The worldwide digital payment market is anticipated to reach USD 6.6 trillion in 2021, increasing by around 40% in only two years. Groundbreaking developments including mobile wallets, peer-to-peer (P2P) mobile payments, real-time payments, and cryptocurrencies are accelerating the evolution of cashless payment methods. In order to meet the changing needs of consumers and businesses, numerous payment technology companies are partnering with conventional financial institutions. In both developed and developing nations, billions of consumers have begun accepting contactless payments as a result of improved broadband access, rising mobile commerce, the introduction of new technologies like Virtual Reality and Artificial Intelligence, and rapid digitalization. Additionally, the non-cash transaction ecosystem is being strengthened by expanding e-commerce enterprises, digital remittances, digital business payments, and mobile B2B payments.
Users of cashless transactions from all generations are increasingly embracing digital peer-to-peer (P2P) apps because they are more enticing and convenient to use. Users can make payments whenever and wherever they choose with in-app purchases or tap-and-go transactions, which take only a few seconds at the checkout. There are many approaches to secure payments while facilitating digital transactions, including tokenization, encryption, Secure Sockets Layer (SSL), and others. Additionally, users don't need to repeatedly enter their information to finish the payment procedure. Online payment gateways thus facilitate trade in the modern economy and are essential for economic progress. With social distancing laws in place, digital payments are now required for contactless transactions rather than just being an option to stop the coronavirus from spreading.
Businesses are empowered by digital commerce
The importance of electronic payment systems has increased as consumers' propensity for online buying grows. Most customers prefer purchasing online over going to traditional brick-and-mortar businesses thanks to expanding internet usage, rising smartphone use, and a variety of e-commerce possibilities. In order to maximize their profit earnings, businesses are moving online using an electronic payment option. The electronic payment system can be automated to reduce errors and save a significant amount of time and work. Users are protected from security breaches by rigorous criteria for fraud detection and prevention in digital transaction systems and AI-based fraud detections. Businesses can increase their customer base by giving customers the option to pay with credit/debit cards, mobile money, e-Wallets, etc. Because clients do not have to count money or deal with papers each time they wish to complete a transaction, the electronic payment procedure increases customer happiness.
Increasing Security Through Biometric Authentication
Recognizing biometric traits and structural characteristics includes confirming an individual's identification through biometric authentication. The verification process may include heartbeat monitoring, vein mapping, iris detection, facial recognition, voice recognition, and fingerprint scanning. Biometric identification has emerged as a trustworthy and safe alternative for conducting digital transactions in light of the surge in identity theft and fraud. A recent study predicts that by 2023, a staggering 57% of all biometric transactions would be biometrically confirmed mobile commerce transactions. The adoption of tap-and-go payments on biometric payment cards is increasing because it enables consumers to complete digital transactions more quickly. Worldline, a provider of digital payment technology, is collaborating with French FinTech A3BC (Anything Anywhere Anytime Biometric Connection) to secure mobile phones using a two-factor authentication procedure. The integrated method does away with one-touch identification and instead detects fingerprints on a hand image. The vein-scanning payment system from FinGo, which enables users to authenticate transactions, will be made available by MasterCard.
Mobile Wallets' dominance
In 2019, credit cards were surpassed by mobile wallets as the most widely used payment method worldwide. Digital wallets give consumers the freedom to keep a variety of payment options in a single digital location and convert cash into the electronic currency needed for online or in-person purchases. Financial institutions have already begun to embrace the digital wallet craze by giving business clients virtual cards. The virtual cards kept in digital wallets have the same functionality as traditional plastic cards, including the same 16-digit card number, CVV code, and expiration date. Only 37% of retailers currently accept mobile payments at the point of sale, but as acceptance increases, retailers are more prepared to invest in tools that support digital wallets. Due to their cheap processing costs and restrictions on transaction amounts and frequency, virtual wallets allow users to save money. Artificial intelligence (AI) is enhancing the user experience in terms of interactions with ChatBots, which are created to carry out and automate necessary exchanges in accordance with the user's interests. Additionally, small to medium-sized businesses are embracing cryptographic money-based e-wallets to store digital currency. Since Amazon pioneered the idea of this platform, which is now being followed by Google and Apple, smart voice technology has contributed to the expansion of smart voice wallets.
E-Commerce Boom Boosting the Development of the Digital Payment Industry
A sonic boom is rippling throughout the FinTech industry as a result of the exponential rise of e-commerce. The type of financial services many e-commerce businesses offer is what fuels their expansion. It is convenient for the buyer and seller to conduct business online and to stay committed to the market. The COVID-19 epidemic brought newer trends to e-commerce innovation, including touchless transactions, virtual cards, QR codes, and various payment options at checkout counters (not using digital wallets). Additionally, the Buy Now Pay Later (BNPL) trend, which lessens the financial strain on the buyer, is ruling the e-commerce sector. With the help of BNPL, consumers may purchase what they require, keep the inventory moving, and make overtime payments without having these actions negatively impact their credit score. Businesses can benefit from increased checkout flexibility and much-needed liquidity thanks to BNPL.
COVID-19 Pandemic's Effect on the Development of the Digital Payments Market
Peer-to-peer (P2P) transfers and bill payments are no longer the primary functions of digital payment systems. The COVID-19 pandemic provided an opportunity for digital payment systems to demonstrate their advantages, such as their comprehensive knowledge of hyper-local markets and their capacity to forge solid local partnerships. Businesses and customers """"went digital"""" more frequently when offering and making online purchases of goods and services. People were afraid to handle or exchange cash when the epidemic first started because they might contract the disease through actual currency. To give COVID-assistance, a number of countries adopted digital financial transfers. Consumers switched to online platforms as a result of lockdown measures, which greatly increased the need for digital payment solutions. Digital platforms are now a necessary part of everyday life, and after a pandemic, consumers are more inclined to continue purchasing online. The sharp change in customer behavior will probably increase demand for e-payment systems even further. As a result, businesses are concentrating their efforts on digital platforms to satisfy the new client demands and prosper in the context of the shifting market environment. Companies are redesigning customer experiences to make them more frictionless and to add new security elements. Payment businesses like PayPal and Square Cash are hiring more people across the board to better understand how society is changing and to stabilize the industry in the near term.
The Future of Payment is Electronic
Consumers are becoming more tech-savvy as a result of rising smartphone and internet usage, which offers limitless prospects for the digital payment sectors. Digital payment systems are expected to continue to grow in the years after the pandemic. Mobile wallets are gradually gaining popularity, even if cards continue to be the preferred method of payment worldwide. The traditional cash flow is declining in bank branches and ATMs, demonstrating a power move towards a cashless society. Currently, China dominates the global mobile wallet consumption, followed by South Korea. However, there are still many countries that are highly dependent on cash due to lack of trust towards financial institutions and lack of proper broadband infrastructure, etc. In the near future, social media-initiated payments, biometric payments, voice-activated payments are likely to become mainstream in developing countries as well.
Cybersecurity and Privacy Concerns with Online Payment Solutions
Cybersecurity and privacy threats have become a troubling concern with the increasing incidences of online fraud. According to the Mastercard survey, one out of four consumers experienced some kind of fraud in 2020, ramping up the cybercrime rate by 49%. In the first half 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 can 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 application of e-payment solutions through amplifying efforts towards building financial literacy can help to prevent frauds. The emergence of mobile commerce and the evolution of e-payment platforms backed by robust security solutions can help to drive the goal of making the economy truly cash-less.""" - https://www.affordablecebu.com/
