2024 Key Trends in Merchant Processing You Need to Know About
The merchant processing industry continues to undergo significant transformations in today’s rapidly evolving digital landscape. In 2024— both businesses and consumers will experience new trends that promise to make payments more secure/ efficient and convenient. Understanding these new trends will help you increase revenue while maintaining secure, efficient and convenient forms of payment connections for your customers. Here are the key trends shaping the industry this year:
Surge in Contactless Payments
Contactless payments, which gained momentum during the COVID-19 pandemic have now become a staple in the payment processing industry. Consumers prefer the convenience and speed of tapping their cards or using mobile wallets over traditional methods such as swiping or inserting cards for EMV approval. This surge is driven by the need for faster transactions, reduced physical contact and enhanced security. Businesses are increasingly adopting contactless payment solutions to meet customer expectations and improve the overall shopping experience.
Rise of Instant Peer-to-Peer (P2P) Payments
The popularity of peer-to-peer payment apps like Zelle/ Venmo and Cash App has skyrocketed, making them integral to modern financial transactions. In 2024— these platforms are expected to gain even more traction as consumers and businesses alike embrace the convenience of instant money transfers. However— a noteworthy change is the introduction of new IRS regulations requiring the issuance of 1099-K forms for transactions exceeding $600 annually. This change affects both individuals and businesses— necessitating careful tracking of transactions to ensure compliance with tax regulations.
Enhanced Data Security
Data security remains a paramount concern in the merchant processing industry. PCI Compliance, mandated since December 2004, plays a crucial role in ensuring that merchants protect their customers’ sensitive information. Unfortunately, many merchants still lack a clear understanding of PCI Compliance & the severe consequences of non-compliance. Failure to complete the PCI Compliance Certification within 90 days of account opening can result in hefty monthly fines up to $100 000 in breach fines, chargeback fees & potential account closure due to excessive chargebacks. Completing the certification, however offers significant benefits including breach coverage (e.g. TSYS offers $100 000), proper training on data handling & lower monthly fees compared to annual penalties. PCI Compliance is particularly critical for online businesses that handle large volumes of sensitive customer data.
Biometric Payment Authentication
Biometric authentication methods are gaining traction in the payment processing industry. Industry leaders like MasterCard are pioneering solutions such as “Selfie Pay” which allows customers to use facial recognition for transaction authorization. This biometric checkout program enhances security by ensuring that the person making the payment is the legitimate cardholder. Biometric authentication not only provides a seamless & secure payment experience but also helps reduce fraud & unauthorized transactions— benefiting both merchants & consumers.
Personalized Payment Experiences
Consumers increasingly seek personalized payment options that cater to their unique needs & preferences. The “Buy Now—Pay Later” (BNPL) model is a prime example of this trend. BNPL options allow customers to make purchases and pay for them in installments— providing greater financial flexibility. This payment model has proven to boost sales & improve customer satisfaction by offering more tailored & convenient payment plans. As more programs enter the market— businesses can expect to see a wider range of personalized payment solutions that enhance the customer experience & drive higher conversion rates.
Expansion of Cross-Border Payments
Globalization & e-commerce growth have fueled the need for efficient cross-border payment solutions. In 2024— major credit card brands are working on improving cross-border payment systems to facilitate international transactions. These advancements aim to reduce friction in currency exchanges/ lower transaction costs & speed up payment processing times. For businesses— this means easier access to international markets, enabling them to reach a broader customer base & increase revenue. Enhanced cross-border payment solutions also benefit consumers by providing a seamless shopping experience when purchasing from overseas merchants.
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