January is such an exciting time for any business, filled with endless possibilities and potential for the coming year. HONOR decided to bust out our Ouija board and make a few predictions for the coming year in payments. Here are our top 5 in no particular order:

A different flavor of Payment Facilitation- With PaaS (Payments as a service) newcomers Infinicept, Payrix and Finix making the path to Payfac easier, ISVs of size will be converting in droves to become registered Payfac’s. The path to becoming a Payfac has now been reduced from 15 months to 3-4, the cost has been reduced from more than $1.5M to $250-$400.  I believe this will greatly impact the Payfac platforms like Stripe and WePay(Chase).

Strategy Expansion– We would look for companies that have already moved away from a partner focused go-to-market to double down on their ISV-owned strategy. Global(GPN) and Square will continue to grow their business through acquisitions. The scale and competition of this strategy has changed since Heartland(a Global subsidiary) bought companies like Digital Dining or LiquorPOS. With the immersion of large players like EverCommerce and Constellation Software,  the large market cap acquirers can buy their way to a broader distribution model through ISV holding companies. With a growing market share, these software holding companies are ripe for processors already looking to expand their reach through wholly owned ISVs.

More Acquisitions- I believe the big three(FIS, FISERV and GPN) will turn their attention abroad for growth. They still have an enormous amount to do domestically to realize the advantages of these massive mergers; as costs are reduced, pricing is adjusted and business units are consolidated. They will need to continue to make smart acquisitions, justifying their aggressive P/E ratios.

Cash Discounting and Surcharging- Several years ago some airlines shifted to “basic economy” and the large airlines all claimed it was ridiculous. Now they all offer it. 46 States have now passed legislation allowing surcharging, once this occurs nationally large retailers will force a change in consumer behavior and increase debit usage. Cash Discounting is protected by the Durbin Amendment but remains convoluted in its practice. Ultimately, as retailers and processors hone in messaging that wont create friction at the point of sale, the dominos will begin to fall.

Mobile Ecommerce- All signs point to continued growth of ecommerce and mobile. ApplePay and Gpay have made significant headway in reducing consumer pain points during the mobile check out process. We will look for continued innovation in mobile commerce following consumer trends.