Top 3 payment innovations to drive revenue

Innovate or die. Adapt, evolve and thrive. Two core principles of nature that also apply to the world of business. Developments in digital technology are strengthening profit margins, improving cybersecurity, and automating compliance procedures. It’s your job to look for the latest inventions to enhance your tech stack. And it’s our job to build them.

As the complexity of digital payments increases, our engineers devise new ways to solve problems. They’re hungry to enhance payment processing technologies to meet your needs better—improving acceptance rates, increasing cost efficiency, and reducing fraud. 

But we know we’re not working alone, and the context of payments industry innovations inspires us to keep driving forward. In a market that’s forecast to grow at a CAGR of 10.5% into 2029, it’s no wonder payments technology is drawing such focus.

This article overviews the most impactful developments in payment technology today.

1. AI-powered payment routing

Artificial intelligence may seem like a new innovation, but payments engineers have been deploying its capabilities for over a decade. Intelligent payment routing ensures your traffic has a higher chance of succeeding, with Checkout.com’s technology making adjustments automatically (within your predefined rules and boundaries).

Our flagship AI-powered payment routing product is called Intelligent Acceptance. It runs on our custom-built machine learning platform. This is not a large language model (LLM), like ChatGPT and Google Bard (now Gemini), which simply churns out the next word based on the probability of aligning with its training data. While LLMs mimic human conversation, facts are not always a priority and “hallucinations” (falsehoods) are a feature of the technology, not a bug.

By contrast, Checkout.com uses machine learning to power a sophisticated decision-making engine that calculates the best optimizations to apply to your payment traffic. It reacts to real-time data, continually making better decisions as the network delivers responses from issuers, schemes, and risk-assessment tools. Even a new merchant will benefit from the accumulated knowledge of Intelligent Acceptance because billions inform it of data points transmitted securely within our payment systems.

Machine-automated compliance

The benefit of machine learning is its ability to make objective decisions based on enormous amounts of data. If a human were in charge of routing payments manually, making the right decisions on Network Tokens, ISO 8583 messaging, Strong Customer Authentication (SCA), and all the other factors at play would be complicated. Each payment is unique, and the format requires adjustments according to the scheme, issuer, security, and compliance requirements of the country in which it’s processed.

Complexity only multiplies when it comes to cross-border transactions. As customers expect to buy anything, anytime, anywhere, your payment systems must be “always on” and handle international payments. While it’s challenging to keep on top of domestic regulation, there are regional rules like PSD3 and PSR to stay abreast of. Not to mention broader industry standards such as PCI DSS. And that’s before we even get into currency exchange calculations, sales tax, import duties, and different interchange rates for cross-border transactions.

Only a global payment services provider (PSP) can manage that information overload. As an acquirer, payment processor, issuer, and payment gateway provider, Checkout.com can help merchants expand their payment networks internationally.

2. Adaptable payment gateway integrations

Compliance is always a top priority. If you’re not compliant, there’s no good reason to operate. Ensuring compliant data handling is one of the most complex parts of a payment gateway integration. Another difficulty is adding new payment methods as your business scales. You can move mountains to prepare your inventory, set up suppliers, and lock in logistics, only to find your payment integration needs… three more weeks. That’s trading time you can’t afford to lose.

With a traditional full API integration of your payment gateway, adding a new payment method capability would require considerable manual effort. That could mean a week of work—or more—every time you want to add a new digital wallet, payment app, or credit card type.

Limited payment options fuel cart abandonment

Competitive businesses need modern financial solutions. When it’s so easy to buy anything online – it’s just as easy to buy from your competitor. So, you need to convert your buyers at checkout as easily as possible. Payments are critical to this: 40% of online shoppers abandoned a purchase because of issues with payment options (such as not being able to use their preferred payment method). The same study found payment options were the second most common reason for cart abandonment (after delivery options). With cart abandonment rates steadily increasing over time, something has to change.

Localized payment experiences improve conversion

Flow is a ready-to-go payment gateway integration which you install into your website – once – and activate new payment methods whenever you need them. It’s an innovation that speeds the deployment of your revenue strategy, assisting with your expansion into new markets. It’s fully compliant with all payment industry requirements, technical standards, and international regulations. This ensures you don’t face liability for handling sensitive payment data.

Flow creates a local payment experience by displaying the most relevant payment methods for customers on your checkout page (based on their IP address). For instance, a customer in the Netherlands will see iDeal as one of the available payment methods, with the basket priced in Euros and on-screen text in Dutch. Local currency, language, and the ability to pay using a preferred method increase customer trust in your brand. Naturally, that leads to better conversion rates and stronger repeat purchasing.

3. Mobile payments

As global penetration of smartphones and internet access proliferates, the handheld device has become the next-generation point-of-sale in your pocket. It says that the average person can now walk into a store and pay at the cash register with the same digital wallet used to fund their Spotify subscription. Payments have been electronic since the Twentieth Century. In the Twenty-First Century, payments are digital – and increasingly mobile-first.

Biometric authentication for one-click checkout

The all-in-one-ness of the mobile device underpins several exciting innovations in secure payments. The selfie camera that unlocks your iPhone can now authenticate your online payment. The fingerprint scanner that opens up your tablet apps? That’s the same technology powering one-click checkout. The technique is so convenient there have even been some attempts to replicate it in physical payment cards. Where I am in London, I commonly see credit cards pushed inside commuters’ phone cases. It’s obvious: everybody wants to combine their payment methods with their smartphone. Digital wallets are the software integration that achieves this. 

Digital wallet adoption set to increase

This convenience is fueling an increase in mobile payment popularity. Indeed, ecommerce payments with digital wallets (including mobile money) are predicted to achieve a 14.9% CAGR between 2023 and 2027. Merchants selling online take note: digital wallets’ share of worldwide ecommerce transaction value is projected to grow steadily, reaching 61% in 2027 (up from 50% in 2023). By contrast, ecommerce credit card payments are predicted to shrink by 0.7% in the same period. 

It won’t surprise you that saving time is the number one reason for shopping online. Put simply, shoppers have less and less time for merchants without mobile-integrated payment systems. 

Local payment apps improve conversion at checkout

Smartphone culture is not ubiquitous – but it certainly is infectious. While some are still committed to cash, credit cards and paper-based transactions (particularly in the B2B space), mobile payments are a significant trend in modern business. Depending on your target market, it’s worth looking into local payment methods that customers already use. 

It’s no good offering payment methods that your customers aren’t interested in – that will only promote cart abandonment. Our research found that 50% of merchants experienced weak sales after failing to properly activate local payment methods in new markets. Instead, apportion market research to determine the payment apps your target demographic uses. Then, find a payment services provider (PSP) that will connect you with them.

Payment innovations equip you for the future

There’s a lot coming down the pipeline in fintech innovation – we’re at a pivotal moment of mobile payment enthusiasm that’s only set to accelerate. Now is the time for merchants to invest in digital payment solutions that optimize conversion. Speak to a Checkout.com team member to discuss payment options for your business.