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 online payment market or does it keep growing at the rapid rate?
The global digital payment marketplace is supposed 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 like mobile wallets, peer-to-peer (P2P) mobile payments, real-time payments, and cryptocurrencies. From the growing digital age, many payment technology information mill collaborating with traditional banking institutions to cater to the most recent consumer and merchant preferences. Because of enhanced broadband connectivity, increasing mobile commerce, emergence of recent technologies for example 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 adopting the digital peer-to-peer (P2P) apps since they are more desirable and flexible to make use of. In-app payments or tap-and-go transactions take seconds on the checkout and allow 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, you don’t need to complete information whenever to accomplish the payment process. Thus, online payment gateways play a crucial role from the economic growth, enabling swap present day economy. With social distancing rules in position, digital payments are getting to be an obligation for contactless transactions rather than a transaction replacement for avoid the spread of coronavirus.
Digital Commerce Empowering Businesses
Electronic payment systems have become an essential part of companies as consumer inclination towards internet shopping is expanding. With broadening internet penetration, increasing use of smartphones, and diverse alternatives for e-transactions, most individuals are preferring online channels over traditional brick-and-mortar stores for shopping. Therefore, businesses 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 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. By providing the flexibility to create payments through credit/debit cards, mobile money, e-Wallet, etc., the businesses can expand their client base. The electronic payment process improves customer happiness as customers do not need to count cash or take care of paperwork when 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. Using the surge in id theft and fraud, biometric authentication has developed into a reliable and secure alternative to make digital transactions. As outlined by a newly released research, biometrically verified mobile commerce transactions are required to constitute a tremendous 57% of the total biometric transaction by 2023. Biometric payment cards are also becoming more popular while they support tap-and-go payments, allowing users to produce 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 cellphones from intrusion with a two-factor authentication process. The combined solution eliminates identification through a single touch, rather it recognizes fingerprints through a picture from 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 become the highly adopted payment type globally. Digital wallets offer flexibility to users to hold multiple payment methods in a digital home change cash into electronic money needed for online or in-store purchases. Financial institutions have previously begun to embrace a digital wallet trend by giving 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 just like the physical plastic card. Currently, only 37% of merchants support mobile payments at the point of sale, however with the increasing adoption, merchants are prepared to invest in technologies facilitating digital wallets. The virtual wallets can conserve money as a result of low processing costs since they limit transaction values and frequency. Artificial Intelligence (AI) is increasing the consumer experience in terms of transactions with ChatBots, made 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 adding to the increase of smart voice wallets since that time Amazon propelled the key of the platform, which can be now being followed by Google and Apple.
E-Commerce Boom Accelerating Digital Payment Market Growth
E-commerce growth with an exponential rate is creating shock waves, and also the sonic boom is reverberating through the FinTech sector. The expansion of numerous e-commerce companies is driven from the form of financial services they feature. Digital transactions help it become convenient for your buyer and seller to make transactions and grow loyal to the marketplace space. The COVID-19 pandemic added some other dimension to e-commerce innovation, introducing newer trends including payment alternatives at checkouts (not with 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 as it relieves the financial burden for the buyer. BNPL involves a gentle credit check needed, and so the consumers can purchase what they need, keep the inventory moving, and pay overtime without affecting their credit history. BNPL provides businesses with much-needed liquidity and greater flexibility at 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 how it can establish strong local partnerships. Businesses and consumers increasingly “went digital” for providing and purchasing services and goods online. When the pandemic hit, people did not want to touch or exchange cash due to the 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 shifted to online platforms, which catapulted the requirement for digital payment systems. Now, digital platforms have become an integral part of people’s lives, and people are more prone to continue shopping on the web inside the post-pandemic period. The dramatic change in consumer behavior will probably augment the requirement for e-payment systems a lot more. Therefore, organizations are focusing their attention on digital mediums to meet the modern customer demands and thrive businesses within the changing market scenario. Organizations are reimagining customer journeys to reduce friction and offer new security measures. Payment companies like PayPal and Square Cash are staffing up across the board to better understand the rearrangement of societal norms and stabilize the organization in the future.
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 always flourish in the past to come. While cards remain the first choice for payments around the world, mobile wallets are quickly gaining traction. The original cashflow is declining in bank branches and ATMs, demonstrating an electrical 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 dependent on cash because of insufficient trust towards finance institutions and not enough proper broadband infrastructure, etc. In the future, social media-initiated payments, biometric payments, voice-activated payments will certainly become mainstream in developing countries too.
Cybersecurity and Privacy Concerns with web Payment Solutions
Cybersecurity and privacy threats have become a troubling concern about the increasing incidences of online fraud. Based on the Mastercard survey, one out of four consumers experienced some kind of fraud in 2020, ramping the cybercrime rate by 49%. From the first half 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 may help control fraudulent activities for example phishing, virus attacks, etc. Shifting to contactless cards, QR codes, and tokenization may also help mitigate risks connected with digital payment solutions. Besides, sensitizing end-users in regards to the secure using e-payment solutions through amplifying efforts towards building financial literacy can help prevent frauds. The emergence of mobile commerce and the evolution of e-payment platforms backed by robust security solutions can help drive the purpose of making the economy truly cash-less.
Based on 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 market is likely to cross USD15 billion mark in 2019, registering a CAGR of 22% by 2026. The expansion might be related to the growing interest in online transactions, rising broadband connectivity, and exponential growth of e-commerce across the world.
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