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The payments industry is the largest interconnected complex business on the planet. We can validate that statement in a myriad of ways – the sheer number of people and businesses transacting, the number of transactions themselves, or the total dollar value of those transactions, which are expected to exceed $3.5 trillion in 2024. It’s a big market that is equally complex and fragmented.

What makes this market so challenging is the complexity combined with the rate of change. Technology has pushed the evolution of the payments business into uncharted waters, making it more and more difficult to stay in the game, let alone ahead of the game. No matter what role an organization plays in the market; banks, merchants, and any entity or person that accepts or makes payments are impacted.

In the table below, we can see significant changes in the market over the last dozen years. The number of different tender types has doubled, and the consumer form factors plus merchant acceptance methods have more than tripled. Every time a new tender type or payment method is added, there are new operating rules and regulations that go into effect.

*New operating rules and regulations go into effect every time a new tender type or payment method is added.

Technology has changed dramatically, creating a more complex equation. All the innovations coupled with the new technology are additive, and none of the tenders or acceptance methods become obsolete. When electronic payments were invented, people claimed cash would go away. However, there is more cash in the system today than ever before. All the traditional payment methods must be kept in place. Industry participants are challenged, needing to stay relevant by offering all the new payment types and ways to pay while at the same time operating the existing methods. These newer technologies impact adoption and retention, while the additional digital payments have helped reach new geographies and user groups.

To round out this complex equation, we can’t afford to ignore fraud and risk management. Security and risk abatement measures are critical to instilling trust in the payments system while protecting assets.

With the advent of all these new payment methods comes an increasing number of providers, many of whom are niche players within the fintech ecosystem solving one problem at a time. Yet, having providers who understand all aspects of the market and who can bring economies of scale to the table will be increasingly important to keep up with the changes.

So as the industry expands and continues to evolve, participants need to consider how best to partner to leverage the speed of change, the ability to scale to meet the market needs, and avoid a collision.