Although it's a cutthroat industry, 2017 still stands out as a particularly competitive year for payments. Facing squeezed interchange rates, accelerated payments expectations, and expanded fraud threats, firms across the payments value chain raced toward scale and monetization. With digital disruption only beginning to gain steam, the pace of change is once again set to grow next year. From our research, understanding of industry trends, and conversations with industry leaders, BI Intelligence has identified five predictions for payments in 2018:

1. A wave of large retailers will begin to accept cryptocurrencies, driven by rising consumer interest. Cryptocurrencies like Bitcoin and Litecoin hit mainstream awareness off the back of rising prices in 2017; Bitcoin reached highs of around $800 in 2016 and exploded to over $19,000 in 2017. But while sky-high prices garnered headlines, merchant acceptance remained low — Overstock, Newegg, and Expedia are among the small handful of merchants currently accepting Bitcoin. In 2018, rising consumer interest, lower transaction fees, and antifraud benefits will lure more large merchants to add cryptocurrency options. According to a senior executive at eBay, the e-commerce firm is now considering adding Bitcoin as a payment option, for example. Whether rising acceptance results in significant payments volume will depend on whether the cryptocurrencies stabilize in price, as few will want to pay with a vehicle that could double in price tomorrow.

2. With droves of sensitive information compromised, payments firms will accelerate security acquisitions and partnerships. The Equifax breach — which compromised the information of 143 million citizens — is making it hard to justify using information like Social Security numbers in authentication. It’s also adding to already high fraud concerns, after 15.4 million US consumers were affected by identity fraud in 2016, according to Javelin. As fraud continues to grow, it will be crucial for firms to increase security investments. Some firms have already started bolstering their security measures — Mastercard acquired Brighterion, a software company that specializes in artificial intelligence (AI), for example. 

Next year, payments firms will double down on acquisitions and partnerships. Developing next-generation security solutions in-house can be time-consuming and costly — for example, a moderately experienced AI expert can earn up to $500,000, according to The New [...]