The cashless payment product 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 development of online payment market or will it keep growing in a rapid rate?
The international digital payment market is anticipated to hit the USD6.6 trillion mark in 2021, registering around a 40% start a couple of 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 companies are collaborating with traditional financial institutions to appeal to the most recent consumer and merchant preferences. On account of enhanced broadband connectivity, increasing mobile commerce, emergence of the latest technologies for example Virtual Reality, Artificial Intelligence, and rapid digitization, vast 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 adopting the digital peer-to-peer (P2P) apps as they are more desirable and flexible to use. In-app payments or tap-and-go transactions take seconds at the checkout and permit users to generate payments anytime and anywhere. Tokenization, encryption, Secure Sockets Layer (SSL), etc., offer multiple means of securing payments while enabling digital transactions. Moreover, a persons don’t have to fill in information whenever to finish the payment process. Thus, online payment gateways play an important role in the economic growth, enabling exchange present day economy. With social distancing rules in place, digital payments are becoming a responsibility for contactless transactions rather than just a transaction substitute for stop the spread of coronavirus.
Digital Commerce Empowering Businesses
Electronic payment systems have become a crucial part of companies as consumer the likelihood of shopping on the web is expanding. With broadening internet penetration, increasing using smartphones, and various options for e-transactions, most consumers are preferring online channels over traditional brick-and-mortar stores for shopping. Therefore, companies are shifting online by having 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 giving the freedom in making payments through credit/debit cards, mobile money, e-Wallet, etc., nokia’s can expand their subscriber base. The electronic payment process improves customer satisfaction as customers don’t have to count cash or cope with paperwork if he or she 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. With all the boost in identity theft and fraud, biometric authentication has become a reliable and secure alternative to create digital transactions. In accordance with a newly released research, biometrically verified mobile commerce transactions are hoped for to constitute an enormous 57% of the total biometric transaction by 2023. Biometric payment cards can also be becoming more popular while they support tap-and-go payments, allowing users to create faster digital transactions. A digital payment technology provider, Worldline is joining up using the French FinTech, A3BC (Anything Anywhere Anytime Biometric Connection), to shield mobile phones from intrusion having a two-factor authentication process. The combined solution eliminates identification by having a single touch, rather it recognizes fingerprints by way of a picture from 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 charge cards for being the highly adopted payment type globally. Digital wallets offer flexibility to users to keep multiple payment methods in one digital home swap cash into electronic money required for online or in-store purchases. Finance institutions have already started to embrace digital wallet trend by providing virtual cards to business customers. The virtual cards stored in digital wallets incorporate 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 in the pos, however with the rising adoption, merchants are able to put money into technologies facilitating digital wallets. The virtual wallets can save money due to low processing costs while they limit transaction values and frequency. Artificial Intelligence (AI) is helping the buyer with regards to transactions with ChatBots, built to execute and robotize essential exchanges as reported by 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 causing the development of smart voice wallets ever since Amazon propelled the principle on this platform, which is now being followed by Google and Apple.
E-Commerce Boom Accelerating Digital Payment Market Growth
E-commerce growth at an exponential rates are creating shock waves, and the sonic boom is reverberating across the FinTech sector. The expansion of several e-commerce companies is driven from the sort of financial services they feature. Digital transactions make it convenient to the seller and buyer to generate transactions and also be loyal to industry space. The COVID-19 pandemic added a different dimension to e-commerce innovation, introducing newer trends such as payment alternatives at checkouts (not with 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 because it relieves the financial burden about the buyer. BNPL involves a gentle appraisal of creditworthiness, therefore the consumers can find what they desire, maintain 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, like a strong knowledge of hyper-local markets and its ability to establish strong local partnerships. Businesses and consumers increasingly “went digital” for providing and acquiring products or services online. If the pandemic hit, people did not wish to touch or exchange cash due to paranoia of catching the infection from physical currencies. Several governments worldwide introduced digital financial transfers to provide COVID-assistance. As a result of lockdown measures, consumers now use online platforms, which catapulted the requirement for digital payment systems. Now, digital platforms are becoming an essential component of people’s lives, and rrndividuals are more likely to continue online shopping inside the post-pandemic period. The dramatic change in consumer behavior is likely to augment the demand for e-payment systems a lot more. Therefore, organizations are focusing their attention on digital mediums to fulfill the brand new customer demands and thrive businesses from the changing market scenario. Organizations are reimagining customer journeys to cut back friction and supply new precautionary features. Payment companies for example PayPal and Square Cash are staffing up in general to higher see the rearrangement of societal norms and stabilize the company sooner.
e-Payment Systems would be 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 expected to still flourish over time to come. While cards remain the first choice for payments around the globe, mobile wallets are quickly gaining traction. The regular earnings is declining in bank branches and ATMs, demonstrating an electric move towards a cashless society. Currently, China dominates the international mobile wallet consumption, followed by South Korea. However, you can still find many countries which are highly dependent upon cash as a result of lack of trust towards financial institutions and deficiency of proper broadband infrastructure, etc. Sooner, social media-initiated payments, biometric payments, voice-activated payments will certainly become mainstream in developing countries at the same time.
Cybersecurity and Privacy Concerns with Online Payment Solutions
Cybersecurity and privacy threats have grown to be a troubling concern about the growing incidences of internet fraud. Based on the Mastercard survey, one out of four consumers experienced some form of fraud in 2020, ramping up 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 will help control fraudulent activities for example phishing, virus attacks, etc. Shifting to contactless cards, QR codes, and tokenization will also help mitigate risks linked to digital payment solutions. Besides, sensitizing end-users regarding 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 backed by robust security solutions can help to drive the goal of making the economy truly cash-less.
As outlined by TechSci research directory “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 global payment gateway market is supposed to cross USD15 billion mark in 2019, registering a CAGR of 22% by 2026. The expansion could be due to the growing requirement for online transactions, rising broadband connectivity, and exponential expansion of e-commerce around the world.
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