Worldline is one of a whole host of leading global payments firms at the epicentre of financial innovation and development, and therefore one of few best positioned to analyse the year that is about to conclude.
With the rise of AI driving consumer fears around a new wave of fraud and the introduction of several regulations and standards leaving payments companies scrambling to prepare, Worldline will also be looking at 2025 as another year of major change and consolidation of 2024’s disruption.
So who better to ask regarding how the payments landscape has evolved this year, as well as forecasting next year, than David Daly, Head of Worldline Discovery Hub.
Daly speaks at length of the development of AI and account-to-account payments this year, as well as a breakdown of regulations coming into effect in 2025 and why financial companies must inform their merchant partners of these incoming changes.
Payment Expert: Firstly David, from your experience, what have been some of the payment methods used by merchant service providers that have dramatically increased in 2024 as opposed to other years?
David Daly: Overall, 2024 saw a continuation of trends already evident in the market. Globally, a continued displacement of cash towards digital payments. In most regions, card payments remain dominant and in some regions, the continued uptick of alternative payment means – most notably UPI in India and Pix in Brazil.
I would say this is leading to a continued increase in the complexity of the payments landscape with, especially global merchants, having to cater for a very diverse set of payment options.
Payment Expert: How have merchants’ payment requirements changed over the course of the past year?
David Daly: Whilst not entirely new, something that I think has accelerated in 2024 is the number of new channels that merchants can use to reach their customers. Whether it’s a livestream or post on a social media platform, a message exchange on platforms like WhatsApp, in-car via the dashboard, or even immersive shopping experiences with technologies like augmented reality.
And, just as we have seen already with in-store, online and mobile, providing an omnichannel experience across all these channels is essential – meaning that a consumer can choose the one they prefer and move easily between them.
And then, of course, the payment experience also has to be optimised in each case as well. A convenient way to pay when driving your car does not look the same as a frictionless in-store experience.
Payment Expert: Is there an increased focus from merchants and non-financial entities to adopt embedded finance options and what benefits does this provide them?
David Daly: The merchants I speak to are primarily focused on how to get people into their stores (physical and online) and how to convert them into paying customers.
With this aim in mind, being able to quickly provide credit to spread the cost of a purchase can bring benefits for the merchant as a way of boosting conversions. And of course, selling other services (like insurance) can also provide an additional revenue stream – but I see that merchants will only consider this if it is implemented in a way that will not distract from the main purchasing decision.
Payment Expert: There has also been greater adoption of account-to-account payments across the industry this year. Why are A2A payments proving to be popular amongst financial services and do you expect this to continue next year?
David Daly: I think what we have seen is that Open Banking by itself has not created an attractive payment means for consumers. Having said that, what we have seen is that it can provide the “behind-the-scenes” payment rails, provided that other important aspects (user experience, dispute management, etc.) are also taken care of.
It is one of the reasons we launched Bank Transfer by Worldline – to provide merchants with a simple way to accept A2A payments online. This innovative solution, based on our Open Banking assets, particularly caters to businesses that handle high-value transactions, such as those in specialty retail, the public sector and B2B payments. And I think it is offers like this that are driving wider adoption.
Payment Expert: With several regulatory and standards coming into effect next year, how pivotal is it for the financial services industry to inform merchants of these changes and what impact could this have if they are uninformed?
David Daly: There are many regulatory changes that will bring new opportunities and also some challenges for merchants. Worldline plays a very active role in the payments regulatory landscape to make sure we are always well positioned to support our customers in this regard.
Some key topics I would call out are:
The Digital Markets Act opens new opportunities for businesses to offer their own payment solutions in 2025. We expect to see digital businesses break out of the old paradigm and develop their own in-app payments for consumers to enhance UX and streamline transactions.
The eIDAS 2.0 regulation will equip EU citizens with a digital identity that they can use across the EU. This will make it possible to provide a streamlined buying experience in cases where identification is required today, for example, for the sale of age restricted goods, or providing your driving license when hiring a car.
In the slightly more distant future, PSD3 will bring changes to Strong Customer Authentication (SCA) requirements, providing more flexibility without compromising trust and security. Merchants will therefore be able to provide a more frictionless payment experience in many cases.
In addition, it is worth noting that there will be a continued push by governments everywhere on topics relating to sustainability and, in particular, reducing carbon emissions.
Worldline sponsored a study in 2024 that examined the most effective ways to achieve a reduction in the carbon footprint of payment acceptance. One key finding was that digital payments are significantly less polluting than the use of cash. However, there are also some important ways in which digital payments can be made even more environmentally friendly.
Firstly, avoiding the printing of physical receipts could lead to a 43% reduction in CO2 emissions for in-store payments. Secondly, switching to virtual cards (and therefore avoiding the production of the plastic bank card), could provide a 34% reduction.
Payment Expert: In the same vein, 2025 looks to be another big year for AI. How essential is it for AI to become quickly regulated in order for financial services to find new ways to accelerate the customer journey?
David Daly: At Worldline we have been using AI for many years to bring real additional value to our clients. To give just one example, for fraud detection, we have developed an AI scoring engine that incorporates over 100 detectors to analyse device behaviour and user patterns. It enables us 30% better fraud prevention compared to using traditional methods based solely on manually configured rules.
But it is, of course, essential that AI is used in an ethical way. And there are still many nuanced dilemmas that have to be solved. For example, on the one hand, AI has the potential to make financial services more inclusive (for example, by providing explanations of financial products and services in a way that can be more easily understood by a broader range of people).
However, if people start to make decisions based on this advice that can impact their financial wellbeing, then how can we ensure the advice is trustworthy? And who is accountable if the advice was wrong or poorly explained?
Payment Expert: How has Worldline’s Metaverse Shopping Hub transformed the customer experience this year and what are your thoughts on the metaverse as a whole heading into next year?
David Daly: The Worldline Metaverse Mall has given merchants a terrific insight into how they can use virtual environments to reach and engage with their customers. What I think is really fascinating, is how the technology is continuing to evolve and how it is being used.
We conducted a consumer survey last year that found that many consumers, across all generations, are expecting brands to provide these new immersive shopping experiences.
For Virtual Reality, I think we are still at an early stage. Headsets are still expensive, heavy and not so easy to use – and most people don’t own one. It’s maybe comparable to the internet in the mid-90s. But I am convinced that over time they will become cheaper, lighter and easier to use, and one day we will probably all own one.
Then, just like it now seems strange to imagine internet shopping as a niche activity, it will seem strange to feel that way about virtual reality. Much more immediately accessible is Augmented Reality as this can be accessed via a standard smartphone. And here we are already seeing many retailers using this, for example, to show how products like a sofa or kitchen table might look in your own home.
Payment Expert: Lastly, and thank you for your time David, could you share your bold prediction for 2025 on what will take the financial industry by storm?
David Daly: It’s difficult to make a bold prediction for 2025, as anything that is going to have a big impact in 2025 will have had to see some traction already.
I do believe that digital payments are increasingly being seen by governments as essential infrastructure. With many people carrying less cash, and some even leaving their house with just their phone, it’s becoming a bigger problem if digital payments stop working for any reason.
Add to this a geo-political environment that is becoming less certain and more complex, and I think we might see some interesting or unexpected requirements for how payments are managed – and this could impact banks, PSPs, merchants and even consumers.
