The cashless payment system 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 increase of internet payment market or could it carry on growing in a rapid rate?
The global digital payment companies are anticipated 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 such as mobile wallets, peer-to-peer (P2P) mobile payments, real-time payments, and cryptocurrencies. Inside the growing digital age, many payment technology organizations are collaborating with traditional financial institutions to cater to the latest consumer and merchant preferences. Because of enhanced broadband connectivity, increasing mobile commerce, emergence of latest technologies for example Virtual Reality, Artificial Intelligence, and rapid digitization, immeasureable folks have 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 since they are more inviting and flexible to utilize. In-app payments or tap-and-go transactions take seconds at the checkout and permit users to generate payments anytime and anywhere. Tokenization, encryption, Secure Sockets Layer (SSL), etc., offer multiple means of securing payments while enabling digital transactions. Moreover, the users don’t have to complete information each and every time to complete the payment process. Thus, online payment gateways play an important role in the economic growth, enabling swap the current economy. With social distancing rules in position, digital payments have become an obligation for contactless transactions rather than a transaction option to stop the spread of coronavirus.
Digital Commerce Empowering Businesses
Electronic payment systems have become an essential part of businesses as consumer the likelihood of shopping on the web is expanding. With broadening internet penetration, increasing utilization 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 with an electronic payment solution to maximize their profit earnings. Automating the electronic payment system eliminates the scope of errors and saves plenty of time and effort. High standards for detecting and preventing fraud in digital transaction systems and AI-based fraud detections protect users from security breaches. Through providing the flexibleness for making payments through credit/debit cards, mobile money, e-Wallet, etc., the businesses can expand their customer base. The electronic payment process improves customer care as customers need not 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 confirm 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 all the boost in identity theft and fraud, biometric authentication has turned into a reliable and secure alternative to create digital transactions. According to a recently available research, biometrically verified mobile commerce transactions are required to constitute a massive 57% in the total biometric transaction by 2023. Biometric payment cards will also be becoming popular as they support tap-and-go payments, allowing users to make faster digital transactions. The digital payment technology provider, Worldline is joining up together with the French FinTech, A3BC (Anything Anywhere Anytime Biometric Connection), to guard mobile phones from intrusion which has a two-factor authentication process. The combined solution eliminates identification by having a single touch, rather it recognizes fingerprints via a picture with 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 being the highly adopted payment type globally. Digital wallets offer flexibility to users to hold multiple payment methods in a digital home and switch cash into electronic money required for online or in-store purchases. Finance institutions have already begun to embrace digital wallet trend by providing virtual cards to business customers. The virtual cards saved in digital wallets include details like 16-digit card number, CVV code, date of expiry and work similar to the physical plastic card. Currently, only 37% of merchants support mobile payments on the point of sale, however with the increasing adoption, merchants are going to put money into technologies facilitating digital wallets. The virtual wallets can help to conserve money due to low processing costs because they limit transaction values and frequency. Artificial Intelligence (AI) is improving the consumer experience on the subject of transactions with ChatBots, made 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 technologies are contributing to the increase of smart voice wallets from the time Amazon propelled the leading on this platform, which is now being as well as Google and Apple.
E-Commerce Boom Accelerating Digital Payment Market Growth
E-commerce growth with an exponential rates are creating shock waves, as well as the sonic boom is reverberating through the FinTech sector. The expansion of many e-commerce companies is driven from the type of financial services they supply. Digital transactions help it become convenient to the buyer and seller to create transactions and grow faithful to the market industry space. The COVID-19 pandemic added a different dimension to e-commerce innovation, introducing newer trends such as payment alternatives at checkouts (steer clear 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 on the buyer. BNPL involves a soft credit assessment, and so the consumers can get what they already want, maintain the inventory moving, and pay overtime without having affected 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, say for example a strong understanding of hyper-local markets and how it can establish strong local partnerships. Businesses and consumers increasingly “went digital” for providing and buying services and goods online. When the pandemic hit, people failed to desire to touch or exchange cash due to paranoia of catching the infection from physical currencies. Several governments all over the world introduced digital financial transfers to provide COVID-assistance. As a result of lockdown measures, consumers moved to online platforms, which catapulted the need for digital payment systems. Now, digital platforms are getting to be an extremely important component of people’s lives, and individuals are more prone to continue online shopping in the post-pandemic period. The dramatic transfer of consumer behavior is likely to augment the interest in e-payment systems even more. Therefore, organizations are focusing their attention on digital mediums to meet the newest customer demands and thrive businesses in the changing market scenario. Organizations are reimagining customer journeys to scale back friction and offer new safety measures. Payment companies like PayPal and Square Cash are staffing up in general to higher comprehend the rearrangement of societal norms and stabilize the business soon.
e-Payment Systems will be the Future
With increasing smartphone and internet penetration, consumers are becoming tech-savvy, which presents endless opportunities for that digital payment markets. Post-pandemic, digital payment systems are supposed to still flourish through the years to come. While cards remain the best 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 world mobile wallet consumption, followed by Columbia. However, you may still find many countries that are highly determined by cash as a result of lack of trust towards banking institutions and not enough 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 web Payment Solutions
Cybersecurity and privacy threats are becoming a troubling nervous about the increasing incidences of internet fraud. Based on the Mastercard survey, one inch four consumers experienced some sort of fraud in 2020, ramping inside the cybercrime rate by 49%. In the first half 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 including phishing, virus attacks, etc. Shifting to contactless cards, QR codes, and tokenization will also help mitigate risks associated with digital payment solutions. Besides, sensitizing end-users regarding the secure application of e-payment solutions through amplifying efforts towards building financial literacy can help to prevent frauds. The emergence of mobile commerce and also the evolution of e-payment platforms supported by robust security solutions will help drive the aim of making the economy truly cash-less.
According to TechSci research report on “Global Payment Gateway Market By Type (Hosted, Self-hosted & Bank Integrated), By Enterprise Size (SME and enormous Enterprise), By End-User (Retail, Travel & Hospitality, Healthcare, Education, Government, Utilities & Others), By Region, Competition, Forecast & Opportunities, 2026”, the international payment gateway companies are supposed to cross USD15 billion mark in 2019, registering a CAGR of 22% by 2026. The increase could be caused by the increasing interest in online transactions, rising broadband connectivity, and exponential expansion of e-commerce across the globe.
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