Secondly, following the investigatory phase led by the European Central Bank (ECB) into how a digital Euro might work in practice, we can expect to see significant progress towards the creation of a digital wallet for Central Bank Digital Currencies (CBDCs).
A digital euro wallet, once set up with the relevant public authority, will ultimately provide the public with a digital form of cash. Consumers could then put money into their wallet via a linked bank account or through a cash deposit, after which they can start making payments both face-to-face and online. It’s critical that this payment system is as customer centric as possible: that is, it’s user friendly, trustworthy and has no barriers to entry or use.
Verticalized, embedded payments
In 2024, payments will become increasingly more embedded into combined software offerings often tailored to a certain vertical allowing smaller merchants to access a one-stop-shop of payment solutions and value-added services beyond the mere payment. Here the ISV’s can be strong partners to payment provides as they combine all the business management software into one solution, also including payment services, covering all merchant needs.
The choice this offers for simple and quick integrations enables vertical-specific merchants to access and embed a platform for tailored digital payment solutions potentially also including merchant financing as well as BNPL options for consumers. For example, a restaurant manager may wish to offer payment via iPad devices, through which they can also book tables and take orders; or an electrician may utilise SoftPOS technology on an Android phone so that they can accept customer payments on premise via their existing mobile phone.
AI will create hyper-personalised solutions
Machine learning and the digitalisation of payments are inextricably linked. Automation enabled by smart algorithms has helped identify and reduce both errors and fraud. ML has also helped us analyse huge amounts of payment data to enable better modelling of future payment scenarios.
But from 2024, Artificial Intelligence will progressively be more integrated into business processes and solutions. AI will have tremendous impact for companies allowing them to optimize a host of different internal processes. For merchants, you could imagine them having an AI assistant, that can effectively help the business leverage data analytics, setting up webstores, setting up chatbots for consumers, and building value-adding-services quite autonomously. It will also integrate more deeply into the payment mix, using generative capabilities to create hyper-personalised solutions that will enhance the shopper experience, while assessing the risk profile of every purchase in real time and reducing the number of cumbersome checks, if possible.
One potential use case is using generative AI to enable customers to find what they want much faster and letting them easily choose how they want to pay. For example, a customer could type, “I’m hosting an Italian-themed dinner party tonight, what can I cook for my guests?” and the AI tool can suggest a recipe, select the ingredients, and choose an accompanying wine, adding it automatically to the shopper’s basket. The customer could then ask to pay via their mobile wallet, and the AI sends the payment request to their phone for approval.
This is just one example of an exciting world of more hyper personalized possibilities that AI opens in the payment world. As the technology improves to become more accurate and trustworthy, previously unthought of shopping experiences will be at the fingertips of every shopper in the digital age.
