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 development of internet payment market or will it carry on growing at a rapid rate?
The world digital payment companies are supposed to hit the USD6.6 trillion mark in 2021, registering around a 40% start 2 yrs. 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. Within the growing digital age, many payment technology publication rack collaborating with traditional financial institutions to appeal to the most recent consumer and merchant preferences. Due to enhanced broadband connectivity, increasing mobile commerce, emergence of recent technologies such as Virtual Reality, Artificial Intelligence, and rapid digitization, huge amounts of individuals have started embracing contactless payments in both 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 appealing and flexible to use. In-app payments or tap-and-go transactions take seconds with the checkout and invite users to generate payments anytime and anywhere. Tokenization, encryption, Secure Sockets Layer (SSL), etc., offer multiple methods for securing payments while enabling digital transactions. Moreover, the users don’t need to fill out information whenever to complete the payment process. Thus, online payment gateways play a vital role inside the economic growth, enabling exchange the modern economy. With social distancing rules set up, digital payments have grown to be an obligation 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 have grown to be a crucial part of businesses as consumer inclination towards online shopping is expanding. With broadening internet penetration, increasing using smartphones, and various alternatives 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 solution 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 giving the flexibility in making payments through credit/debit cards, mobile money, e-Wallet, etc., the firms can expand their subscriber base. The electronic payment process improves customer satisfaction as customers need not count cash or handle paperwork whenever they intend to make the transaction.
Biometric Authentication Enhancing Security
Biometric authentication involves recognizing biometric features and structural characteristics to verify 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 id theft and fraud, biometric authentication has developed into a reliable and secure alternative in making digital transactions. In accordance with a recent research, biometrically verified mobile commerce transactions are expected to constitute an enormous 57% of the total biometric transaction by 2023. Biometric payment cards are also becoming more popular as they support tap-and-go payments, allowing users to create faster digital transactions. Digital payment technology provider, Worldline is joining up together with the French FinTech, A3BC (Anything Anywhere Anytime Biometric Connection), to shield mobiles from intrusion with a two-factor authentication process. The combined solution eliminates identification through a single touch, rather it recognizes fingerprints by way of 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 credit cards to become the highly adopted payment type globally. Digital wallets offer flexibility to users to store multiple payment methods a single digital home and switch cash into electronic money necessary for online or in-store purchases. Loan companies have already began to embrace digital wallet trend by providing virtual cards to business customers. The virtual cards kept in digital wallets include 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 with the point of sale, however with ever rising adoption, merchants are prepared to put money into technologies facilitating digital wallets. The virtual wallets can conserve money due to low processing costs while they limit transaction values and frequency. Artificial Intelligence (AI) is enhancing the user experience on the subject of 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 contributing to the increase of smart voice wallets from the time Amazon propelled the principle on this platform, which is now being then Google and Apple.
E-Commerce Boom Accelerating Digital Payment Market Growth
E-commerce growth with an exponential rates are creating shock waves, along with the sonic boom is reverberating through the FinTech sector. The growth of countless e-commerce companies is driven from the sort of financial services they feature. Digital transactions ensure it is convenient for the seller and buyer to generate transactions and grow faithful to industry space. The COVID-19 pandemic added an alternative dimension to e-commerce innovation, introducing newer trends for example 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 for the buyer. BNPL involves a soft credit assessment, therefore the consumers can buy what they already want, keep your 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, for instance a strong comprehension of hyper-local markets and how it can establish strong local partnerships. Businesses and consumers increasingly “went digital” for providing and getting services and goods online. Once the pandemic hit, people failed to desire to touch or exchange cash because of the paranoia of catching chlamydia from physical currencies. Several governments worldwide introduced digital financial transfers to 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 extremely important component of people’s lives, and individuals are more likely to continue internet shopping inside the post-pandemic period. The dramatic shift in consumer behavior may well 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 inside the changing market scenario. Organizations are reimagining customer journeys to lessen friction and offer new security features. Payment companies such as PayPal and Square Cash are staffing up charges to better see the rearrangement of societal norms and stabilize the company in the near future.
e-Payment Systems are 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 anticipated to carry on and flourish over time to come. While cards remain the first choice for payments worldwide, mobile wallets are quickly gaining traction. The regular cashflow is declining in bank branches and ATMs, demonstrating an electrical move towards a cashless society. Currently, China dominates the global mobile wallet consumption, followed by Mexico. However, you can still find many countries that are highly dependent upon cash because of insufficient trust towards banking institutions and insufficient proper broadband infrastructure, etc. In the future, 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 concern with the increasing incidences of internet fraud. According to the Mastercard survey, one inch four consumers experienced some form of fraud in 2020, ramping in 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 including multifactor authentication, biometrics, 3D security, Artificial Intelligence, and Machine Learning can help control fraudulent activities like phishing, virus attacks, etc. Shifting to contactless cards, QR codes, and tokenization can also help mitigate risks related to digital payment solutions. Besides, sensitizing end-users regarding the secure putting on e-payment solutions through amplifying efforts towards building financial literacy can help to prevent frauds. The emergence of mobile commerce and the evolution of e-payment platforms supported by robust security solutions will help drive the goal 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 marketplace is expected to cross USD15 billion mark in 2019, registering a CAGR of 22% by 2026. The growth may be due to the increasing need for online transactions, rising broadband connectivity, and exponential increase of e-commerce across the globe.
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