The cashless payment method is growing exponentially with evolving payment methods, rising e-commerce use, enhanced broadband connectivity, and emergence of new technologies. Can increasing incidences of cyberattacks and spams hamper the expansion of internet payment market or can it continue to grow 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 couple of years. The cashless payment methods are rapidly evolving with ground-breaking innovations such as mobile wallets, peer-to-peer (P2P) mobile payments, real-time payments, and cryptocurrencies. From the growing digital age, many payment technology organizations are collaborating with traditional financial institutions to cater to the most recent consumer and merchant preferences. Due to enhanced broadband connectivity, increasing mobile commerce, emergence of the latest technologies such as Virtual Reality, Artificial Intelligence, and rapid digitization, huge amounts of individuals have started embracing contactless payments 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 after the digital peer-to-peer (P2P) apps since they are more pleasing and flexible to work with. In-app payments or tap-and-go transactions take seconds at the checkout and permit users to create payments anytime and anywhere. Tokenization, encryption, Secure Sockets Layer (SSL), etc., offer multiple methods for securing payments while enabling digital transactions. Moreover, you need not fill out information each and every time to finish the payment process. Thus, online payment gateways play a vital role within the economic growth, enabling trade-in the modern economy. With social distancing rules set up, digital payments are getting to be a responsibility for contactless transactions rather than a transaction alternative to stop 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 utilization of smartphones, and diverse selections for e-transactions, most individuals are preferring online channels over traditional brick-and-mortar stores for shopping. Therefore, corporations are shifting online with the electronic payment solution to maximize their profit earnings. Automating the electronic payment system eliminates the scope of errors and saves a lot of effort and time. High standards for detecting and preventing fraud in digital transaction systems and AI-based fraud detections protect users from security breaches. Through providing the flexibility to create payments through credit/debit cards, mobile money, e-Wallet, etc., the businesses can expand their customer base. The electronic payment process improves client satisfaction as customers don’t have to count cash or cope with paperwork every time they want 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. With all the rise in id theft and fraud, biometric authentication has become a reliable and secure alternative to create digital transactions. Based on a newly released research, biometrically verified mobile commerce transactions are required to constitute a huge 57% in the total biometric transaction by 2023. Biometric payment cards will also be becoming more popular because they support tap-and-go payments, allowing users to create faster digital transactions. The digital payment technology provider, Worldline is joining up together with the French FinTech, A3BC (Anything Anywhere Anytime Biometric Connection), to shield mobile phones from intrusion with a two-factor authentication process. The combined solution eliminates identification by having a single touch, rather it recognizes fingerprints through a picture with the hand. MasterCard is about 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 to get the highly adopted payment type globally. Digital wallets offer flexibility to users to save multiple payment methods a single digital home change cash into electronic money required for online or in-store purchases. Financial institutions previously begun to embrace the digital wallet trend by giving virtual cards to business customers. The virtual cards held in digital wallets contain details like 16-digit card number, CVV code, date of expiry and work just as the physical thing. Currently, only 37% of merchants support mobile payments on the point of sale, though increasing adoption, merchants are prepared to put money into technologies facilitating digital wallets. The virtual wallets can help to conserve money because of low processing costs while they limit transaction values and frequency. Artificial Intelligence (AI) is improving the buyer experience with regards to transactions with ChatBots, built to execute and robotize essential exchanges as per 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 technology is adding to the development of smart voice wallets since that time Amazon propelled the leading on this platform, which is now being followed by Google and Apple.
E-Commerce Boom Accelerating Digital Payment Market Growth
E-commerce growth with an exponential minute rates are creating shock waves, along with the sonic boom is reverberating across the FinTech sector. The development of many e-commerce companies is driven with the type of financial services they supply. Digital transactions ensure it is convenient for the buyer and seller to produce transactions and grow faithful to the market space. The COVID-19 pandemic added another dimension to e-commerce innovation, introducing newer trends like 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 mainly because it relieves the financial burden about the buyer. BNPL involves a soft appraisal of creditworthiness, hence the consumers can buy what they desire, keep your inventory moving, and pay overtime without affecting their credit history. BNPL provides businesses with much-needed liquidity and greater flexibility on 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 understanding of hyper-local markets and how it can establish strong local partnerships. Businesses and consumers increasingly “went digital” for providing and getting products and services online. If the pandemic hit, people would not need to touch or exchange cash as a result of paranoia of catching chlamydia from physical currencies. Several governments around the globe introduced digital financial transfers to provide COVID-assistance. Due to lockdown measures, consumers shifted to online platforms, which catapulted the need for digital payment systems. Now, digital platforms have grown to be a vital part of people’s lives, and people are more likely to continue shopping online within the post-pandemic period. The dramatic shift in consumer behavior probably will augment the need for e-payment systems much more. Therefore, information mill focusing their attention on digital mediums to satisfy the modern customer demands and thrive businesses within the changing market scenario. Organizations are reimagining customer journeys to cut back friction and still provide new safety measures. Payment companies like PayPal and Square Cash are staffing up across the board to higher understand the rearrangement of societal norms and stabilize the organization in the near future.
e-Payment Systems are the Future
With increasing smartphone and internet penetration, individuals are becoming tech-savvy, which presents endless opportunities for your digital payment markets. Post-pandemic, digital payment systems are anticipated to always flourish over time ahead. While cards remain the first choice for payments around the globe, mobile wallets are quickly gaining traction. The traditional 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, accompanied by South Korea. However, there are still many countries that are highly determined by cash because of lack of trust towards loan companies and deficiency of proper broadband infrastructure, etc. Soon, social media-initiated payments, biometric payments, voice-activated payments will probably 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 anxiety about the growing incidences of online fraud. According to the Mastercard survey, one in four consumers experienced some type of fraud in 2020, ramping up the cybercrime rate by 49%. Inside the first 1 / 2 of 2020, online scams increased by 73.8% from 2019. However, adopting new-age technologies such as multifactor authentication, biometrics, 3D security, Artificial Intelligence, and Machine Learning may help control fraudulent activities including phishing, virus attacks, etc. Shifting to contactless cards, QR codes, and tokenization can also help mitigate risks associated with digital payment solutions. Besides, sensitizing end-users concerning the secure using e-payment solutions through amplifying efforts towards building financial literacy can help to prevent frauds. The emergence of mobile commerce as well as the evolution of e-payment platforms supported by robust security solutions may help drive the purpose of making the economy truly cash-less.
As outlined by TechSci research report on “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 worldwide payment gateway market is expected to cross USD15 billion mark in 2019, registering a CAGR of 22% by 2026. The growth could be caused by the growing demand for online transactions, rising broadband connectivity, and exponential expansion of e-commerce across the globe.
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