26.08.2024
As Eastern Europe continues to modernise its financial infrastructure, the region is quickly becoming a hotspot for innovative digital payments trends. From bustling tech hubs to burgeoning fintech scenes, Eastern Europe is no longer just catching up with the West-it's forging its own path in the digital payments landscape. With a mix of tech-savvy consumers, forward-thinking regulators, and ambitious startups, the region is fertile ground for the next big thing in payments.
The race is on for payment providers to deliver the smoothest, most secure, and easiest experience, and in this environment, understanding the key trends shaping digital payments in Eastern Europe is critical for businesses and consumers alike. In 2024, there are several key trends that are reshaping the way transactions are made, making digital payments faster, safer, and more convenient than ever before. In this blog post, we will explore the top 5 of them.
The Rise of Digital Wallets and Super Apps
Digital wallets continue to gain traction across Eastern Europe, driven by the convenience and security they offer. However, the region is witnessing a significant shift towards super apps—platforms that integrate multiple services, including payments, e-commerce, and social media. Inspired by models like WeChat in China, these nascent super apps are becoming a hub for various financial services. In Eastern Europe, companies like Revolut, Paysera, and Wise are expanding their offerings to include more than just payments, providing value-added services such as insurance, investment options, instant messaging features and loyalty programs.
Super apps are particularly appealing in this region due to the high mobile penetration rates and a growing preference for seamless, all-in-one solutions. As more users adopt these platforms, the competition among providers is intensifying, with companies striving to offer the most comprehensive and user-friendly services.
Embedded Finance and Banking as a Service (BaaS)
Embedded finance, where financial services are seamlessly integrated into non-financial platforms, is another trend gaining momentum in Eastern Europe. This model allows companies to offer payment solutions, loans, or insurance products directly within their own ecosystems without requiring customers to interact with traditional banks. For instance, e-commerce platforms can offer buy-now-pay-later (BNPL) options, powered by embedded financial services from third-party providers.
Banking as a Service (BaaS) is a related trend where fintech companies and even non-financial companies can offer banking products using the infrastructure of established banks. This trend is supported by open banking regulations in the European Union, which encourage greater collaboration and innovation in the financial sector. Demand for BaaS and embedded finance is expected to continue to grow throughout the decade as companies seek to improve the customer experience by integrating seamless financial solutions. In fact, according to a report by Future Market Insights, the European banking as a service industry is expected to grow from US$8,913.30 million in 2024 to US$36,097.05 million over the next 10 years.
Expanding Role of Cryptocurrencies and Central Bank Digital Currencies (CBDCs)
Cryptocurrencies have long been a part of the digital payments landscape in Eastern Europe, but 2024 is expected to be a transformative year with the increasing focus on Central Bank Digital Currencies (CBDCs). Countries like Ukraine, Turkey are at the forefront, experimenting with CBDCs to modernize their payment systems and reduce dependence on traditional banking infrastructure.
These digital currencies, issued by central banks, offer a state-backed alternative to decentralised cryptocurrencies and promise greater stability. Ukraine, for example, has made great strides in its CBDC development, with plans to openly test the e-hryvnia by the end of 2024, with the aim of increasing cashless transactions and the strength of the national currency. As more countries in East Europe explore or pilot CBDCs, the digital payments landscape could be transformed, offering a secure and regulated alternative to both cash and existing digital payment methods.
Focus on Security and Fraud Prevention
As digital payments continue to grow, so too does the need for robust security measures. In the East European region, this has become a significant area of focus in 2024, with an increasing number of payment providers seeking to address the issue. Multi-factor authentication, AI-driven fraud detection and tokenization are becoming standard practices, offering consumers enhanced protection and confidence when making digital transactions.
As a PSP operating in Eastern Europe, COLIBRIX is contributing to the region's digital transformation by providing secure and innovative payment solutions tailored to the unique needs of local businesses and consumers. Our focus on enhancing transaction security and providing seamless payment experiences is helping to build trust in digital payments across the region.
Growth of Contactless Payments
Contactless payments have become increasingly widespread across Eastern Europe. According to the European Central Bank, the total number of non-cash payments in the Euro area surged by 10.1% to 67.0 billion in the first half of 2023 compared to the same period in 2022. This growth highlights the rising dominance of contactless transactions, which offer unparalleled convenience and speed. As tap-to-pay technology becomes more embedded in everyday life, its adoption across Eastern Europe is expected to accelerate further in 2024.
The expansion of contactless payments is also fueled by higher transaction limits and the integration of mobile wallets and wearable devices, which are making it easier for consumers to use these methods for a broader range of purchases. The move toward a cashless society is well underway, with digital payment methods becoming increasingly essential.
In 2024, the digital payments sector in Eastern Europe is on a path of significant growth and transformation. With the rise of super apps, the adoption of cryptocurrencies and CBDCs, enhanced security measures, and the continued expansion of contactless payments, the region is becoming a powerhouse of innovation. Companies that can effectively harness these trends will be in a strong position to lead this dynamic market, offering consumers and businesses alike more efficient, secure and sustainable payment solutions. And as these trends evolve, they will undoubtedly shape the future of finance in Eastern Europe over the next decade, driving further digitalization and financial inclusion across the region.