‘BNPL fraudsters aren’t far behind’: Payments predictions for 2022 (Part 3)

This is the third part of a three-part series on the most important upcoming trends in payments. Part 1 covers embedded finance, cross-border payments and on-demand pay, while part 2 looks at the digitization of B2B payments, the growth of stablecoins, and the virtual card boom. Finally, part 3 explores digital wallets, P2P payments, and cybersecurity. For more updates on all things payments, subscribe to our Payments newsletter here.

The payments industry has experienced some major shifts this year, catapulted by the pandemic-induced move towards digitization. With 2022 almost here, we asked 22 experts from across the payments spectrum to predict what trends we can expect from the industry in the coming year. 

A number of themes stood out as particularly relevant for 2022. Here’s what the experts say you should look out for as we head into the new year.

Digital wallets and P2P payments will keep growing

Digital wallets and P2P payment platforms will further increase in popularity as younger consumers spur the development of new payment methods through their desire for simple, on-demand options.

“Over one-third of teens today don’t have a traditional bank account, instead relying on P2P apps and wallets to hold their funds, and I anticipate that number will further increase as new payment methods become available. These methods will continue to shape the online shopping experience, and will ultimately change the in-store shopping experience as we know it.”

- Brian Dammeir, president – North America at Adyen

“Digital wallets will continue making waves next year, particularly on the B2C front. Consumers are shifting from card-based payments to account and QR code-based transactions, loading multiple cards into their mobile wallet. It’s becoming increasingly common for consumers to leave their credit cards behind and instead make most payments through a digital wallet.”

- Karim Ben-Jaafar, president & COO at Beanworks

“After the pandemic-accelerated migration to digital banking platforms, in 2021 retail cardholders arrived at the one-third threshold (32%) for tethering to mobile payment services via their primary credit card. Further, data show that usage of services like PayPal and Apple Pay improves the credit card experience, and so the card issuer can reap some of these related satisfaction benefits. We expect that in 2022, consumers will increase the usage of these payment tools as they become more comfortable with mobile transactions of all types.

Increasingly, consumers and businesses are using P2P platforms like Zelle and Venmo to transfer funds. In our recent survey data, 38% of bank customers reported using a P2P service to transfer funds in the past three months. As with mobile wallets, this usage level already represents more than a fringe of activity. As consumers and businesses alike increasingly move toward digital platforms across financial services functions, a healthy growth trend in the use of P2P services will certainly continue in 2022.”

- John Cabell, director of banking and payments intelligence at J.D. Power

“A recent Wave report found that when presented with the option to pay by credit card, bank payment or Apple Pay on an invoice, over 1 in 4 small business customers (27%) chose Apple Pay. Without the manual input required for credit card payments on an invoice, digital wallets create a frictionless experience. As consumers look for ease and speed when it comes to payments, we can expect to see increased adoption of digital wallets in the new year.”

- David Axler, vp/gm – banking and books at Wave

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Cybersecurity will become central; passwords will become secondary

Cybercrime has shot up since the start of the pandemic. With an increasing number of users performing online transactions, cybercriminals have plenty of possible targets, particularly when it comes to payment services like BNPL. Protecting users from cybercrime has become more complex than before, causing many companies to consider ways to eliminate the need for passwords.

“Relying on individuals to remember countless passwords across several different platforms is confusing and time-consuming. This means that users often end up keeping passwords that are easy to guess or even the same across all websites. As a result, cybercriminals are having an easier time hacking into websites through guessing or attempting the same password on different login pages.

With a heavier focus on cybersecurity, payment service providers are investing time and money into authentication methods or scanning systems that would eliminate the need for passwords. This is something we can expect to see introduced in 2022. Microsoft has paved the way by allowing all their users to go without passwords through their customized authentication app.

Additionally, QR codes have been around for many years now, but their widespread use for authenticating payments may finally start to happen.”

- Kristin Uptain, marketing manager at Redde Payments

“BNPL exploded in 2021: 56% of US consumers reported they have used it, generating $100 billion in sales. While offering BNPL may seem like a no-brainer for ecommerce merchants looking to engage a new swath of consumers, they need to know that fraudsters aren’t far behind.

In the year ahead, I expect BNPL to become an increasingly popular target for fraudsters. From false account signups to account takeover attacks using stolen personal information from the Dark Web, fraudsters will leverage loopholes in the application process and take advantage of the surge in BNPL payments to steal items ranging from fast food to big ticket items like electronics and furniture, leaving the vendor and the consumer to pay the price. 

Crypto exchanges also have a big authentication problem. On the one hand, exchanges, digital wallets and fintechs are seeing an 850% increase in account takeover attacks, driven largely by poor consumer password hygiene. On the other hand, would-be traders are seeking workarounds to bypass KYC checks, with reasons ranging from tax evasion, to feeling that ID checks go against the ethos of crypto trading, to minors seeking access to trade illegally. 

In 2022, we’ll see crypto exchanges increasingly seek out biometric technology as an alternative to passwords and as a means to limit KYC checks to securely verify and authenticate users, while combating fraud on their platforms. Biometric authentication – especially when untethered to underlying passwords – provides a better user experience and is more aligned with the preferences of privacy-conscious traders.”

- Brittany Allen, trust and safety architect at Sift

“Multi-Factor Authentication (MFA) will prevail in 2022 and will continue to be pushed by merchants. MFA has three types of authentication factors: biometric identification, device in-use, and password. Just like opening your smartphone with your finger or facial recognition, consumers have been using this mode of authentication in their day-to-day lives, and will soon be able to make everyday purchases with biometric capabilities as well.

Next year, consumers will have the ability to set up multiple layers of security when performing transactions in real-time. For example, when using a credit card at the local store, consumers will instantaneously receive a message on their smartphone to confirm their purchase. By offering multiple layers of security, these enhanced measures drastically reduce the risk of fraud, stolen pins and fraudulent purchases.”

- Jeff Kump, head of payments at CSG Forte