The Year Payments Embraced Both Innovation and Tradition

As the payments industry moves beyond the pandemic's initial disruption, a new era emerges where accelerated digital changes become normalized while familiar trends resurface. The defining factor across all payment evolution? Customer experience.

Customer Experience Drives Payment Strategy

The pandemic fundamentally shifted how merchants view payments—from operational necessity to competitive advantage.

"Payments have become an increasingly strategic area of focus for merchants as it's something that's driving differentiation within their business. You're really seeing the customer experience as king in payments today."

Jordan McKee, Principal Analyst at 451 Research

This strategic shift occurs against a backdrop of significant growth, with global card spending projected to increase by 10.5% in 2022, led by continued debit card gains over credit cards.¹

Infrastructure Modernization Takes Center Stage

The pandemic exposed critical weaknesses in outdated payment systems, forcing merchants to confront infrastructure limitations that couldn't support e-commerce demand. This wake-up call drives modernization efforts throughout 2022.

"Two-thirds (67%) of merchants strongly agree that modern payment infrastructure will have a highly transformative impact on their business over the next three years."²

Asia leads this strategic thinking, with 84% of Asia-based respondents viewing payments as highly strategic.³ The urgency is justified—banks risk losing 10% to 15% of retail payments revenue ($100-150 billion globally) if they fail to modernize.⁴

Modern infrastructure includes cloud-based wallets like EMVCo Secure Remote Commerce with Click to Pay functionality, and Tap on Mobile solutions that enable smartphone payment acceptance without additional hardware.

Cards-as-a-Service Democratizes Payment Innovation

The introduction of Cards-as-a-Service (CaaS) represents a fundamental industry shift, democratizing card issuance beyond traditional financial institutions.

"Cards-as-a-Service companies have democratized card issuance and empower almost any company or person to build and launch a card program."

David Shipper, Strategic Advisor at Aite-Novarica Group

This democratization pressures traditional banks as digital payments growth, service commoditization, and regulatory actions converge to empower consumers in unprecedented ways.

Omnichannel Evolution Expands Beyond Traditional Channels

Omnichannel commerce continues evolving beyond in-store, web, and mobile to include social commerce venues as the next frontier.

"We expect to see omnichannel grow beyond in-store, web, and mobile, and begin to include social commerce venues as well. See social commerce develop into a lucrative sales channel for all types of merchants, as shoppers flock to what is becoming the digital version of the '90s shopping mall."

Don Apgar, Director of the Merchant Services Practice at Mercator Advisory Group

The numbers support this expansion: non-store e-commerce represents the fastest-growing retail segment, expected to grow by $81.8 billion to nearly $600 billion in the U.S. in 2022.⁵ Among smaller businesses, 60% of those under $10 million in sales accept web orders, with 42% offering mobile ordering capabilities.⁵

Buy Now, Pay Later Becomes Mainstream

BNPL solutions have fundamentally altered consumer expectations and behavior, showing no signs of slowing.

"76% of merchants surveyed in the U.S. said they accept the BNPL payment method compared with 60% in the UK."⁷

The demographic driving this growth is clear: 51% of Gen Z and 42% of Millennial respondents have used BNPL at least once in the past six months.⁷ This popularity forces traditional banks to develop their own BNPL offerings, creating new intersections between alternative credit and traditional banking services.

Cryptocurrency Gains Industry Attention

While not expected to dominate 2022, cryptocurrency represents an unmistakable industry theme requiring serious attention.

"We expect to see payments companies with venture arms injecting more capital into the cryptocurrency ecosystem and incumbents padding their headcount with cryptocurrency talent. Any payments company that has not begun to take this market seriously by the end of the year is likely to be at a significant disadvantage."

Jordan McKee, 451 Research

The potential benefits extend globally—if widely adopted, cryptocurrency could establish a universal payment network independent of local fiat currencies.⁶

The Convergence of Multiple Trends

Three secular trends converge to create massive disruption in payment acceptance: rapid contactless technology adoption, global migration to digital payments, and API availability that simplifies new technology implementation. While COVID-19 accelerated these changes, the transformation began before 2020 and continues reshaping the industry landscape.

"2022 represents a major opportunity to establish new payment practices that stick for consumers."

Ryan Tuttle, Euromonitor International

The year ahead promises to solidify pandemic-driven changes while introducing new innovations that will define the next era of global payments.