Trends in Digital Payments
Companies operating in the FinTech market are focused on providing flexible, simpler, and easy to use solutions for the consumers. The ePayment solution and service vendors are acknowledging the shifting preferences of consumers towards online shopping and cashless payments. Owing to this, the vendors are focused on making the ePayment systems more accessible and easy to use.
The global ePayment system market revenue totaled ~US$ 77.8 Bn in 2020, according to Future Market Insights (FMI). The overall market is expected to reach ~US$ 456.6 Bn by 2031, growing at a CAGR of around 17.7% for 2021 – 31.
The ePayment system market is estimated to account for nearly 75% of the global payments market. With the rising popularity of contactless payments and e-Payment gateways, the market for ePayment systems has witnessed significant growth. Furthermore, there has been a shift towards mCommerce, online shopping, digital commerce and cashless transactions which is further propelling the ePayment system market growth.
The COVID-19 has reinforced the trend of digital payments and mCommerce, across payment types and demographics. The pandemic has shed the spotlight on the significance of ePayments, summarizing a decade of anticipated revolution into one year and creating a shift in human behavior towards the acceptance of digital payments. Driven by this the ePayment system market is estimated to witness a growth from around 12.5% to 14.6% Y-o-Y from 2019 to 2021.
As technology and consumer demand continues to disrupt markets and prompt new approaches by financial institutions, fintechs and merchants, it’s clear that 2022 will be another year of large-scale change. With further positive disruption across commerce and money movement, innovation will continue to thrive in an open environment, which will truly unlock the power and potential of digital money.
E-Wallets Taking A Larger Share
Juniper Research forecasts that the value of global e-wallet transactions will exceed $10 trillion by 2025, up from $5.5 trillion in 2020. E-wallet providers, both original equipment manufacturers such as Apple Pay, Starbucks, Google Pay and Samsung Pay and mobile money wallets.
The Rise Of ‘Buy-Now-Pay-Later’
While digital and mobile wallets accounted for 44.5% of e-commerce payment transactions in 2020, buy-now-pay-later (BNPL) took just a 2.1% share, according to FT Partners Fintech Industry Research. The report predicts that that figure will double to 4.2% by 2024, even as the share of transactions funded by digital and mobile wallets will grow to 51.7% during the same period.
BNPL use accelerated during the course of the pandemic as consumers purchased greater volumes of goods and services online, with many tempted by the speed and convenience of being able to spread their repayments over six weeks or more at the simple click of a button. It is also across the entire commerce ecosystem.
According to McKinsey’s 2021 Digital Payments Consumer Survey, 30 percent of our survey respondents report having financed a purchase with this type of service (Exhibit 1). Although this share is only three percentage points higher than 2020’s, attitudinal data seem to support the value proposition put forth by BNPL providers—and given the product’s increased availability we believe usage may be growing faster than penetration.
While the COVID-19 pandemic slowed penetration of some forms of digital spending, the overall trend continues toward greater use of digital options. As consumers and businesses continue to adapt to new ways of shopping, embracing digital-first commerce will be a competitive advantage that translates to more sales and consumer trust. Innovations in digital payments, like BNPL and cryptocurrency, are also beginning to take root and show the potential for future growth. With the speed at which change occurs, digital-first commerce will soon be the new normal.
Protecting customer data and privacy is among the top 3 trends businesses say will have the greatest impact on their business in 2022. A sharpened focus on protecting customer data is critically important not only this year, but for the foreseeable future.