A leading global payment network says digital identity should be a top priority within the payments ecosystem. Discover has released results from its comprehensive study of the payments ecosystem, which provide key insights into the motivations driving the industry.
Along with 451 Research of S&P Global Market Intelligence, Discover Global Network surveyed thousands of decision-makers across fintech, and merchants and consumers to understand their priorities.
Markets surveyed include the U.S., UK, Canada, Mexico, Brazil, Ecuador, Germany, Spain, India, Japan, China/Hong Kong, Singapore, and South Africa.
Overall, 72 percent are “very” or “somewhat” interested in using digital identity to reduce friction in healthcare interactions, and two-thirds are interested in using digital ID for online payments, such as with ecommerce retailers, roughly the same as for government services.
“The fintech ecosystem is having a transformative impact on our everyday lives. We’re seeing a lot of adoption and maturation of financial services from consumers and businesses,” says Jennifer Cruz, SVP of U.S. Acceptance and Credit Issuing at Discover Global Network.
“That said, fintechs walk a tightrope between consumers who expect instant and convenient payment experiences and merchants that demand seamless integration and security,” she continued.
Key findings from the 2024 Payments State of the Union survey
Consumer usage indicates instant payments are a prime opportunity, but security is key.
The survey indicates that when deciding to use an emerging payment experience, 51 percent of consumers see the security of their personal information as an important factor; followed by ease of use (33 percent) and convenience (30 percent).
Seven in ten consumers say they are willing to adapt to additional security steps for log in or checkout.
Mastercard has been adopting passkeys for payments to improve convenience for consumers while keeping their personal information more secure than passwords.
Being empowered with better fraud controls (38 percent) and the ability to make/receive instant payments (37 percent) are the leading areas of improvement consumers want to see from financial institutions.
Merchants address slow payment transfers and fraud
Merchants say Improving fraud prevention processes (75 percent) and providing a wide variety of payment options for consumers (75 percent) are important to the success of their business.
Tap to Pay on mobile (93 percent), instant payments (92 percent) and digital identity (88 percent) are the technologies merchants anticipate providing the most value to their business. The report says that prioritizing the development and implementation of digital identity solutions helps to meet the expectations of both consumer expectations and venture capitalists.
Reducing fraud and chargebacks was identified as a top business payment priority in the next two years by 38 percent of merchants.
Payment fraud (34 percent), new account fraud (27 percent), friendly fraud (26 percent), which consists of customers disputing legitimate purchases, and bot attacks (26 percent) have increased the most in the last two years among merchants.
Fintechs track demands of consumers and merchants
The survey also shows that fintechs see consumers (49 percent) and merchants (39 percent) as a growth opportunity in the next five years.
Fraud prevention (92 percent), payment data security (92 percent), commercial/B2B payments (90 percent), and instant payments (93 percent) are important payment initiatives for fintechs.
Instant payments are an important emerging payment use case to the business of 93 percent of fintechs.
Business-to-business payments (66 percent), business-to-consumer payments (57 percent), and consumer-to-business (55 percent) are the instant payments use cases fintechs are most interested in pursuing.
Artificial intelligence (44 percent) is the topic fintechs are most interested in deepening their expertise in and (50 percent) of fintechs want to leverage artificial intelligence to pursue fraud prevention.
Jordan McKee, research director at 451 Research, which is a part of S&P Global, commented: “The third installment of this year’s survey revealed significant opportunities for fintechs to address the needs of both consumer and merchant audiences.”
“Contrary to expectations, their priorities aligned more closely than anticipated, unveiling a clear path to current and future growth,” he continued.
“Overall, the findings emphasize that instant payments and fraud prevention are key areas where fintechs should concentrate their efforts to drive success.”
For more on the Future of Fintech: Payments State of the Union 2024 Study, you can download the full report here.
Article Topics
biometric payments | digital identity | Discover | fintech | fraud prevention | identity verification | market report
