Secure transactions in 2023: where do we go?

As usual in this period of the year, many analysts present their anticipation of the year to come. The return of war in Europe means that predictions for 2023 are in a totally different context from what they may have been in the past. Of course, we can only wish the end of this horrible war and have thoughts for the innumerable victims.

Other global changes affect our industry: we are not yet out of the shortages crisis that occurred in 2022 and the global return of inflation, especially with the increase of energy costs affects our operations.

In telecoms, one may easily anticipate a continuation of 5G networks rollouts, expansion of IoT and the 6G projects becoming more concrete every day. Authentication and the need for security remains at the core of major players’ requirements for mobile communications. eSIM are increasingly deployed both in the IoT and in the consumer markets. Juniper Research just published a report in which they anticipate the value of the global eSIM market to increase from US$ 4.7 billion (EUR 4.4 billion) in 2023, to US$ 16.3 billion (EUR 15.2 billion) by 2027. According to their research, the eSIM market will mainly be driven by the adoption of eSIM-enabled consumer devices: Apple announced an eSIM-only iPhone 14 in certain geographies and Juniper anticipates Android handset vendors to follow suit. The next step after the eSIM is the iSIM (integrated SIM), which includes authentication functions in the baseband processor, thus becoming the device root of trust. This evolution will significantly change the value chain in our industry as well as the balance of power.

IoT deployments will keep on expanding, even if the stratospheric forecasts that were published a few years ago still appear out of reach as deployments of IoT projects have proved more complex than anticipated. Markets and Markets anticipates that the global IoT market will grow from US$ 243 billion (EUR 226 billion) this year to US$ 575 billion (EUR 535 billion) in 2027. Security standards keep on developing, and even if our industry culture revolves around semiconductor, software based solutions are gaining ground. eSIMs are increasingly adopted as part of security solutions in the IoT market. With the deployment of 5G networks, 5G-based IoT is to be increasingly adopted, only if we can provide appropriate security measures. At the same time, the industry is structuring, and regulations are coming to provide more legibility to different offers: the European Cyber Resilience Act (CRA) development has been launched by the European Commission and it will include IoT as well as traditional networks.

In the Payment segment, one may anticipate the continuation of several trends. Contactless payment in physical commerce will continue to grow: Juniper Research anticipates that contactless transaction volumes will significantly exceed contactless card volumes by 2023. Transaction volumes for mobile payments will grow from 26 billion in 2021 to 49 billion in 2023, representing a growth of 92%, they say. Real-time payments are increasingly deployed, in all geographies, thanks to an increasing adoption of the ISO 20022 messaging standards. The European Payment Council (EPC) is pushing for a wider adoption of Instant Payments and according to FinTech Futures, the global real-time payments market is expected to reach an impressive US$ 87 billion (EUR 81 billion) by 2028, representing an estimated CAGR of 32% from 2022 to 2028. BNPL (Buy Now Pay Later) platforms represent an easy Automated lending opportunities for consumers, leading them to increasingly often choose to delay their payments for a significantly lower cost that with credit cards. Realtime payments and BNPL are increasingly seen by consumers as an alternative to card payments.

Tier I players in our industry are organized not only to adapt to these changes but to anticipate them, they have set up strategy teams, advanced R&D and processes to deliver products and services to satisfy a permanently evolving demand. Tier II and Tier III players, which concentrate on industrial activities may face more difficulties in adaptation, probably a demonstration of economic Darwinism.