After a whirlwind 2023, we've arrived in 2024. But there's no time to stop and take a breath. This is payments. There's always something to improve, automate, and optimize. 

Here's what five members of the Primer team have to say about what's top of mind for them as we start 2024.

Navigating fraud challenges, embracing network tokens, and adopting localized APMs

Theo Spyrides, Head of Payments, Primer

2024 will undoubtedly be another big year for payments—they always seem to be, don't they? As I look at the trends currently unfolding, three are likely to have a significant impact on merchants this year:

• The need for increasingly sophisticated fraud prevention strategies. 

• The continued adoption of network tokens.

• The further growth in market-specific/local alternative payment methods and card networks. 

Fraud prevention strategies take center stage

Fraud prevention continues to be a huge challenge for merchants. The frequency and sophistication of attacks from fraudsters are increasing, with bad actors using generative AI tools to create realistic deep fakes and launch effective phishing attacks. 

Merchants are forecasted to experience payment fraud worth more than $362 billion worldwide between 2023 and 2028, according to Juniper Research.

Last year, many merchants tightened their risk rules to combat this issue. However, there's a question looming: are these stringent fraud rules causing more harm than good? 

That's the question every business needs to ask in 2024 to ensure they're not stopping legitimate customers from completing their transactions. There are many advanced tools to help merchants strike this balance and create more sophisticated fraud detection and prevention strategies. Take a look at this blog to learn more.

Network tokens reach the next level 

Network tokens gained significant attention in 2023 as they allow merchants to enhance performance, curb fraud, and reduce processing costs. Nevertheless, incomplete issuer adoption hindered widespread usage.

But things are expected to shift in 2024. The schemes have pledged that nearly all issuers will be on board with network tokens within the next 18 to 24 months. That means for merchants, 2024 will mark the time to move beyond discussions and utilize network tokens across their payment flows, reaping the benefits of reduced fraud and improved authorization rates.

To learn more about network tokens, check out our blog, which answers five common questions.

Growth of local APMs and card networks 

Pix, Brazil's payment network, breached the 3 billion monthly transaction mark in just two years. It's an impressive feat and again underscores that payment preferences remain highly localized—and evolve fast. 

This trend holds more significance now than ever before. There's a notable shift towards 'nationalized payments,' both at the payment method and card network levels. 

In recent years, several countries have launched or proposed a domestic card scheme driven by concerns about domestic payment sovereignty and increasing fees from international card schemes. For example, the UK Payments Report recently advocated for the UK to establish a card network and reduce dependence on Visa and Mastercard.

The disparate payments landscape will continue to be essential for merchants to navigate and stay on top of to ensure their customers continue to process payments seamlessly with their preferred payment methods.

The next evolution of checkout: social commerce, AR/VR, and beyond

Jeffrey Lin, Solutions Engineering, Primer

Looking ahead to 2024, I'm intrigued to see how companies will continue to innovate their checkout experiences to boost conversion and nurture brand loyalty. 

In particular, I expect more businesses to explore social commerce, especially in a post-pandemic world, where younger, tech-savvy Gen Z-ers have increasingly greater spending power. Projections suggest global social commerce sales will hit $3 trillion by 2026! It's already massively popular across Asia. And in some markets, like China, over 80% of online consumers use social networks for shopping. 

Yet Western brands have been slower in their adoption of social commerce. But it's just a matter of time before that changes. After all, these digital platforms are where their customers spend most of their time—recent data reveals that 60% of TikTok users spend more than 10 hours on the app each week.

By tapping into social networks, brands can seamlessly align their content strategy with their sales and payment strategy, ultimately generating more revenue and fostering brand loyalty.

There are other exciting opportunities for brands beyond social commerce. For instance, Mercedes enables drivers to purchase upgrades directly from their car's entertainment system. In China, this extends to ordering food deliveries upon reaching a destination. These are just another example of how checkout can now occur anywhere.

And what about VR and AR? We can already use our phones to see how furniture may look in our homes. Granted, the rendering is a little cartoonish sometimes. Still, the technology is improving rapidly, and it's not unfeasible to imagine a world where you can try on clothes in AR and make a purchase right there and then, just as if you were in a store. 

The potential for brands to evolve and optimize their checkout experiences is vast. However, many brands have significant ground to cover before fully capitalizing on these opportunities. The ecommerce landscape is rife with poor checkout experiences, with many overlooking fundamental aspects like optimizing the checkout process for mobile devices.

Merchants must address these shortcomings before anything else; customers will no longer tolerate a poor checkout experience. But that's not enough—once these issues are addressed, it's time for businesses to think beyond the traditional commerce channels and consider ways to use the checkout to make their brand stand out from the crowd. At the same time, they must also start investing in payment infrastructure that offers the agility to facilitate transactions through a diverse range of channels.

Prioritizing customer experience, optimizing performance, and managing costs

Kevin Lee, Head of Partnerships, Primer

Returning to basics is the theme I suspect will dominate in 2024.

In the past half-decade, we've witnessed a whirlwind of payment innovation, especially at the front end, with a rapid influx of new payment methods.

This innovation has opened up vast opportunities for merchants to tailor their payment offerings to meet their customers' unique needs, potentially gaining a competitive edge. However, few have realized this due to the additional complexity all this brought on merchants accepting online payments. 

As a consequence, the role of payments in many organizations has become centered around troubleshooting and maintaining the spaghetti bowl of disparate and interoperable integrations that form their payment stack. It's unsustainable, and it's holding merchants back from unlocking the potential of their payments. 

Our CEO, Gab, highlighted this in his year-end post, discussing how businesses are waking up to the fact that their operations rely on outdated legacy systems unfit for today's digital economy. Without investing in modern payment infrastructure, there's a considerable risk of payments adversely impacting the bottom line and hindering business objectives—if it's not already. 

This is where the return to basics comes into play. Leading merchants will take a holistic view of their payment processes and make adjustments to:

Create a frictionless customer experience

Global merchants need to think locally and create a hyper-relevant payment experience. But this doesn't only mean providing customers with relevant payment options at the checkout. What happens after the customer clicks pay is also critical. Merchants should consider factors such as when and where they present a 3DS challenge, how they utilize fraud screening rules to provide adequate protection while minimizing the risk of false declines, and the steps they should take if a payment isn't successfully authorized. 

Optimizing for performance

The payments performance equation is a tough one to crack. And it's made even more challenging because many merchants still have little visibility into their payment data. Consequently, merchants have little to no ability to analyze the performance of their payment providers and uncover the insights that can shed light on the steps they need to take to move closer to their business goals. Merchants demanding access to this data and ensuring they can make apples-for-apples comparisons will be a big topic of conversation in 2024. 

See how Primer Observability Pro gives merchants more insights into their payment data.

Optimizing for costs

Costs are always front of mind for merchants—and in today's challenging economic climate, managing them has become mission-critical. I suspect merchants renegotiating with their providers will be more bullish than usual to ensure they're getting favorable economics. But remember, optimizing for cost continues after the contract is signed. Steps to take include:

• Managing payment volume to meet optimal pricing tiers.

• Utilizing local acquiring.

• Exploring new payment options, such as account-to-account payments. 

Achieving these goals relies on merchants choosing the right payment partners. In 2024, successful merchants need diverse partners to enable top-notch service delivery. These partners should offer advanced technology, equitable terms, local market proficiency, and guidance through the intricacies of local payments while uncovering optimization opportunities across performance, cost, and risk.

Continuing on the path to sustainable growth

Kailash Madam, Head of Sales, Primer

Over the past year or so, we've seen many merchants pivot from a "growth at all costs" approach to a "sustainable growth approach." It's an interesting development, and, in my opinion, is the correct way of doing business as it'll help most avoid the ugly downsides that occur when the market turns. 

This shift in mindset from merchants has had interesting implications on how they view payments. Businesses have recognized that optimized, high-performing payments that bridge effectively to the rest of the commerce experience are central to delivering sustainable growth. 

The issue is many businesses now focusing on their payments have uncovered the technical complexity that sits under the hood. Companies running a multi-processor and payment method payment setup manage various integrations that are typically interoperable. 

For businesses hoping to scale rapidly and go to market as soon as possible, the manual integration of new payment methods and processors isn't the most efficient route to sustainable growth. 

What does this mean for 2024?

I suspect we'll see more merchants take the hard decision to rip out their legacy payments stack and strike relationships with partners, allowing them to build a highly sophisticated payment infrastructure without taking on any technical debt and complexity. By doing so, many businesses will change their focus from maintaining payment to using payments to efficiently grow revenues, reduce cost, and use payments as a springboard to drive greater efficiencies and effectiveness across the organization. 

See our case studies to learn how the world's most innovative businesses use Primer to make payments a lever for growth.

The year of Open Banking, maybe

Ellie Jaggs, Customer Success Manager, Primer

A lot is happening in the payments ecosystem at the moment, but one of the most significant topics for me is Open Banking. The big question for 2024: will this be the year it finally goes mainstream?

Let's be honest; Open Banking hasn't quite hit the home run many expected yet. Even in the UK, a front-runner in this space, only about 11% of the population actively embraces Open Banking, per the October 2023 Open Banking Impact Report.

Why the slow uptake? Consumers lack a compelling incentive to transition from card payments to Open Banking. Consequently, despite acknowledging its benefits, businesses remain hesitant to invest in offering Open Banking as a  payment method.

Classic chicken and egg scenario, right?

However, 2024 could potentially mark a turning point. The UK's Joint Regulatory Oversight Committee is gearing up for the next phase of Open Banking. Additionally, forthcoming PSD3 regulations within the EU aim to enhance the functionality of Open Banking, making it more appealing to consumers.

The developments in the United States are also noteworthy. There's an ongoing discourse about introducing open banking regulations similar to those in Europe.

The recent launch of FedNow, the new real-time bank payment rails in the US, lays the groundwork for implementing open banking. Moreover, the Consumer Financial Protection Bureau is considering pushing for 'open banking-like' rules in the coming year.

Adding to the mix is the 'Credit Card Competition Act.' If enacted, it could reshape the credit card rewards system in the US. These rewards are among the biggest inhibitors to using bank-based payment methods.  

Irrespective of the timeline, there's an inevitability of Open Banking entering the mainstream. So whether it happens in 2024, 2025, or beyond, what's critical is that merchants are prepared and have a flexible payment infrastructure that allows them to swiftly integrate Open Banking or any emerging payment method once the opportunity arises.

Starting the year as we mean to go on

2024 will be a very busy year for all of us here at Primer as we continue building the world's leading Unified Payment Infrastructure to allow merchants to unlock and unleash their payment potential with Primer.

Be sure to follow us on LinkedIn to see our latest updates and get actionable insights into how to make payments a growth lever for your business.