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 increase of online payment market or will it carry on growing at the rapid rate?
The worldwide digital payment marketplace is likely to hit the USD6.6 trillion mark in 2021, registering around a 40% begin a 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. Within the growing digital age, many payment technology information mill collaborating with traditional financial institutions to focus on the latest consumer and merchant preferences. As a result of enhanced broadband connectivity, increasing mobile commerce, emergence of recent technologies including Virtual Reality, Artificial Intelligence, and rapid digitization, huge amounts of everyone has 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 as is also more pleasing and flexible to utilize. In-app payments or tap-and-go transactions take seconds at the checkout and enable 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, the users need not add information whenever to complete the payment process. Thus, online payment gateways play an important role within the economic growth, enabling swap the present day economy. With social distancing rules set up, digital payments are getting to be an obligation for contactless transactions rather than just a transaction option to stop the spread of coronavirus.
Digital Commerce Empowering Businesses
Electronic payment systems have become an important 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 by having an electronic payment means to fix maximize their profit earnings. Automating the electronic payment system eliminates the scope of errors and saves a considerable amount 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 flexibleness for making payments through credit/debit cards, mobile money, e-Wallet, etc., nokia’s can expand their usage. The electronic payment process improves client satisfaction as customers need not count cash or handle paperwork whenever they want to make the transaction.
Biometric Authentication Enhancing Security
Biometric authentication involves recognizing biometric features and structural characteristics to confirm the identification of the individual. The verification method can involve fingerprint scanning, facial recognition, voice recognition, vein mapping, iris detection, and heartbeat analysis. With all the rise in identity fraud and fraud, biometric authentication has turned into a reliable and secure alternative in making digital transactions. Based on a recent research, biometrically verified mobile commerce transactions are hoped for to constitute a massive 57% in the total biometric transaction by 2023. Biometric payment cards will also be becoming more popular since they support tap-and-go payments, allowing users to produce faster digital transactions. A digital payment technology provider, Worldline is joining up together with the French FinTech, A3BC (Anything Anywhere Anytime Biometric Connection), to shield cell phones from intrusion using a two-factor authentication process. The combined solution eliminates identification by having a single touch, rather it recognizes fingerprints by way of 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 cards to become the highly adopted payment type globally. Digital wallets offer flexibility to users to save multiple payment methods in a digital home swap cash into electronic money required for online or in-store purchases. Finance institutions have began to embrace the digital wallet trend by providing virtual cards to business customers. The virtual cards held in digital wallets incorporate details like 16-digit card number, CVV code, date of expiry and work just like the physical charge card. Currently, only 37% of merchants support mobile payments on the pos, but the rising adoption, merchants are prepared to purchase technologies facilitating digital wallets. The virtual wallets can help to save money because of low processing costs since they limit transaction values and frequency. Artificial Intelligence (AI) is increasing the buyer 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 increasingly being embraced by new companies to small-medium organizations for storing digital money. Smart voice technology is leading to the development of smart voice wallets since that time Amazon propelled the main with this platform, that’s now being then Google and Apple.
E-Commerce Boom Accelerating Digital Payment Market Growth
E-commerce growth in an exponential rates are creating shock waves, and also the sonic boom is reverberating across the FinTech sector. The expansion of several e-commerce companies is driven from the form of financial services they provide. Digital transactions make it convenient for your seller and buyer to create transactions and grow loyal to the market space. The COVID-19 pandemic added another dimension to e-commerce innovation, introducing newer trends like 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 because it relieves the financial burden on the buyer. BNPL involves a gentle credit assessment, therefore the consumers can get what they need, maintain the inventory moving, and pay overtime without affecting their credit standing. 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, 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 purchasing goods and services online. In the event the pandemic hit, people did not wish to touch or exchange cash due to the paranoia of catching the infection from physical currencies. Several governments worldwide introduced digital financial gets in provide COVID-assistance. As a result of lockdown measures, consumers now use online platforms, which catapulted the need for digital payment systems. Now, digital platforms are becoming a vital part of people’s lives, and people are prone to continue shopping on the web within the post-pandemic period. The dramatic transfer of consumer behavior may well augment the demand for e-payment systems more. Therefore, publication rack focusing their attention on digital mediums to fulfill the new customer demands and thrive businesses within the changing market scenario. Organizations are reimagining customer journeys to lessen friction and offer new safety measures. Payment companies for example PayPal and Square Cash are staffing up in general to better see the rearrangement of societal norms and stabilize the business sooner.
e-Payment Systems would be 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 expected to always flourish through the years ahead. While cards remain the first choice for payments worldwide, mobile wallets are quickly gaining traction. The traditional earnings is declining in bank branches and ATMs, demonstrating a power move towards a cashless society. Currently, China dominates the worldwide mobile wallet consumption, as well as South Korea. However, you may still find many countries which can be highly influenced by cash because of lack of trust towards banking institutions and lack of 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 internet Payment Solutions
Cybersecurity and privacy threats have grown to be a troubling anxiety about the growing incidences of internet fraud. According to the Mastercard survey, one inch four consumers experienced some type of fraud in 2020, ramping inside the cybercrime rate by 49%. In the first half of 2020, online scams increased by 73.8% from 2019. However, adopting new-age technologies for example multifactor authentication, biometrics, 3D security, Artificial Intelligence, and Machine Learning may help control fraudulent activities such as phishing, virus attacks, etc. Shifting to contactless cards, QR codes, and tokenization could also help mitigate risks linked to digital payment solutions. Besides, sensitizing end-users in regards to the secure use of e-payment solutions through amplifying efforts towards building financial literacy may help prevent frauds. The emergence of mobile commerce along with the evolution of e-payment platforms backed by robust security solutions can help drive the objective of making the economy truly cash-less.
According to TechSci research set of “Global Payment Gateway Market By Type (Hosted, Self-hosted & Bank Integrated), By Enterprise Size (SME and huge Enterprise), By End-User (Retail, Travel & Hospitality, Healthcare, Education, Government, Utilities & Others), By Region, Competition, Forecast & Opportunities, 2026”, the international payment gateway companies are likely to cross USD15 billion mark in 2019, registering a CAGR of 22% by 2026. The development could be related to the increasing need for online transactions, rising broadband connectivity, and exponential development of e-commerce across the globe.
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