1. Full steam ahead for digital wallets
The traditional wallet could soon be a thing of the past. Even before the roll-out of Wero, let’s take a look at digital wallets, or e-wallets, with their many functions. Convenient, secure and free, this solution is one of the most serious competitors to the bank card in the omnichannel age. Payment by e-wallet makes remote and in-store payments easier and more fluid.
Accessible from a computer, smartphone or tablet, the digital wallet simply requires you to download an application, create an account and enter your personal details and bank card number. With limited circulation of bank details (these are no longer communicated to the merchant), the e-wallet effectively reduces the risk of fraud and protects personal data thanks to encryption software. E-wallets are offered by banks, payment service providers such as PayPal or Paylib and telephone operators.
In 2023, it was the most popular online payment method, accounting for 50% of global e-commerce spending. This trend is set to become even more pronounced now that e-wallets include loyalty cards: by 2027, 61% of e-commerce spending is expected to be on digital and mobile wallets. (Sources: The Global Payments Report 2024)
KEY FIGURES: By 2025, the digital wallet will account for 52.5% of the value of global e-commerce transactions.
(FIS Global Payments Report 2023)
2. Instant payment: click and it’s done!
By 2025, when the new Payment Services Directive (PSD3) comes into force, all banks will be required to offer instant transfers at no extra charge. This will reduce the current minimum of 24 hours for SEPA transfers to a matter of seconds. It’s a revolution that’s also based on open banking technology. Since 2018, this has already enabled standard instant transfers free of charge via a link or QR code. How? Thanks to APIs, the connectors that use bank details in third-party environments (e-commerce sites, accounting software, etc.). The result: a smooth, fully secure user experience. But not all banks yet have the necessary technological infrastructure, and most charge fees for instant transfers, which is holding back their growth.
According to the "Observatoire pour la sécurité des moyens de paiement" (only in french), the use of instant transfers will continue to grow, rising by 95% between 2022 and 2023. In terms of volume, it is even 138%. The introduction of PSD3 should mark the advent of this efficient and totally secure payment solution between bank accounts opened within the SEPA zone (the member countries of the European Union, the member countries of the European Economic Area, as well as Switzerland, Andorra, Monaco, San Marino and the Vatican).
4. Split payments: flexibility that works for you
With inflation so high, consumers are looking for ways to balance their budgets or deal with unforeseen circumstances without fear of going into overdraft in the middle of the month. This challenge is well understood by retailers, more and more of whom are offering Buy Now Pay Later (BNPL) solutions to avoid losing sales. In other words, the customer can defer payment for 15 or 30 days after placing the order or spread the payment over several monthly instalments. Today, 43% of Europeans use BNPL solutions (+22% in one year). A genuine revolution in the world of short-term financing, BNPL is ideally suited to e-commerce and B2B transactions, taking the pressure off companies’ cash flow. For e-tailers, this is an ideal solution for increasing the average basket and conversion rates, while optimising the customer experience.
The fast-growing BNPL market can be broken down into several types of players: traditional consumer credit operators, traditional banking institutions and fintech pure players with specific BNPL offerings. FLOA, the French leader in customer-focused split payments and user experience (UX), offers split payments, mini-credits and bank cards. The aim is to offer customers greater autonomy, control, flexibility and transparency in their payment transactions. Since the end of 2023, the wholly owned subsidiary of BNP Paribas, which operates in France, Spain, Belgium, Italy and Portugal, has been taking things a step further with Buy Now Pay Whenever, a new application that separates payment from the time of purchase, so you can manage your budget at any time.
However, discussions are underway at European level to regulate new types of credit such as BNPL. The aim is to inform consumers, protect them and prevent any abusive practices that could lead to over-indebtedness. In October 2023, the European Council adopted a directive on consumer credit that now includes small loans of less than €200 and BNPL. Already mobilised to prevent any abusive practices that could lead to over-indebtedness, the banks will have to provide information on the total cost of the payment in instalments, consult the payment incident file before any agreement is made and introduce a 14-day cooling-off period for this type of credit. A more protective framework for a market that is now reaching maturity, particularly in France, where 70% of the population use payment facilities, 44% of them on a recurring basis.
5. Virtual cards: consumers really love them
Whether they’re used to replace or complement physical bank cards, virtual cards are extremely flexible. They are suitable for both online and in-store contactless payment (provided they have been registered on your e-wallet beforehand), for both one-off and recurring use. They also guarantee the same level of security as a traditional payment card. They can even be instantly locked remotely in the event of theft or doubt about a transaction. According to a study by Juniper Research, the number of virtual card transactions will reach $175 billion worldwide by 2028. This explosion has been accelerated by their increasing integration with existing digital wallets, such as Apple Pay and Google Pay.
Virtual cards are also widely used for integrating BNPL payment modules: generated when the purchase is validated for an amount equal to the total of the transaction, they enable the merchant to be paid immediately, while the BNPL solution provider recovers the sums due as and when the customer pays. Finally, at a time when plastic is under fire for its harmful effects on the environment, the virtual card offers an excellent alternative.
Virtual cards, so what are we talking about?
In concrete terms, virtual cards, or Virtual Card Numbers (VCNs), are digital cards available via a web or mobile portal that can be configured for a single use, for a given period of time or for a given amount. Like a physical card, they have a number, an expiry date and a security code. Only financial institutions and fintechs are authorised to issue this type of payment solution, which is so popular with companies, who see it as an ideal, secure way of rationalising their expenditure, particularly employee expenses (fuel, tolls, train and plane tickets, recharging electric vehicles, etc.).
With a virtual card, employees gain greater autonomy, and the organisation gains in efficiency: no more need to advance business expenses, print out expense reports or wait for them to be reimbursed... Payment limits remain entirely flexible, however, as do the brands for which expenses are incurred.
6. A new stage in innovation with biometrics
In 2020, BNP Paribas made history by launching the first contactless card with fingerprint recognition in France. You no longer need to enter your PIN, whatever the amount of the transaction: simply place your finger on the fingerprint reader, then hold the card up to the payment terminal.
Since then, work on payment solutions using facial recognition, handprints (the network of veins) and iris scans has been well under way. Clearly, biometrics, which consists of identifying a person by their physical or behavioural characteristics, has a bright future ahead of it, for two simple reasons: its security (the data is strictly personal and cannot be falsified) and its ease of use. There are still obstacles to be overcome in terms of the cost of this technology and its reliability, as well as issues relating to the security and storage of personal data.
7. Fully tokenised card networks
2024 will see major upheavals for the major bank card networks: Visa, Mastercard, Amex and CB will be introducing automatic card updates based on tokenisation. This security technique replaces sensitive payment information such as card numbers with a set of unique random characters known as tokens. This means that security is preserved, as the original information on the cards is not used. If fraud is attempted, it will not be possible to use the token to carry out unauthorised transactions, as it contains no sensitive information and is not a valid means of payment. This reduces the risk of data leaks and fraud.
Once expired, the physical card will be updated and only the last four digits and the expiry date will be changed. By October 2024, French issuers will have to issue 100% of tokens on cards in circulation, which will make it easier to make recurring or one-click payments.
So-called tokenised transactions are set to grow by 58% worldwide, according to a study by Juniper Research. By strengthening security and streamlining the management of payment information, they offer significant benefits to all businesses that handle sensitive payment data, such as online merchants, subscription-based service providers, but also physical points of sale and marketplaces.
