Payment players redirect their focus from user acquisition to profitability, betting on creating applications that extend the 360° user experience. The trend in payments for the coming year aims to match growth with profitability. FinTech is always looking to stay ahead of the curve, and Jason Simon, as a subject matter expert, adds some of the trends in the space that may be evident in 2023.
Players will increasingly start to move away from their single-product models to build concentrated service ecosystems ranging from credit and merchant solutions to real-time payments. With consolidated growth in recent years, the expectation now is to design applications that digitize the daily use of cash on all fronts.
Thus, the challenge ahead is to build a value proposition that solves the distortions – of preference or regulation – in the different Latin American countries. “We all have opportunities to continue working on being the one-stop shop for payments,” says Simon.
For the expert, the dynamics for participants in the payments industry have changed. They are now immersed in healthy and sustainable portfolio strategies that focus not only on discounts, cashback and loyalty points, but on experiences, products and solving the obstacles in users’ financial lives.
“Many platforms aim to achieve easy finance and solve it through an application with embedded solutions or partnerships that cooperate in this process of expanding the user experience,” asserts Simon. Related comments were exposed at the event “Digital payments 2023: What’s new and trending.” Different specialists like Simon shared their expectations and focal points of product and functionality development for the coming year.
The first frontier of exploration (or exploitation) for next year will be personal microcredits, under the Buy Now, Pay Later (BNPL) format.
According to Simon, the region is “fertile ground” for continuing to grant this type of loan, above all “as an opportunity to continue adding new customers through a value proposal that discourages informal credit in exchange for a closer (at the point of sale), flexible and secure option.
On the other hand, real-time payments have come to challenge the industry, assures Simon, due to the need for interaction between traditional players, FinTechs and regulators. The challenge, moreover, lies in the infrastructure related to all the “wiring” that comes behind payment methods, but which allows “bringing simpler products, such as QR, to the forefront.”
He also adds that these initiatives will be encouraging simpler uses than the cards themselves, whose complexity lies not only in the cost, but also in the POS terminals that must be installed in stores. Now, public initiatives such as CoDi in Mexico, Pix in Brazil, Transferencias 3.0 in Argentina and other systems planned for next year in Colombia and Peru are expected to enjoy equivalent incentives for all participants in terms of monetization.
“It’s a challenge that CoDi has had for participants to say it’s zero cost,” Simon added. “With that, it’s very difficult to make that infrastructure and connection expense. Otherwise I’m going to be able to monetize it. However, there is an opportunity in terms of reviewing and understanding the right incentives.”
For the expert, the sense of regulation should be to move towards an approach that unifies experiences and facilitates the payment process for the user. While some countries maintain closed interoperable payment loops, the idea is that the regulatory approach to this practice will shift towards openness by next year to benefit everyone.
For Simon, the relationship with merchants (from an acquiring point of view) is moving beyond payments. He is turning to offering more ecosystem solutions that, while they start by processing payments to the merchant, can then leverage other products or services.