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 expansion of online payment market or can it keep growing with a rapid rate?
The worldwide 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. In the growing digital age, many payment technology information mill collaborating with traditional loan companies to cater to the most recent consumer and merchant preferences. As a result of enhanced broadband connectivity, increasing mobile commerce, emergence of latest technologies for example Virtual Reality, Artificial Intelligence, and rapid digitization, huge amounts of people 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 as they are more pleasing and versatile to work with. In-app payments or tap-and-go transactions take seconds with the checkout and invite users to create payments anytime and anywhere. Tokenization, encryption, Secure Sockets Layer (SSL), etc., offer multiple means of securing payments while enabling digital transactions. Moreover, a gamers do not have to add information each and every time to complete the payment process. Thus, online payment gateways play a crucial role in the economic growth, enabling swap the modern economy. With social distancing rules in place, digital payments have become a responsibility for contactless transactions as opposed to just a transaction option to prevent the spread of coronavirus.
Digital Commerce Empowering Businesses
Electronic payment systems are getting to be an important part of businesses as consumer inclination towards online shopping is expanding. With broadening internet penetration, increasing utilization of smartphones, and diverse choices for e-transactions, most rrndividuals are preferring online channels over traditional brick-and-mortar stores for shopping. Therefore, businesses are shifting online with an electronic payment treatment for 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 offering the pliability for making payments through credit/debit cards, mobile money, e-Wallet, etc., the businesses can expand their usage. The electronic payment process improves customer satisfaction as customers do not need to count cash or take care of paperwork whenever they need 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. Using the increase in identity fraud and fraud, biometric authentication has become a reliable and secure alternative in making digital transactions. According to a recent research, biometrically verified mobile commerce transactions are required to constitute a tremendous 57% in the total biometric transaction by 2023. Biometric payment cards can also be becoming more popular as they support tap-and-go payments, allowing users to create faster digital transactions. Digital payment technology provider, Worldline is partnering up with all the French FinTech, A3BC (Anything Anywhere Anytime Biometric Connection), to safeguard cell phones from intrusion having a two-factor authentication process. The combined solution eliminates identification through a single touch, rather it recognizes fingerprints through a picture in 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 get the highly adopted payment type globally. Digital wallets offer flexibility to users to keep multiple payment methods a single digital home and turn cash into electronic money needed for online or in-store purchases. Finance institutions have previously did start to embrace the digital wallet trend through providing virtual cards to business customers. The virtual cards kept in digital wallets consist of details like 16-digit card number, CVV code, date of expiry and work just as the physical credit card. Currently, only 37% of merchants support mobile payments at the pos, but with the increasing adoption, merchants are able to spend money on technologies facilitating digital wallets. The virtual wallets can help to save money as a result of low processing costs as they limit transaction values and frequency. Artificial Intelligence (AI) is improving the consumer experience with regards to 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 causing the expansion of smart voice wallets since that time Amazon propelled the leading with this platform, which can be now being followed by Google and Apple.
E-Commerce Boom Accelerating Digital Payment Market Growth
E-commerce growth at an exponential minute rates are creating shock waves, and also the sonic boom is reverberating over the FinTech sector. The development of several e-commerce companies is driven by the form of financial services they feature. Digital transactions help it become convenient for your seller and buyer to produce transactions and turn into faithful to the market industry space. The COVID-19 pandemic added an alternative dimension to e-commerce innovation, introducing newer trends like payment alternatives at checkouts (not with 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 around the buyer. BNPL involves a soft appraisal of creditworthiness, therefore the consumers can buy what they already want, keep the inventory moving, and pay overtime without affecting their credit score. 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 how it can establish strong local partnerships. Businesses and consumers increasingly “went digital” for providing and purchasing goods and services online. Once the pandemic hit, people didn’t want to touch or exchange cash due to paranoia of catching the issue 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 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 shopping online within the post-pandemic period. The dramatic shift in consumer behavior is likely to augment the need for e-payment systems much more. Therefore, publication rack focusing their attention on digital mediums to satisfy the newest customer demands and thrive businesses from the changing market scenario. Organizations are reimagining customer journeys to cut back friction and provide new security measures. Payment companies for example PayPal and Square Cash are staffing up charges to improve see 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 to the digital payment markets. Post-pandemic, digital payment systems are likely to always flourish through the years to come. While cards remain the best for payments around the globe, mobile wallets are quickly gaining traction. The traditional cash flow is declining in bank branches and ATMs, demonstrating an energy move towards a cashless society. Currently, China dominates the international mobile wallet consumption, then Columbia. However, you can still find many countries which are highly influenced by cash because of insufficient trust towards finance institutions and deficiency of 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 internet Payment Solutions
Cybersecurity and privacy threats are becoming a troubling nervous about the growing incidences of online fraud. In accordance with the Mastercard survey, one in four consumers experienced some kind of fraud in 2020, ramping in the cybercrime rate by 49%. From the first 50 % of 2020, online scams increased by 73.8% from 2019. However, adopting new-age technologies like multifactor authentication, biometrics, 3D security, Artificial Intelligence, and Machine Learning might help control fraudulent activities such as 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 about the secure using e-payment solutions through amplifying efforts towards building financial literacy may help 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.
Based on TechSci research directory of “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 international payment gateway market is likely to cross USD15 billion mark in 2019, registering a CAGR of 22% by 2026. The growth might be due to the growing interest in online transactions, rising broadband connectivity, and exponential growth of e-commerce around the world.
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