What to expect from payments in 2023

Starting 2023 one thing is clear, digital payments are more important than ever as a tool for businesses to thrive in a dynamic economic environment. Beyond that, this year brings with it a lot of uncertainty for merchants across all sectors. As merchants grapple with the global economic downturn, new innovations will take center stage, and finding partners that can offer them will be key. 

We asked two experts from our business—one based in Europe and the other in the US—what they expect to see in those markets. 

The European perspective:
Shaun Puckrin, VP Product Management, Checkout.com

In times of tough economic conditions, businesses always focus on where they can achieve efficiencies. 2023 will see merchants turn to payments to find those. Improving acceptance rates and taking a localized approach to payment preference will continue to be important. The best merchants will take an even more forensic approach, understanding that there are places of hidden treasures at every step of the payment journey. 

Using 3DS and exemptions appropriately will be one area where merchants can find improvements. The technology is now mature enough that compliance doesn’t need to be a box ticking obligatory exercise, but instead can deliver superior customer journeys. New capabilities such as delegating authority gives merchants more control to hone payment experiences to suit individual channels and customers. This is a big step change from the default measures that merchants have been used to, and expect them to take advantage. 

Many legacy payment providers will struggle to fully support merchants in navigating and enabling these opportunities, so I think we’ll see a move to PSPs that can offer depth and breadth of capabilities in a single platform, alongside ‘human’ expertise. In the UK especially, more merchants will be looking to jump on board the open banking train, so will need their PSP to support them with adoption.

2023 will also be the year where embedded finance will go mainstream. Again, it’ll be accelerated by merchants reacting to a tougher economy. Payments will evolve into money management, because merchants have more to gain by operating more at the intersection of money coming in and going out. 

The US perspective:
Zack Levine, VP North America, Checkout.com

Last year saw a lot of talk about the rise of new payment methods, but I think we’ll see established methods continuing to lead the way. Right up there will be digital wallets, notably Apple Pay and Google Pay, as customers increasingly reach for those first. They’ll become ‘must-haves’ in the list of payment options that merchants offer. While we’ll continue to see PayPal maintain its 10-15% market share. 

I think the big shift for 2023 will be more attitudinal. The tougher trading conditions we expect will see merchants think differently about payments. They are far more literate these days and understand there are big gains to be had from optimizing their payment operation. With pressure on sales and profits, there’ll be more focus to activate those gains. Part of that narrative will be about unlocking new revenue streams, such as through improving approval rates and exploring embedded payments. But I think more merchants will be looking at cost efficiencies. You can expect to see big merchants with large volumes insert themselves into their flow of funds to negotiate fee reductions and optimize interchange fees. Others will be looking at payment methods such as pinless debit, where they can save up to 80 basis points per transaction. Network tokens will also be on merchants’ radars.

More broadly, I think the drive to save on costs and unlock new revenue streams will lead to merchants simplifying their payments stacks and moving away from API layering. So we’ll see more adoption of solutions where gateway, processor and fraud prevention products are native. The customer will be the ultimate winner in this, with merchants able to build better payment experiences. It will also bring much needed transparency to a payments industry that has been too complex and opaque. In turn, we’ll see even more merchants engage with the full range of benefits that payments can bring.