The most important digital payment trends in Switzerland in 2023
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2022 was another turbulent year. The Covid pandemic continued to ripple, the Russian-Ukrainian war broke out, the energy and commodity crisis came to a head, inflation skyrocketed, and consumer spending plummeted. The consequences of all this - and more - were felt in online retail: The boom caused by the lockdowns was over.
And yet this year has also taught us a lot, perhaps even more than we think. The difficult times have made e-commerce commerce more resilient: companies have become more flexible to stay competitive. And the future of payment is definitely digital.
In this article, the Swiss online payment service provider Payrexx explains current and future trends that will shape and influence digital payments in Switzerland in 2023. Online merchants should keep an eye on these.
Trend 1: Mobile payment and wallets become the new standard
Smartphone payments are becoming increasingly popular, and by 2023 most customers will be making payments using mobile payment applications such as Apple Pay, Google Pay, Paypal (in Switzerland mainly e-commerce), TWINT and Samsung Pay.
These applications offer a convenient and secure way to make payments and are becoming increasingly important, particularly in the area of e-commerce. Through the use of NFC technology (Near Field Communication, abbreviated NFC, is a short-range wireless technology that enables devices to communicate with each other when they are a short distance apart, around ten centimeters) and QR codes, customers can make contactless payments quickly and easily via smartphone or wearables. It will be essential for companies to offer these payment options.
Trend 2: Growth of QR code-based payment
In recent years, QR code-based payment has become more and more established, and in 2023 it will play an important role in the field of digital payments.
First of all, it is important to understand how QR code-based payment works. QR codes are two-dimensional barcodes that can be scanned using a smartphone camera. Once the QR code has been scanned, the user is automatically redirected to a payment page where he or she can complete the payment. This simple and convenient payment method offers many advantages for both customers and companies. For customers, it means they don't need a special payment card or hardware to make a payment. They can simply use their smartphone to scan the QR code and complete the payment. For businesses, the growth of QR code-based payments means that they can offer their clientele a fast and convenient payment method without having to install special hardware or payment terminals. This can be particularly beneficial for smaller businesses that cannot afford the cost of installing payment terminals.
One example of the growth of QR code-based payment is the Chinese online retailer Alibaba, which uses QR codes to enable a simple and convenient payment system for its customers. In Switzerland, QR codes are mainly known in connection with TWINT and the new Swiss QR bill. Payrexx has developed a simple QR code solution for SMEs that supports not only TWINT, but all relevant payment methods in Switzerland.
Trend 3: Increase in "buy now, pay later" (BNPL) payments, online but also in-store.
"Buy now, pay later" (BNPL) is a payment method that allows customers to make their purchases immediately but defer payment to a later date.
BNPL has gained popularity in recent years and has become a trend in digital payments worldwide. One of the main reasons for the growing popularity of BNPL is that it is particularly attractive to younger consumers who may have limited financial resources and find it difficult to pay for larger purchases at once. In addition, payment is very flexible and secure.
Finally, the COVID-19 pandemic has contributed to BNPL becoming a trend as many people have become more cautious about spending money due to economic uncertainties and restrictions on physical purchases, and are seeking alternative payment options such as BNPL that allow them to make their purchases without having to raise all the money at once.
In fact, the trend could also become permanently established in Switzerland as an attractive solution for the younger generations. The advantages for consumers include:
Payment only necessary after receipt and inspection of the goods. Refunds to the end customer are thus often not necessary.
Larger purchases are also possible without prior savings.
Processing via the apps of the payment service providers is intuitive and secure.
But there are also disadvantages and risks that should be aware of anyone who wants to make purchases with later payment in the future:
additional fees in case of late payment
Credit limit often non-transparent
Payment term not always adjustable
According to the Online Retailer Survey 2022 - a study by the E-Commerce Lab of the Zurich University of Applied Sciences (ZHAW), two-thirds of merchants who offer BNPL see advantages primarily in the acquisition of additional customers through a broader range of payment methods, as well as the higher conversion rate, the higher loyalty of existing customers and the constant availability of this payment method.
Ivan Schmid, CEO and founder of Payrexx, assumes that BNPL will also become established in the store and B2B sectors, as on the one hand more and more business processes are being digitized and on the other hand it enables companies (especially young start-ups) to improve their cash flow situation by postponing the payment of purchases to a later date.
In Switzerland, the following BNPL providers are predominantly known: Klarna, bob Finance, MF Group, SwissBilling, Byjuno and Ideal Payment. The offers of bob Finance, SwissBilling and Ideal Payment are available with Payrexx. In 2023, some new providers like BNPL from TWINT (in partnership with SwissBilling) and others will boost the topic.
Trend 4: Biometric authentication becomes the standard
The use of biometric authentication methods such as facial recognition, voice analysis, and fingerprint scanning will continue to grow, and by 2023, many companies will rely on these technologies to verify user accounts and make payment transactions more secure. The use of biometric data can prevent fraud and identity theft. For example, the online retailer Amazon already allows its customers to make a purchase directly using facial recognition.
Version 2 of 3-D Secure also uses biometric authentication in a new approach through a broader data spectrum. 3-D Secure is a security protocol for online payments developed by the major credit card companies. It serves to increase the security of online purchases by introducing an additional security level that is interposed for every online purchase.
Trend 5: Increase in instant payment solutions
The use of instant payment solutions will continue to grow and the technology will become a preferred payment method for many customers and businesses. Instant payment solutions allow payments to be made in real time and offer a fast and convenient alternative to traditional payment methods such as bank transfers.
By using instant payment solutions, payments can be processed within a few seconds and are therefore ideal for fast transactions, such as when purchasing products in the e-commerce sector. Another advantage of instant payment solutions is their high level of security. By using encrypted data transmissions and modern authentication methods such as biometric technologies, payments made using instant payment solutions are very secure.
In the area of instant payment, Switzerland is currently still far behind in international comparison. Nevertheless, there are some projects and efforts to develop and promote instant payment standards. More and more banks are already offering P2P payments in real time. Yapeal, for example. Payrexx will also offer a Swiss instant payment solution for the e-commerce sector in cooperation with banks.
Trend 6: Growth of fintech companies
The number of fintech companies offering innovative payment solutions will continue to grow and these companies will continue to play an important role in digital payments in 2023. Their focus on the needs of customers and their advanced technologies will make them an alternative to traditional banks.
There will therefore be greater cooperation between online payment providers and traditional financial service providers.
"The payments sector is on a growth trajectory, in part because small and medium-sized enterprises, public institutions and merchant:ins want to integrate payment and financing options into their operations"
said PwC fundraising expert Sherin Maruhn in an interview with Reuters news agency at the end of December 2022. Source: Cash article from December 18, 2022.
Trend 7: Spread of wearable payment technologies
Wearable payment technologies, such as smartwatches and fitness trackers, which can be used as a means of payment, are becoming increasingly widespread. These technologies enable users to make payments easily and conveniently via their wearable device by holding their device up to a payment terminal or authorizing their payment via a corresponding app. One example of such wearable payment technology is the Apple Watch. The Apple Watch can be connected to the iPhone and allows users to make payments via the Apple Pay app. Users can add their credit or debit card and then make payments in stores, restaurants or online by holding their Apple Watch up to the terminal or authorizing it via the app.
Another example is Garmin Pay (company headquarters in Schaffhausen) - a payment function available on most Garmin fitness trackers. Users can add their credit or debit card and then make payments in stores or online by holding their Garmin watch up to the terminal or authorizing their payment through the Garmin app. The proliferation of wearable payment technologies provides users with a convenient and secure way to make payments. These technologies also allow users to leave their physical wallets at home and still make payments, which can be especially beneficial for athletes and people on the go.
Trend 8: Increased focus on security
In the field of digital payments, a focus on security is increasingly important as more and more people shop and make payments online. The increasing use of technologies such as mobile payments and online banking also increases the risk of cyber attacks and data misuse.
To ensure the security of transactions and personal information, it is important to use secure payment methods and secure online payment providers, and to carry out regular security updates. The introduction of regulations and compliance standards also helps to improve security in the digital payment sector.
The PCI-DSS (Payment Card Industry Data Security Standard) Level-1 is an internationally recognized security standard developed by the Payment Card Industry Security Standards Council (PCI SSC). It specifies how companies must securely handle credit and debit cards to minimize the risk of data breaches and misuse. The PCI-DSS Level-1 standard is considered the highest level of security and sets strict requirements for managing security measures and protecting sensitive customer data. Companies that meet the PCI-DSS Level-1 standard can ensure that they offer their customers a secure payment process and protection of their personal data. The payment provider Payrexx annually complies with the latest PCI-DSS Level-1 standards at the highest security level.
Trend 9: Virtual credit cards
A virtual credit card is a type of electronic payment method that allows online purchases to be made without having a physical credit card. It is created via an online account (usually via smartphone app) with a credit card company or bank and can then be used for online payments. In addition to classic credit cards, there are also prepaid credit cards and debit cards (Debit Mastercard, Visa Debit) as virtual cards.
Virtual credit cards usually have a limited validity and a fixed amount that can be used for payments. They are more secure than traditional credit cards, as they cannot be stolen or lost and no personal information needs to be provided to use them.
The use of virtual credit cards will increase as it provides an easy and secure way to pay for online purchases. Important advantages of virtual credit cards are:
Flexibility: Virtual credit cards can be easily created and disabled, making them easier to manage and control.
Easy to set up: there is no paperwork or waiting time to get a virtual credit card as it can be set up online.
International usability: Virtual credit cards are accepted worldwide and can be easily used for online purchases and payments abroad.
Anonymity: Virtual credit cards allow payments to be made anonymously, as no personal information needs to be provided.
Learn more about accepting virtual credit cards with Payrexx. A good provider overview for consumers can be found at Moneyland .
Trend 10: Growing popularity of P2P payment services and platforms
Platforms that allow users to make payments directly to each other will continue to grow in popularity for the following reasons:
Convenience: P2P payment platforms allow users to send and receive payments directly from their smartphones or computers without the need for cash or checks.
Security: P2P payment platforms often use security assumptions such as encryption and secure authentication to protect users' financial information.
Wide acceptance: many P2P payment platforms are widely accepted and used by many people, making it easy to send and receive payments from others.
Cost: P2P payment platforms can be more cost-effective compared to traditional payment methods, as they often have lower or no fees.
Social payments allow users to donate money and send and receive money to friends and family directly through social networks such as Facebook and Instagram or payment services such as TWINT, Paypal or increasingly through neon banking apps.
This type of payment will probably become even more important in the future, especially among younger users.
Trend 11: Omnichannel payments
More and more customers are making purchases across multiple channels and devices. Omnichannel payments enable businesses to make their payment options available across all channels, improving the user experience and customer satisfaction. They also make it easier for customers to make payments whether they are shopping online or in a store, and enable payments to be tracked and managed across multiple devices. Omnichannel payments thus help to improve the customer experience and strengthen customer loyalty.
Trend 12: Increasing use of blockchain technology for micropayments
In recent years, the use of cryptocurrencies such as Bitcoin, Ethereum, and Litecoin as a means of payment has become more widespread, especially for micropayments, and in 2023 this trend will continue.
In light of current events, it's easy to forget that the crypto industry has continued to evolve significantly in recent months, regardless of market turmoil. With The Merge, the Ethereum ecosystem has seen a significant technological advancement that will improve the scalability and mass adoption of the Ethereum blockchain.
Blockchain technology has the potential to be used as the new standard for micropayments, as it enables fast, secure and low-cost transactions. With Centi Payment Services(Centi Ltd), there is an interesting project in Switzerland that enables micropayments in real time and at almost no cost.
Central bank digital currencies (CBDC) on the rise
CBDC (Central Bank Digital Currency) are digital currencies issued by central banks. They are often seen as a possible alternative to traditional currencies and could play an important role in digital payments in the future.
There are several reasons why CBDCs can be seen as a future opportunity in the field of digital payments. First, they are faster and less expensive than traditional payment methods because they can be transferred directly between two parties without the need for intermediaries. They can also serve as a means to promote financial inclusion by providing access to financial services for people without bank accounts or with poor credit ratings.
However, there are also some challenges to consider when implementing CBDCs. For example, there are privacy concerns as central banks may have access to financial transactions conducted with CBDCs. There are also issues in the context of regulation and dealing with cyber risks.
There are two major megatrends worldwide (megatrend transparency and megatrend globalization) that are moving the digital transformation. Nobody can defend against these trends - they are the "flow of history" of our society. In view of this, as well as the fact that new CBDC projects are published every day, the Swiss National Bank (SNB), as an innovative national bank in Central Europe, must follow suit.
Although SNB Governing Board member Andrea Maechler said at an online finance conference at Goethe University in Frankfurt on January 18, 2022, that the SNB was turning down a digital central bank currency (CBDC) for individuals to use widely for everyday transactions because it believed the risks outweighed the benefits, we at Payrexx are nevertheless convinced that a digital franc will be introduced in the foreseeable future.
More information on the topic:
Conclusion
Overall, 2023 will be an exciting year for the digital payments industry, with many new developments and innovations. We can look forward to seeing what new products and technologies the industry can expect in the coming months.
Disclaimer: The opinions expressed in this article regarding trends in the digital payment market reflect the personal opinions of Payrexx AG experts and may not be complete or accurate.
Create your own successes with Payrexx
Payrexx offers a simple and convenient payment solution that allows your customers to easily choose their preferred payment method and an optimized checkout to increase your conversion rate.
As one of the fastest growing payment service providers in German-speaking countries, we have made it our mission to provide our customers with the means to achieve greater success in e-commerce. With Payrexx, you can expect advanced security features, all major payment methods such as TWINT, Mastercard, VISA, PostFinance, Apple Pay, Google Pay, Samsung Pay, Paypal and QR-bill from a single source. As well as an intuitive dashboard with integrated e-commerce tools, and personalized care and support for all phases of business.
Learn more now about secure online payments with Payrexx.
