The cashless payment product 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 internet payment market or does it continue to grow at the rapid rate?
The worldwide digital payment market is anticipated to hit the USD6.6 trillion mark in 2021, registering around a 40% begin two years. The cashless payment methods are rapidly evolving with ground-breaking innovations for example mobile wallets, peer-to-peer (P2P) mobile payments, real-time payments, and cryptocurrencies. Inside the growing digital age, many payment technology companies are collaborating with traditional banking institutions to cater to the latest consumer and merchant preferences. On account of enhanced broadband connectivity, increasing mobile commerce, emergence of new technologies including Virtual Reality, Artificial Intelligence, and rapid digitization, immeasureable everyone has started embracing contactless payments both in 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 since they are more pleasing and flexible to make use of. In-app payments or tap-and-go transactions take seconds with the checkout and permit users to produce 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 need to complete information each time to finish the payment process. Thus, online payment gateways play a crucial role in the economic growth, enabling trade in the modern economy. With social distancing rules in position, digital payments are getting to be a duty for contactless transactions rather than just a transaction alternative to prevent the spread of coronavirus.
Digital Commerce Empowering Businesses
Electronic payment systems are getting to be a crucial part of businesses as consumer inclination towards shopping on the web is expanding. With broadening internet penetration, increasing use of smartphones, and various options for e-transactions, most consumers are preferring online channels over traditional brick-and-mortar stores for shopping. Therefore, businesses are shifting online with an electronic payment means to fix 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 freedom in making payments through credit/debit cards, mobile money, e-Wallet, etc., the businesses can expand their usage. The electronic payment process improves client satisfaction as customers do not need to count cash or deal with paperwork if he or she need 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 rise in identity fraud and fraud, biometric authentication has become a reliable and secure alternative in making digital transactions. According to a recently available research, biometrically verified mobile commerce transactions are required to constitute an enormous 57% from the total biometric transaction by 2023. Biometric payment cards may also be becoming popular as they support tap-and-go payments, allowing users to make faster digital transactions. The digital payment technology provider, Worldline is partnering up with all the French FinTech, A3BC (Anything Anywhere Anytime Biometric Connection), to safeguard mobile phones from intrusion having a two-factor authentication process. The combined solution eliminates identification by way of a single touch, rather it recognizes fingerprints via 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 bank cards for being the highly adopted payment type globally. Digital wallets offer flexibility to users to store multiple payment methods in one digital home and turn cash into electronic money needed for online or in-store purchases. Loan companies have started 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 as the physical plastic card. Currently, only 37% of merchants support mobile payments at the pos, but the increasing adoption, merchants are going to purchase technologies facilitating digital wallets. The virtual wallets can save money on account of low processing costs while they limit transaction values and frequency. Artificial Intelligence (AI) is increasing the buyer in relation to transactions with ChatBots, designed to execute and robotize essential exchanges as reported by 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 contributing to the increase of smart voice wallets ever since Amazon propelled the key of this platform, which is now being accompanied by Google and Apple.
E-Commerce Boom Accelerating Digital Payment Market Growth
E-commerce growth in an exponential minute rates are creating shock waves, and also the sonic boom is reverberating throughout the FinTech sector. The increase of many e-commerce companies is driven with the kind of financial services they feature. Digital transactions make it convenient for the buyer and seller to produce transactions and turn into faithful to the market 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, and also 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 gentle appraisal of creditworthiness, therefore the consumers can purchase what they already want, keep your inventory moving, and pay overtime without affecting their credit history. BNPL provides businesses with much-needed liquidity and greater flexibility in 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, say for example a strong knowledge of hyper-local markets and how it can establish strong local partnerships. Businesses and consumers increasingly “went digital” for providing and acquiring goods and services online. In the event the pandemic hit, people didn’t desire to touch or exchange cash due to the paranoia of catching the issue from physical currencies. Several governments around the globe introduced digital financial transfers to provide COVID-assistance. Due to lockdown measures, consumers shifted to online platforms, which catapulted the need for digital payment systems. Now, digital platforms are becoming an integral part of people’s lives, and rrndividuals are very likely to continue shopping online within the post-pandemic period. The dramatic shift in consumer behavior may well augment the requirement for e-payment systems more. Therefore, organizations are focusing their attention on digital mediums to satisfy the modern customer demands and thrive businesses from the changing market scenario. Organizations are reimagining customer journeys to scale back friction and offer new precautionary features. Payment companies such as PayPal and Square Cash are staffing up in general to raised comprehend the rearrangement of societal norms and stabilize the company in the future.
e-Payment Systems are the Future
With increasing smartphone and internet penetration, rrndividuals are becoming tech-savvy, which presents endless opportunities for that digital payment markets. Post-pandemic, digital payment systems are likely to carry on and flourish over the years into the future. While cards remain the first choice for payments around the globe, mobile wallets are quickly gaining traction. The standard earnings is declining in bank branches and ATMs, demonstrating an electrical move towards a cashless society. Currently, China dominates the world mobile wallet consumption, then Mexico. However, there are still many countries which might be highly dependent on cash because of insufficient trust towards financial institutions and lack of proper broadband infrastructure, etc. Soon, social media-initiated payments, biometric payments, voice-activated payments will likely become mainstream in developing countries too.
Cybersecurity and Privacy Concerns with internet Payment Solutions
Cybersecurity and privacy threats have become a troubling nervous about the increasing incidences of online fraud. In accordance with the Mastercard survey, one out of four consumers experienced some sort of fraud in 2020, ramping in the cybercrime rate by 49%. Within the first 50 % 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 including phishing, virus attacks, etc. Shifting to contactless cards, QR codes, and tokenization could also help mitigate risks associated with digital payment solutions. Besides, sensitizing end-users in regards to the secure using e-payment solutions through amplifying efforts towards building financial literacy will help prevent frauds. The emergence of mobile commerce and the evolution of e-payment platforms backed by robust security solutions will help drive the purpose of making the economy truly cash-less.
According to TechSci research report on “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 information mill anticipated to cross USD15 billion mark in 2019, registering a CAGR of 22% by 2026. The development may be due to the increasing interest in online transactions, rising broadband connectivity, and exponential growth of e-commerce around the globe.
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