• Alex Reddish, Managing Director at Tribe Payments


• 14.12.2022 04:15 pm
#payments

Crypto acceptance

While 2022 was a tumultuous year for cryptocurrency according to the big headlines, blockchain innovation continues. For example, we’re seeing the development of Cross-Chain Bridges so different blockchains can communicate with each other—so smart contracts can read and write data to and from other blockchains.

Despite its setbacks, crypto isn’t going to go away—it’s a trillion-dollar ecosystem. But the setbacks may help crystallise what it actually is, not a get-rich-quick scheme or an investment vehicle, but a way to move money around. As such, we need wider acceptance and better on- and off-ramps to convert crypto and fiat currency. In 2023 there will be a lot of talk of better regulation and oversight, but serious crypto businesses will be continuing to innovate, create a better experience and wider adoption.

A new battle in credit

2022 saw an expansion in easy-to-access consumer credit services, and it didn’t come without some controversy. But while buy-now-pay-later schemes are undoubtedly popular today, we may see some contraction in the market as circumstances change. A shifting macroeconomic climate will lead to a squeeze and responsible lending will be the key to sustainable business beyond 2023. A saturated market plus consumer hesitance over debt means that there will be a new battleground for growth. This is likely to be SME credit.

SMEs have different needs, often looking for short-term credit to cover cash flow, and are often underserved as a less “glamorous” target compared to consumer products. SME credit products have already been launched by fintechs, but we are likely to see consumer-facing brands take an interest too in 2023.

The value of interchange fees

Can a fintech business rely on interchange fees for a sizable chunk of its business? There has been some worry in the market that the acquirers, issuers and card schemes that rely on these charges cannot do so forever, and there is a need to diversify to be viable. After all, regulators reviewing the caps on these charges are likely to move them in one direction—lower—and new types of payments may mean interchange fees are paid less and less often.

However, these fees are, to an extent, inflation-proof. As prices increase, so do the fees, remaining at a steady percentage of each purchase. The inflation we’ve seen in 2022 and are likely to see in 2023 means that people are trying to make their money go further, but are not necessarily spending less. So while some fintechs may see their business take a hit from changing circumstances, interchange fees are likely to remain relatively steady—at least in the short term.