The cashless payment system is growing exponentially with evolving payment methods, rising e-commerce use, enhanced broadband connectivity, and emergence of recent technologies. Can increasing incidences of cyberattacks and spams hamper the development of internet payment market or could it keep growing with a rapid rate?
The worldwide digital payment market is supposed to hit the USD6.6 trillion mark in 2021, registering around a 40% jump in couple of 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. From the growing digital age, many payment technology publication rack collaborating with traditional loan companies to serve the most recent consumer and merchant preferences. On account of enhanced broadband connectivity, increasing mobile commerce, emergence of recent technologies including Virtual Reality, Artificial Intelligence, and rapid digitization, immeasureable 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 since they are more appealing and versatile to work with. In-app payments or tap-and-go transactions take seconds in the checkout and invite users to create payments anytime and anywhere. Tokenization, encryption, Secure Sockets Layer (SSL), etc., offer multiple ways of securing payments while enabling digital transactions. Moreover, the users don’t need to fill in information every time to finish the payment process. Thus, online payment gateways play an important role from the economic growth, enabling trade-in the current economy. With social distancing rules set up, digital payments are becoming a responsibility for contactless transactions rather than just a transaction replacement for steer clear of the spread of coronavirus.
Digital Commerce Empowering Businesses
Electronic payment systems have grown to be an essential part of companies as consumer inclination towards shopping online is expanding. With broadening internet penetration, increasing using smartphones, and diverse alternatives for e-transactions, most people are preferring online channels over traditional brick-and-mortar stores for shopping. Therefore, organizations are shifting online with an electronic payment strategy 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 make payments through credit/debit cards, mobile money, e-Wallet, etc., the businesses can expand their customer base. The electronic payment process improves client satisfaction as customers need not count cash or handle 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. Together with the rise in id theft and fraud, biometric authentication has developed into a reliable and secure alternative to make digital transactions. In accordance with a recently available research, biometrically verified mobile commerce transactions are anticipated to constitute a tremendous 57% of the total biometric transaction by 2023. Biometric payment cards may also be becoming popular as they support tap-and-go payments, allowing users to produce faster digital transactions. The digital payment technology provider, Worldline is joining up using the French FinTech, A3BC (Anything Anywhere Anytime Biometric Connection), to protect mobiles from intrusion with a two-factor authentication process. The combined solution eliminates identification by having a single touch, rather it recognizes fingerprints via a picture in the hand. MasterCard is intending 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 store multiple payment methods in a digital home and switch cash into electronic money necessary for online or in-store purchases. Banking institutions have already begun to embrace the digital wallet trend through providing virtual cards to business customers. The virtual cards stored 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 in the point of sale, though ever rising adoption, merchants are going to invest in technologies facilitating digital wallets. The virtual wallets can help to conserve money because of low processing costs as they limit transaction values and frequency. Artificial Intelligence (AI) is increasing the user experience in terms of transactions with ChatBots, meant 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 leading to the growth of smart voice wallets ever since Amazon propelled the key of the platform, which is now being as well as Google and Apple.
E-Commerce Boom Accelerating Digital Payment Market Growth
E-commerce growth within an exponential rate is creating shock waves, and also the sonic boom is reverberating over the FinTech sector. The growth of countless e-commerce companies is driven from the form of financial services they offer. Digital transactions allow it to be convenient for your buyer and seller to make transactions and remain faithful to the market space. The COVID-19 pandemic added an alternative dimension to e-commerce innovation, introducing newer trends for example payment alternatives at checkouts (avoid digital wallets), virtual cards, QR codes, as well as other touchless transactions. Besides, the Buy Now Pay Later (BNPL) trend is dominating the e-commerce industry mainly because it relieves the financial burden around the buyer. BNPL involves a soft credit assessment, so the consumers can buy what they already want, maintain your inventory moving, and pay overtime without having affected their credit score. 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 understanding of hyper-local markets and how it can 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 need to touch or exchange cash due to the paranoia of catching the issue from physical currencies. Several governments all over the world introduced digital financial gets in provide COVID-assistance. Because of lockdown measures, consumers now use online platforms, which catapulted the demand for digital payment systems. Now, digital platforms are getting to be an extremely important component of people’s lives, and people are very likely to continue online shopping from the post-pandemic period. The dramatic shift in consumer behavior may well augment the need for e-payment systems much more. Therefore, companies are 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 scale back friction and supply new safety measures. Payment companies including PayPal and Square Cash are staffing up across the board to higher comprehend the rearrangement of societal norms and stabilize the business enterprise sooner.
e-Payment Systems include the Future
With increasing smartphone and internet penetration, rrndividuals are becoming tech-savvy, which presents endless opportunities for the digital payment markets. Post-pandemic, digital payment systems are likely to continue to flourish over the years to come. While cards remain the first choice for payments around the globe, mobile wallets are quickly gaining traction. The regular income is declining in bank branches and ATMs, demonstrating an electrical move perfectly into a cashless society. Currently, China dominates the world mobile wallet consumption, then Columbia. However, it is possible to many countries that are highly dependent upon cash as a result of not enough trust towards loan companies and insufficient proper broadband infrastructure, etc. In the near future, social media-initiated payments, biometric payments, voice-activated payments will likely become mainstream in developing countries as well.
Cybersecurity and Privacy Concerns with internet Payment Solutions
Cybersecurity and privacy threats are getting to be a troubling concern with the growing incidences of internet fraud. Based on the Mastercard survey, one in four consumers experienced some form of fraud in 2020, ramping in the cybercrime rate by 49%. Within the first 1 / 2 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 will help control fraudulent activities like phishing, virus attacks, etc. Shifting to contactless cards, QR codes, and tokenization can also help mitigate risks connected with digital payment solutions. Besides, sensitizing end-users concerning 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 backed by robust security solutions can help drive the purpose of making the economy truly cash-less.
As outlined by TechSci research set 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 worldwide payment gateway information mill anticipated to cross USD15 billion mark in 2019, registering a CAGR of 22% by 2026. The expansion might be due to the increasing interest in online transactions, rising broadband connectivity, and exponential development of e-commerce around the globe.
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