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 with a rapid rate?
The global digital payment industry is expected to hit the USD6.6 trillion mark in 2021, registering around a 40% start 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. Within the growing digital age, many payment technology companies are collaborating with traditional banking institutions to focus on 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, vast amounts of individuals have started embracing contactless payments in the 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 because they are more desirable and versatile to utilize. In-app payments or tap-and-go transactions take seconds on the checkout and invite users to make payments anytime and anywhere. Tokenization, encryption, Secure Sockets Layer (SSL), etc., offer multiple ways of securing payments while enabling digital transactions. Moreover, a persons don’t have to fill out information whenever to complete the payment process. Thus, online payment gateways play a crucial role within the economic growth, enabling swap the present day economy. With social distancing rules set up, digital payments are becoming a duty for contactless transactions as opposed to just a transaction replacement for steer clear of the spread of coronavirus.
Digital Commerce Empowering Businesses
Electronic payment systems are getting to be a crucial part of businesses as consumer inclination towards online shopping is expanding. With broadening internet penetration, increasing use of smartphones, and diverse selections for e-transactions, most individuals are preferring online channels over traditional brick-and-mortar stores for shopping. Therefore, organizations are shifting online having an electronic payment treatment for maximize their profit earnings. Automating the electronic payment system eliminates the scope of errors and saves a great deal of commitment. 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 in making payments through credit/debit cards, mobile money, e-Wallet, etc., the lenders can expand their usage. The electronic payment process improves customer happiness as customers do not need to count cash or deal with paperwork every time they want to make the transaction.
Biometric Authentication Enhancing Security
Biometric authentication involves recognizing biometric features and structural characteristics to ensure 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 boost in identity fraud and fraud, biometric authentication has become a reliable and secure alternative in making digital transactions. In accordance with a recent research, biometrically verified mobile commerce transactions are hoped for to constitute a massive 57% of 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 produce faster digital transactions. The digital payment technology provider, Worldline is joining up with all the French FinTech, A3BC (Anything Anywhere Anytime Biometric Connection), to safeguard mobiles from intrusion using a two-factor authentication process. The combined solution eliminates identification by having a single touch, rather it recognizes fingerprints by having a picture of 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 credit cards to get the highly adopted payment type globally. Digital wallets offer flexibility to users to keep multiple payment methods in one digital home change cash into electronic money essential for online or in-store purchases. Loan companies have previously did start to embrace the digital wallet trend through providing virtual cards to business customers. The virtual cards stored in digital wallets contain 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 pos, though ever rising adoption, merchants are prepared to put money into technologies facilitating digital wallets. The virtual wallets can help to conserve money as a result of low processing costs as they limit transaction values and frequency. Artificial Intelligence (AI) is improving the consumer 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 now being embraced by new companies to small-medium organizations for storing digital money. Smart voice technology is leading to the growth of smart voice wallets since Amazon propelled the key with this platform, which is now being followed by Google and Apple.
E-Commerce Boom Accelerating Digital Payment Market Growth
E-commerce growth in an exponential minute rates are creating shock waves, and also the sonic boom is reverberating throughout the FinTech sector. The increase of numerous e-commerce companies is driven with the kind of financial services they offer. Digital transactions ensure it is convenient for the buyer and seller to create transactions and turn into loyal to the marketplace space. The COVID-19 pandemic added another dimension to e-commerce innovation, introducing newer trends such as payment alternatives at checkouts (avoid digital wallets), virtual cards, QR codes, and other touchless transactions. Besides, the Buy Now Pay Later (BNPL) trend is dominating the e-commerce industry as it relieves the financial burden on the buyer. BNPL involves a soft credit assessment, hence the consumers can purchase what they desire, maintain 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, such as a strong comprehension of hyper-local markets and its ability to establish strong local partnerships. Businesses and consumers increasingly “went digital” for providing and buying products and services online. In the event the pandemic hit, people didn’t 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. Owing to lockdown measures, consumers moved to online platforms, which catapulted the interest in digital payment systems. Now, digital platforms have become an integral part of people’s lives, and people are more likely to continue online shopping inside the post-pandemic period. The dramatic shift in consumer behavior is likely to augment the demand for e-payment systems a lot more. Therefore, information mill focusing their attention on digital mediums to fulfill the modern customer demands and thrive businesses in the changing market scenario. Organizations are reimagining customer journeys to lessen friction and offer new security measures. Payment companies for example PayPal and Square Cash are staffing up in general to improve see the rearrangement of societal norms and stabilize the business sooner.
e-Payment Systems will be the Future
With increasing smartphone and internet penetration, people are becoming tech-savvy, which presents endless opportunities to the digital payment markets. Post-pandemic, digital payment systems are expected to continue to flourish in the past to come. While cards remain the best for payments worldwide, mobile wallets are quickly gaining traction. The standard income is declining in bank branches and ATMs, demonstrating an energy move towards a cashless society. Currently, China dominates the global mobile wallet consumption, then South Korea. However, it is possible to many countries which can be highly dependent on cash as a result of not enough trust towards financial institutions and not enough proper broadband infrastructure, etc. Sooner, social media-initiated payments, biometric payments, voice-activated payments will probably become mainstream in developing countries also.
Cybersecurity and Privacy Concerns with Online Payment Solutions
Cybersecurity and privacy threats have become a troubling anxiety about the growing 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%. Inside the first half 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 might help control fraudulent activities for example phishing, virus attacks, etc. Shifting to contactless cards, QR codes, and tokenization could also help mitigate risks related to digital payment solutions. Besides, sensitizing end-users concerning the secure putting on e-payment solutions through amplifying efforts towards building financial literacy will help prevent frauds. The emergence of mobile commerce along with the evolution of e-payment platforms supported by robust security solutions may help drive the aim 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 Large Enterprise), By End-User (Retail, Travel & Hospitality, Healthcare, Education, Government, Utilities & Others), By Region, Competition, Forecast & Opportunities, 2026”, the worldwide payment gateway companies are expected to cross USD15 billion mark in 2019, registering a CAGR of 22% by 2026. The development might be due to the increasing interest in online transactions, rising broadband connectivity, and exponential increase of e-commerce across the globe.
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