The cashless payment method is growing exponentially with evolving payment methods, rising e-commerce use, enhanced broadband connectivity, and emergence of latest technologies. Can increasing incidences of cyberattacks and spams hamper the development of online payment market or does it keep growing at a rapid rate?
The world digital payment industry is expected to hit the USD6.6 trillion mark in 2021, registering around a 40% jump in two years. The cashless payment methods are rapidly evolving with ground-breaking innovations including mobile wallets, peer-to-peer (P2P) mobile payments, real-time payments, and cryptocurrencies. Inside the growing digital age, many payment technology companies are collaborating with traditional finance institutions to serve the newest consumer and merchant preferences. On account of enhanced broadband connectivity, increasing mobile commerce, emergence of latest technologies including Virtual Reality, Artificial Intelligence, and rapid digitization, immeasureable people have started embracing contactless payments in both developed and emerging countries. Besides, surging e-commerce businesses, digital remittances, digital business payments, and mobile B2B payments are boosting the non-cash transaction ecosystem.
Cashless transaction method users across various generations are widely following a digital peer-to-peer (P2P) apps as they are more inviting and versatile to use. In-app payments or tap-and-go transactions take seconds in the checkout and enable users to make payments anytime and anywhere. Tokenization, encryption, Secure Sockets Layer (SSL), etc., offer multiple means of securing payments while enabling digital transactions. Moreover, a persons need not fill out information each time to finish the payment process. Thus, online payment gateways play a crucial role in the economic growth, enabling swap present day economy. With social distancing rules set up, digital payments are getting to be a responsibility for contactless transactions as opposed to just a transaction alternative to stop the spread of coronavirus.
Digital Commerce Empowering Businesses
Electronic payment systems have become a crucial part of businesses as consumer the likelihood of internet shopping is expanding. With broadening internet penetration, increasing use of smartphones, and diverse selections for e-transactions, most people are preferring online channels over traditional brick-and-mortar stores for shopping. Therefore, corporations are shifting online by having an electronic payment treatment for maximize their profit earnings. Automating the electronic payment system eliminates the scope of errors and saves a lot of commitment. High standards for detecting and preventing fraud in digital transaction systems and AI-based fraud detections protect users from security breaches. By offering the pliability to create payments through credit/debit cards, mobile money, e-Wallet, etc., the businesses can expand their client base. The electronic payment process improves client satisfaction as customers don’t need to count cash or handle paperwork every time they desire to make the transaction.
Biometric Authentication Enhancing Security
Biometric authentication involves recognizing biometric features and structural characteristics to make sure that the identification associated with an individual. The verification method can involve fingerprint scanning, facial recognition, voice recognition, vein mapping, iris detection, and heartbeat analysis. With the surge in id theft and fraud, biometric authentication has changed into a reliable and secure alternative to make digital transactions. Based on a recent research, biometrically verified mobile commerce transactions are expected to constitute a huge 57% with the total biometric transaction by 2023. Biometric payment cards can also be becoming popular because they support tap-and-go payments, allowing users to make faster digital transactions. Digital payment technology provider, Worldline is partnering up with the French FinTech, A3BC (Anything Anywhere Anytime Biometric Connection), to safeguard cellphones from intrusion using a two-factor authentication process. The combined solution eliminates identification via a single touch, rather it recognizes fingerprints by having a picture in the hand. MasterCard is planning to bring FinGo’s vein-scanning payment solution that facilitates users to authenticate transactions.
Dominance of Mobile Wallets
In 2019, mobile wallets overtook cards to get the highly adopted payment type globally. Digital wallets offer flexibility to users to store multiple payment methods in one digital home and turn cash into electronic money required for online or in-store purchases. Finance institutions have began to embrace the digital wallet trend by giving virtual cards to business customers. The virtual cards saved in digital wallets incorporate details like 16-digit card number, CVV code, date of expiry and work just as the physical plastic card. Currently, only 37% of merchants support mobile payments with the point of sale, but with the increasing adoption, merchants are able to invest in technologies facilitating digital wallets. The virtual wallets can conserve money due to low processing costs since they limit transaction values and frequency. Artificial Intelligence (AI) is improving the user experience in relation to transactions with ChatBots, built to execute and robotize essential exchanges as per the user’s interest. Besides, cryptographic money-based e-wallets are being embraced by new companies to small-medium organizations for storing digital money. Smart voice technologies are causing the development of smart voice wallets ever since Amazon propelled the leading of this platform, that is now being accompanied by Google and Apple.
E-Commerce Boom Accelerating Digital Payment Market Growth
E-commerce growth with an exponential rate is creating shock waves, along with the sonic boom is reverberating throughout the FinTech sector. The development of many e-commerce companies is driven from the sort of financial services they supply. Digital transactions help it become convenient to the buyer and seller to produce transactions and grow loyal to the market space. The COVID-19 pandemic added another dimension to e-commerce innovation, introducing newer trends like payment alternatives at checkouts (not with digital wallets), virtual cards, QR codes, as well as other touchless transactions. Besides, the Buy Now Pay Later (BNPL) trend is dominating the e-commerce industry because it relieves the financial burden on the buyer. BNPL involves a soft appraisal of creditworthiness, and so the consumers can buy what they really want, maintain your inventory moving, and pay overtime without affecting their credit standing. BNPL provides businesses with much-needed liquidity and greater flexibility with the checkout.
Influence of COVID-19 Pandemic on Digital Payment Market Growth
Digital payment systems have moved beyond their peer-to-peer (P2P) transfers and bill payments. The COVID-19 pandemic allowed digital payment systems to showcase their strengths, like a strong idea of hyper-local markets and its ability to establish strong local partnerships. Businesses and consumers increasingly “went digital” for providing and acquiring products and services online. In the event the pandemic hit, people didn’t need to touch or exchange cash due to paranoia of catching the issue from physical currencies. Several governments worldwide introduced digital financial transfers to provide COVID-assistance. Because of lockdown measures, consumers shifted to online platforms, which catapulted the requirement for digital payment systems. Now, digital platforms have grown to be an extremely important component of people’s lives, and rrndividuals are more prone to continue online shopping within the post-pandemic period. The dramatic shift in consumer behavior may well augment the demand for e-payment systems much more. Therefore, publication rack focusing their attention on digital mediums to fulfill the modern customer demands and thrive businesses from the changing market scenario. Organizations are reimagining customer journeys to cut back friction and offer new security measures. Payment companies such as PayPal and Square Cash are staffing up overall to higher understand the rearrangement of societal norms and stabilize the company soon.
e-Payment Systems will be the Future
With increasing smartphone and internet penetration, rrndividuals are becoming tech-savvy, which presents endless opportunities for the digital payment markets. Post-pandemic, digital payment systems are likely to continue to flourish over the years to come. While cards remain the first choice for payments around the globe, mobile wallets are quickly gaining traction. The original cash flow is declining in bank branches and ATMs, demonstrating an electric move towards a cashless society. Currently, China dominates the worldwide mobile wallet consumption, followed by South Korea. However, it is possible to many countries that are highly dependent on cash because of not enough trust towards financial institutions and insufficient proper broadband infrastructure, etc. Soon, social media-initiated payments, biometric payments, voice-activated payments will certainly become mainstream in developing countries at the same time.
Cybersecurity and Privacy Concerns with Online Payment Solutions
Cybersecurity and privacy threats are getting to be a troubling concern about the growing incidences of online fraud. Based on the Mastercard survey, one in four consumers experienced some form of fraud in 2020, ramping up the cybercrime rate by 49%. From the first 1 / 2 of 2020, online scams increased by 73.8% from 2019. However, adopting new-age technologies for example multifactor authentication, biometrics, 3D security, Artificial Intelligence, and Machine Learning can help control fraudulent activities like phishing, virus attacks, etc. Shifting to contactless cards, QR codes, and tokenization could also help mitigate risks connected with digital payment solutions. Besides, sensitizing end-users concerning the secure application of e-payment solutions through amplifying efforts towards building financial literacy may help prevent frauds. The emergence of mobile commerce along with the evolution of e-payment platforms backed by robust security solutions may help drive the goal of making the economy truly cash-less.
As outlined by TechSci research set of “Global Payment Gateway Market By Type (Hosted, Self-hosted & Bank Integrated), By Enterprise Size (SME and big Enterprise), By End-User (Retail, Travel & Hospitality, Healthcare, Education, Government, Utilities & Others), By Region, Competition, Forecast & Opportunities, 2026”, the international payment gateway marketplace is expected to cross USD15 billion mark in 2019, registering a CAGR of 22% by 2026. The expansion can be caused by the increasing need for online transactions, rising broadband connectivity, and exponential development of e-commerce across the world.
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