Skip to main content Skip to footer
Cognizant Blog

The payment landscape is transforming rapidly, shaped by changing consumer demands, technology innovation, regulation, and the drive for sustainability.

Change brings both opportunities and organising challenges for payment institutions – issuers, acquirers, payment networks, and banks running wholesale and retail payments. It’s time for these institutions to evolve beyond transactions: to scale fast or risk falling behind, double down on efficiency, and be bold in innovating for the future.

Cognizant’s 2024 cards and payments outlook outlines six priority areas shaping the payments landscape in the next 12 months. For each, we assess the key developments underway, and steps industry players can take to ready themselves.

1. Scaling new payment methods  

Innovation in payments races ahead as alternate methods emerge, from BNPL to pan-European digital wallets like Wero. Open banking enables pay-by-bank for e-commerce, retail, and P2P. The barrage of new initiatives, from real-time to instant payments, accelerates the industry's transformation.

And newer payment rails continue to develop. For example, decentralised stores of value, like central bank digital currencies (CBDCs), will gain more traction in 2024.

Meanwhile, the private sector will venture deeper into cryptocurrency payments, non-fungible tokens (NFTs) to tokenise assets, and programmable payments via blockchain. JP Morgan, for instance, recently launched  Programmable Payments, allowing businesses to define complex payment triggers and releases based on smart contract functionality. Others will follow in 2024.

For payment institutions, the challenge is prioritising where to place innovation bets, given stretched technology budgets. Success will come from identifying the payment methods that best align with their strategy and customers.

Banks must also solve the emerging “checkout clutter” issue, where consumers face too many payment options that hamper adoption. Deploying machine learning models to study customer pain points and behaviours will remove unnecessary friction.

Cloud point-of-sale systems and tap-to-pay functionality will lower the cost of acceptance – as merchants don’t need to rent a device from their provider – and offer customers more value added products and services. Seamless – or even invisible – checkout experiences from the likes of Amazon Go and Uber that minimise payment friction will raise consumer expectations.

2. Advancing cross-border payments

Advances in cross-border payments and remittances are starting to address historical challenges with speed, transparency, and access. G20 endorsement to enhance the cross-border payment roadmap is accelerating progress. And new regulations and standards, such as ISO 20022 (read more here), are paving the way for faster and more efficient payments.

Consider, that over 60 countries worldwide have already deployed faster payments infrastructure that allows people to send money within the country. Yet cross-border transactions remain a challenge. Nexus is a project from BIS that aims to connect multiple instant payment systems, and enable transactions within 60 seconds. At present, BIS is building prototypes and pilots to test in the South East Asian market.

Meanwhile, partnerships between fintech disruptors and incumbents are also on the rise. Players like Visa, Wise, and Euronet – among many other examples – are disrupting cross-border transactions through acquisitions.

Alongside Project Nexus, initiatives like SWIFT’s CBDC experiment lab, Project Dunbar for multi-CBDC payments, and ISO 20022 adoption will drive cross-border initiatives.

Indeed, Visa’s acquisition of Currencycloud in late 2021 signalled a continuation of its intent to enable payments through its “network of networks” across geographies, schemes, and rails. Other players want a piece of the pie, though. That leaders like Visa and Mastercard are acquiring and partnering fintech means that innovation in this space will be supercharged.

Meanwhile, SWIFT continues to dominate interbank settlements, though many smaller fintechs are emerging as alternate providers. SWIFT’s roadmap to adopt ISO 20022 for standardising cross-border messaging is gathering pace ahead of its 2025 deadline. ISO 20022 provides richer data flows, enabling more transparent and seamless international payments. As new payment rails emerge, interoperability based on an alignment of standards like ISO 20022 will be essential for preventing further fragmentation. Many banks still have significant modernisation efforts underway here.

3. Leveraging new technology

From artificial intelligence (AI) to blockchain and biometrics, technology advances are rapidly changing market dynamics and creating opportunities for early movers to outpace competitors.

Many institutions are waking up to AI and Gen AI’s potential for streamlining compliance, credit decisions, customer service, personalisation and more. Cloud migration is also gathering speed, as players shift more infrastructure off legacy data centres to enable greater scalability and innovation.  

In security, biometrics adoption is rising across the value chain from on-boarding, authentication to customer servicing to help authenticate customers and reduce fraud. For example, in September 2023, Mercedes announced it had introduced native in-car payments, using advanced fingerprint technology.

While blockchain has faced hype, declining development costs and advances like more energy-efficient consensus mechanisms are driving new decentralised applications like programmable business-to-business (B2B) payments and tokenisation of assets. Similarly, the technology powering the Internet of Things (IoT) and robotic process automation (RPA) has matured and should not be dismissed despite excitement dying. 

As ever, the challenge lies in developing scalable business cases and moving from proofs of concept to production-grade deployments that seamlessly integrate with legacy systems. Those who can clear this hurdle reap the rewards.

4. Enabling sustainable payments

Sustainability is rising on the agenda, as payments institutions assess their environmental impact and leverage their platforms to encourage responsible spending.  

There are many areas for attention, from digitisation initiatives to reduce paper receipts and needless plastic cards to minimising energy usage, such as card payment terminals left needlessly on overnight.  

Initiatives to incentivise consumers for sustainable purchasing, while also working with merchants to promote eco-friendly products and practices will likely gain traction. Participants are awarded loyalty points and other benefits for choosing sustainable options, from recyclable packaging to energy reductions. Visa launched sustainability-focused payment solutions in Asia Pacific in 2022, and the market can expect this trend to gain speed.

There are other win-wins to be realised. Consider in 2018, there were over 11 billion paper receipts printed. Transitioning transactions to digital will reduce paper receipts and plastic, with e-receipts and virtual cards being the near future. By 2024, blockchain networks will slash emissions using energy-efficient protocols, and carbon footprint calculators will provide transparency into the environmental impact of payments.

As younger demographics vote ever more consciously with their wallets, branding, and credibility around sustainability will provide a competitive edge. Moreover, institutions that get ahead of the curve can align profit with purpose.

5. Safeguarding digital payments 

As payment activity continues transitioning online, security and compliance will remain top priorities for preserving trust. A proactive approach to governance, risk, and compliance – with regulations tightening around cryptocurrencies, Authorised Push Payment (APP) fraud, and CDBCs – is business critical.

Certainly, emerging techniques for identity fraud – like AI deepfakes – raise the stakes further. Banks need to leverage AI security solutions capable of outsmarting increasingly sophisticated attacks. Anti-fraud systems based on machine learning algorithms can also help match humans in detecting suspicious behaviour that enables proactive response. In 2024, expect to see the emergence of FinCrime solutions that better handle identity fraud.

Increased collaboration and information sharing across the industry will be key to reducing risk. Banks should embrace anonymised mechanisms that enable collective response while respecting competitive boundaries.  

Payment leaders must also enable greater transparency and control for customers over how their data is used through user-friendly interfaces. Banks progressing on core platform modernisation will be best placed to provide a seamless and secure customer experience.

Additionally, Payment Systems Regulator (PSR) has launched two market reviews into card fees – one on scheme and processing fees and one on cross-border interchange fees. Notably, Visa and MasterCard accounted for around 98% of all UK debit and credit card payments in 2021, both by volume and value. The findings are expected to be available in 2024.

In the near term, regulation around how banks reimburse APP scams is set to allocate more liability to receiving banks that fail to freeze suspicious transfers. Rules are still taking shape, given concerns that some banks feel penalised for having better fraud detection capabilities at this stage.

Although timelines remain long-term, the Bank of England is expected to ramp up planning for a potential digital pound. Compared to the UK, though, countries like China and India will be further along in piloting CBDCs domestically. However, as other nations push ahead, industry pressure may build faster progress. Interoperability with other major CBDC projects will also be vital.

Ultimately, advancing UK payment speed, transparency, and access will require continued collaboration between government, regulators and industry players throughout the payments chain.  

Key takeaways

As the pace of change across payments continues accelerating, financial institutions face dual imperatives – delivering against today’s priorities around security, reliability and efficiency, while also innovating for the future.  

Prioritisation will be vital, aligning innovation investments closely with strategic goals and customer needs. Partnerships can help pool resources on emerging infrastructure like CBDCs. Modernising core technology stacks remains essential, despite short-term margin pressures.

As consumer expectations around payment convenience continue rising, significant growth opportunities exist for those harnessing technology effectively while preserving trust through solid safeguards and risk management.  

Cards and payments is fast becoming one of financial services’ most dynamic sectors – and 2024 will see key foundations laid for the future across payment rails, infrastructure, and customer experience. Institutions that can balance delivery today while innovating for tomorrow will shape the payment landscape for the next generation.

For more insights, explore our Outlook 2024 series – which includes Banking and Capital Markets – visit the Banking section of our website or contact us. 


Cognizant Nordics

Our experts are contributing with exciting insights about what is going on within technology and innovation.



In focus
Banking
Banking
In focus image

Latest blog posts

Related posts