PwC Digital Finance Landscape: Digital payment solutions are shaping customer decisions

Key Trends in the Digital Payments Market

1. Regulatory Pressure and Opportunities
   Innovations such as the Instant Payment System (IPS) and PSD2 are advancing faster and more convenient transactions, but they also place a significant administrative burden on financial institutions.
2. Economic Uncertainty
   Inflation and declining consumer confidence challenge merchants and financial providers, while neobanks intensify competition. Cross-border transactions are increasing, pushing businesses to innovate to meet global service expectations.
3. Cybersecurity and Customer Trust
   As online payments grow, so does the importance of data security. Building trust requires not only technology but also consumer education and clear communication about the benefits and safety of digital solutions.
4. Innovations and Customer Experience
   Consumers demand faster, more seamless solutions like one-click payments or “Invisible Payments,” which improve user experience and boost cart value.
5. Infrastructure and Technological Progress
   Expanding card acceptance networks and adopting technologies like tokenization and open banking drive digitization, though regional disparities remain significant.
6. Changing Consumer Habits
   Consumer preferences vary: a tech-savvy segment embraces digital tools, while others cling to traditional payment methods. Preferences also differ by demographics, location, age, and education.

Consumer Profiles

• Digital Pioneers: Regularly use digital solutions like mobile payments and subscriptions, driving innovation adoption.
• Traditional Shoppers: Prefer cash or cash-on-delivery and require education and reassurance about digital methods.
• Transitioning Users: Use some digital options but haven’t fully switched; incentives and circumstances often guide their choices.

Payment Behavior Insights

• Card payments are most common in physical stores (77%), followed by domestic purchases (60%) and utility payments (44%).
• Despite digital growth, cash withdrawal remains prevalent, with 40% of users still utilizing their cards for this purpose.
• In Q2 2024, Hungarian consumers spent HUF 1,450 billion online, with HUF 582 billion on foreign transactions. The average foreign transaction value (HUF 15,000) exceeds domestic spending (HUF 9,560).

Challenges and Opportunities

Post-pandemic, merchants and service providers strive to regain pre-COVID levels while adapting to consumer needs. Neobanks continue to gain market share, urging financial providers to redefine their value propositions. Merchants increasingly adopt solutions like Apple Pay, Google Pay, and one-click payments to cater to diverse consumer demands.

Customer experience extends beyond transaction speed and simplicity to include trust in merchants, with features like robust return processes and reliable service enhancing satisfaction.

The report emphasizes that payment solutions permeate every industry, from e-commerce to utilities, and adapting to evolving consumer expectations is critical for staying competitive.