The global payments industry is evolving at an unprecedented pace. The race is on to stay ahead of dramatic shifts in consumer preferences, regulatory changes, and technological innovations. A consistent theme across these advances is the use of modern payment solutions, including blockchain-enabled payments, to realize faster, more inclusive, and transparent customer experiences.
To help navigate this dynamic landscape, Ripple recently published its 2023 Trends in Regional Payments eBook, a comprehensive report of the latest trends shaping payment ecosystems worldwide. Delving into key insights by region—including North America, Asia, Africa, Latin America, and Europe—the eBook serves as a compass for businesses and institutions seeking to harness the power of innovative cross-border payment solutions.
Open Banking in North America
The financial landscape in North America is primed for a meaningful reshaping. New technologies enabling secure data exchange, interoperability, and faster payments are all contributing to the emergence of a more streamlined, efficient financial ecosystem.
As part of this, increased consumer demand is driving a surge in open banking adoption, with 71% of US consumers saying they’d rather make purchases or pay bills directly from their bank account. This shift has big names like Coinbase and Mastercard jumping on board, but it’s not all blue skies. Patchwork regulatory frameworks and educational initiatives may be hindering widespread adoption. Only 34% of US consumers using open banking technology are aware of it, and open banking regimes are delayed across the region.
At the same time, the launch of FedNow—the United States Federal Reserve’s instant payment service—and the ISO 20022 messaging standard are helping modernized payment systems and financial services to gain traction. The report notes several industry observers and participants predicting FedNow will drive a greater rollout of instant payment offerings. These will be enabled by ISO 20022 and its ability to facilitate more detailed payment communications, straight-through processing, and greater processing accuracy.
Instant Payments in Asia Pacific
Home to 10 out of 13 of the most profitable digital-only banks worldwide, Asia Pacific is the epicenter of digital finance. Innovative technologies, ubiquitous smartphone access, favorable regulatory frameworks, and a culture rooted in customer-centricity have all made the region a global leader in financial innovation with better cross-border and domestic payment capabilities, access to real-time settlement, and opportunities for financial inclusion.
This enthusiastic “payments first” approach is seen across the region. From QR code-based real-time payment systems in Singapore and Thailand to the Unified Payments Interface in India, which just surpassed 10 billion processed transactions, Asia Pacific has shown a great appetite for experimentation and adoption. Even Japan, which operates the world’s oldest payments infrastructure, recently announced a “Cashless Vision” to increase digital transactions to 40% by 2027.
However, the industry isn’t bulletproof. Privacy and security concerns, macroeconomic volatility, and a lack of predictable consumer behavior could hamper adoption of new payment rails. With 75% of consumers saying they would withdraw support of a brand in the case of a data breach, close collaboration between national governments and private companies to deploy solutions like crypto that help address these concerns will be crucial for continued success.
Mobile Payments in Africa
In Africa, the convergence of digital payments and mobile-first transformation is revolutionizing financial inclusion. Growing adoption trends across multiple technology fronts are being driven by limited access to broader financial services due to cost barriers, lack of identifying documentation, few physical bank branches, and cash-heavy economies.
As a result, the use of digital payments in the region is expanding well beyond the global average, accounting for 70% of the world’s $1 trillion mobile money value and nearly half of registered mobile money accounts. Crypto-powered remittance payments are also gaining momentum as migrants take advantage of the technology to support their families. In fact, inbound remittance payments in Africa surged to more than $100 billion last year.
Despite challenges such as interoperability issues and security concerns, crypto-enabled payments are poised to enhance accessibility and affordability across the region. The report highlights fintechs’ opportunity to piggyback on this success and enable successful adoption.
Crypto in Latin America
Latin America has undergone a major digital transformation, fueled by funded fintechs and progressive governments. A region-wide shift away from cash, unsettling inflationary issues and persistent challenges with the existing banking system have all pushed consumers towards digital payments and crypto-powered solutions. As a result, cashless transactions are expected to grow 52% between now and 2025, and then 48% thereafter until 2030.
Still, high fees and low interoperability from a fragmented payments landscape remain the norm. Any major shift toward crypto in the region is likely to be met with resistance from influential sector incumbents who view the technology as a threat, slowing down innovations, swaying regulatory rulings, and curbing interoperability.
But with Latin Americans representing the biggest adopters of alternative payment methods, regulators are working hard to overcome these issues and answer demand with real-time payment options. Digital banks also have a role to play, offering improved availability and education to help bring digital payments into the mainstream. Central Bank Digital Currencies (CBDCs) are a growing tool for governments seeking to advance inclusion and better weather macroeconomic uncertainty, with Brazil, Argentina, Colombia, and Ecuador all ranking within the top 20 countries globally for adoption of digital assets.
Instant Payments in Europe
Instant payments continue to gain traction across Europe, driven by increased consumer and business expectations. Initiatives like the European Central Bank’s exploration of a digital euro and the UK’s Faster Payments System signal progress toward a more resilient, competitive, and innovative landscape. New proposals from the European Commission also promise to reduce fraud, improve open banking functions, and harmonize administrative rules for over 270 e-money institutions and 800 payment institutions, which should in turn stimulate innovation and competition in the financial sector.
Still, there is work to be done. One in three EU payment service providers do not offer instant euro payments and up to 70 million payment accounts in the euro area do not allow holders to send and receive instant payments. Other challenges like conflicting interests, misalignment, and a lack of critical mass participants also continue to drag on the European financial landscape.
However, there is confidence that innovations driven by the region’s technological lead and digital-first approach, such as a growing embrace of CBDCs and a single EU payment area allowing citizens and businesses to easily make cross-border payments, give it a strong competitive edge.
The Future of Payments
The common themes of innovation and evolution across the global payments landscape indicate a new era of streamlined payment experiences, characterized by speed, inclusivity, and transparency. As ecosystem players navigate this transformed landscape, the imperative is clear: embrace innovation, adapt to change, and pioneer solutions that meet the changing needs of businesses and individuals.
Take a deeper dive into global payments trends by downloading the eBook.
