The cashless payment product 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 expansion of internet payment market or could it expanding at a rapid rate?
The world digital payment market is expected to hit the USD6.6 trillion mark in 2021, registering around a 40% jump in a couple of years. The cashless payment methods are rapidly evolving with ground-breaking innovations for example mobile wallets, peer-to-peer (P2P) mobile payments, real-time payments, and cryptocurrencies. Within the growing digital age, many payment technology publication rack collaborating with traditional financial institutions to cater to the most up-to-date consumer and merchant preferences. As a result of enhanced broadband connectivity, increasing mobile commerce, emergence of new technologies including Virtual Reality, Artificial Intelligence, and rapid digitization, immeasureable everyone has started embracing contactless payments both in 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 because they are more desirable and flexible to work with. In-app payments or tap-and-go transactions take seconds with the checkout and invite users to create payments anytime and anywhere. Tokenization, encryption, Secure Sockets Layer (SSL), etc., offer multiple strategies to securing payments while enabling digital transactions. Moreover, the users need not fill in information whenever to perform the payment process. Thus, online payment gateways play an important role inside the economic growth, enabling exchange the modern economy. With social distancing rules set up, digital payments have become an obligation for contactless transactions as opposed to just a transaction option to prevent the spread of coronavirus.
Digital Commerce Empowering Businesses
Electronic payment systems are getting to be an important part of businesses as consumer the likelihood of online shopping is expanding. With broadening internet penetration, increasing use of smartphones, and various choices for e-transactions, most people are preferring online channels over traditional brick-and-mortar stores for shopping. Therefore, companies are shifting online having an electronic payment strategy to maximize their profit earnings. Automating the electronic payment system eliminates the scope of errors and saves plenty of time and energy. High standards for detecting and preventing fraud in digital transaction systems and AI-based fraud detections protect users from security breaches. By providing the flexibleness to create payments through credit/debit cards, mobile money, e-Wallet, etc., the firms can expand their usage. The electronic payment process improves customer satisfaction as customers don’t have to count cash or handle paperwork when they need to make the transaction.
Biometric Authentication Enhancing Security
Biometric authentication involves recognizing biometric features and structural characteristics to make sure that the identification of your individual. The verification method can involve fingerprint scanning, facial recognition, voice recognition, vein mapping, iris detection, and heartbeat analysis. Using the surge in id theft and fraud, biometric authentication has become a reliable and secure alternative to make digital transactions. In accordance with a recently available research, biometrically verified mobile commerce transactions are required to constitute a huge 57% from the total biometric transaction by 2023. Biometric payment cards may also be becoming popular as they support tap-and-go payments, allowing users to generate faster digital transactions. A digital payment technology provider, Worldline is partnering up with all the French FinTech, A3BC (Anything Anywhere Anytime Biometric Connection), to shield mobile phones from intrusion having a two-factor authentication process. The combined solution eliminates identification through a single touch, rather it recognizes fingerprints by having a picture with the hand. MasterCard is likely to bring FinGo’s vein-scanning payment solution that facilitates users to authenticate transactions.
Dominance of Mobile Wallets
In 2019, mobile wallets overtook bank cards being the highly adopted payment type globally. Digital wallets offer flexibility to users to save multiple payment methods in a digital home and switch cash into electronic money required for online or in-store purchases. Loan companies previously began to embrace digital wallet trend by providing virtual cards to business customers. The virtual cards saved in digital wallets contain details like 16-digit card number, CVV code, date of expiry and work just as the physical credit card. Currently, only 37% of merchants support mobile payments in the point of sale, but the increasing adoption, merchants are able to put money into technologies facilitating digital wallets. The virtual wallets can conserve money due to low processing costs as they limit transaction values and frequency. Artificial Intelligence (AI) is helping the consumer experience with regards to transactions with ChatBots, made to execute and robotize essential exchanges as reported by the user’s interest. Besides, cryptographic money-based e-wallets are increasingly being embraced by new companies to small-medium organizations for storing digital money. Smart voice technologies are contributing to the expansion of smart voice wallets since that time Amazon propelled the leading on this platform, that’s now being accompanied by Google and Apple.
E-Commerce Boom Accelerating Digital Payment Market Growth
E-commerce growth at an exponential rates are creating shock waves, along with the sonic boom is reverberating through the FinTech sector. The expansion of numerous e-commerce companies is driven with the sort of financial services they provide. Digital transactions make it convenient for your seller and buyer to produce transactions and turn into faithful to the marketplace space. The COVID-19 pandemic added some other dimension to e-commerce innovation, introducing newer trends including payment alternatives at checkouts (avoid digital wallets), virtual cards, QR codes, and also other touchless transactions. Besides, the Buy Now Pay Later (BNPL) trend is dominating the e-commerce industry because it relieves the financial burden about the buyer. BNPL involves a gentle credit check needed, and so the consumers can find what they already want, keep the inventory moving, and pay overtime without affecting their credit score. BNPL provides businesses with much-needed liquidity and greater flexibility in 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, such as a strong understanding of hyper-local markets and how it can establish strong local partnerships. Businesses and consumers increasingly “went digital” for providing and getting products or services online. In the event the pandemic hit, people would not desire to touch or exchange cash because of the paranoia of catching the infection from physical currencies. Several governments all over the world introduced digital financial gets in provide COVID-assistance. Because of lockdown measures, consumers moved to online platforms, which catapulted the demand for digital payment systems. Now, digital platforms are becoming an essential component of people’s lives, and individuals are prone to continue internet shopping inside the post-pandemic period. The dramatic shift in consumer behavior is likely to augment the demand for e-payment systems more. Therefore, information mill focusing their attention on digital mediums to meet the brand new customer demands and thrive businesses from the changing market scenario. Organizations are reimagining customer journeys to cut back friction and offer new precautionary features. Payment companies for example PayPal and Square Cash are staffing up overall to higher see the rearrangement of societal norms and stabilize the organization sooner.
e-Payment Systems are the Future
With increasing smartphone and internet penetration, people are becoming tech-savvy, which presents endless opportunities for that digital payment markets. Post-pandemic, digital payment systems are supposed to carry on and flourish over time to come. While cards remain the first choice for payments around the globe, mobile wallets are quickly gaining traction. The regular cashflow is declining in bank branches and ATMs, demonstrating a power move perfectly into a cashless society. Currently, China dominates the international mobile wallet consumption, as well as Columbia. However, you can still find many countries which can be highly dependent on cash as a result of deficiency of trust towards loan companies and insufficient proper broadband infrastructure, etc. In the near future, social media-initiated payments, biometric payments, voice-activated payments will certainly become mainstream in developing countries too.
Cybersecurity and Privacy Concerns with Online Payment Solutions
Cybersecurity and privacy threats are becoming a troubling nervous about the growing incidences of internet fraud. In accordance with the Mastercard survey, one inch four consumers experienced some sort of fraud in 2020, ramping inside the cybercrime rate by 49%. In the first 50 % of 2020, online scams increased by 73.8% from 2019. However, adopting new-age technologies including multifactor authentication, biometrics, 3D security, Artificial Intelligence, and Machine Learning might help control fraudulent activities like phishing, virus attacks, etc. Shifting to contactless cards, QR codes, and tokenization may also help mitigate risks linked to digital payment solutions. Besides, sensitizing end-users regarding the secure use of e-payment solutions through amplifying efforts towards building financial literacy will help prevent frauds. The emergence of mobile commerce and also the evolution of e-payment platforms supported by robust security solutions can help to drive the objective of making the economy truly cash-less.
According to TechSci research set of “Global Payment Gateway Market By Type (Hosted, Self-hosted & Bank Integrated), By Enterprise Size (SME and huge 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 might be due to the increasing demand for online transactions, rising broadband connectivity, and exponential expansion of e-commerce across the globe.
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