Global Digital Payments Market Is Estimated To Witness High Growth Owing To Rising Smartphone Penetration And Increasing E-commerce Sales
The global digital payments market is estimated to be valued at US$ 75.34 Bn in 2024, exhibiting a CAGR of 21.7% over the forecast period (2024-2031). Furthermore, the growing adoption of digital payments across sectors like retail, BFSI, transportation, and others are further driving the market growth.
Market Dynamics:
Rising smartphone penetration has been a key driver facilitating the adoption of digital payment methods globally. Additionally, the COVID-19 pandemic has further accelerated the shift towards contactless and digital transactions over cash.
The e-commerce industry has experienced tremendous growth over the past few years supported by growing internet and smartphone users. E-commerce platforms rely heavily on digital payment options to enable smooth checkout processes for consumers. As e-commerce sales continue to rise with the greater penetration of the internet globally, it will lead to a proportional growth in demand for digital payment solutions. The need for simple, secure, and hassle-free payment experiences amidst rising online shopping is propelling the digital payments market forward.
High Smartphone Penetration is Driving Increased Mobile Payments
One of the key drivers of growth in the global digital payments market is the rising smartphone penetration worldwide. Over the past decade, smartphone adoption has skyrocketed globally, with mobile internet access now commonplace even in developing markets. As more consumers own smartphones, they are increasingly comfortable making online and mobile payments directly from their devices. Mobile wallets and payment apps allow for seamless, contactless payments that are more convenient than physical cards or cash. This rising convenience of digital payments is driving more consumers to adopt mobile payment options for everyday transactions.
Growing Ecommerce Sales Are Fueling Non-cash Payment Options
Another major driver is the booming e-commerce sector globally. As more consumers shop online across borders and on a range of devices, digital payment options have become essential to facilitate these virtual transactions. E-commerce sales continue to grow significantly year-over-year and account for an increasing share of total retail sales. This growth in online shopping is fueling demand for digital wallets, online banking, credit/debit cards, and other non-cash payment methods. Consumers now expect a wide variety of payment options when shopping online to complete purchases seamlessly from any location.
Lack Of Standardization Can Hinder Cross-border Digital Payments
One key restraint is the lack of global standards and interoperability between different digital payment networks and providers. Each country and region has its own preferred platforms, regulations, and technical requirements. This fragmentation makes it challenging for payment options to work seamlessly across geographic borders. Consumers find it difficult to use the same payment methods when shopping internationally. Several domestic payment standards also do not interact with each other, limiting options for merchants. The industry is working to resolve these issues, but standardization will take time to achieve at a global scale.
Security And Fraud Concerns Increase Perceived Risks
Consumer concern over security and fraud is another major factor holding back faster adoption rates. High-profile data breaches and an increase in digital payment fraud have eroded some consumer trust in using their financial information online. Many remain wary about sharing sensitive banking credentials with new digital payment providers. This perceived security risk, even if the actual risks are low, poses a restraint when encouraging new users to adopt digital payment options. Continuous efforts are needed to enhance security features and build confidence in protection measures.
Open Banking Reforms Introduce New Payment Innovation Opportunities
One significant opportunity is the adoption of open banking regulations in major markets. By requiring banks to securely share customer data with third parties, open banking encourages fintech innovation and new payment entrants. This reform allows customers to manage all their financial accounts in one place and easily pay bills or shop using account-linked payment options. It also drives improvements in application programming interfaces for payments. Open banking dismantles bank monopolies and fosters competition, incentivizing new products tailored for digital native consumers.
Growing Mobile Money Adoption In Emerging Markets Presents New Customer Bases
Another promising opportunity lies in the rising adoption of mobile money services in developing economies that have largely skipped credit card and online banking phases. By facilitating financial inclusion using basic feature phones, mobile money platforms allow these underbanked consumers to participate in the digital economy via peer-to-peer transfers and merchant payments. Emerging markets like India, Africa, and Southeast Asia present substantial greenfield opportunities as their massive unbanked populations come online. Mobile money providers that can gain scale in these growth markets stand to tap huge new customer bases.
Link: https://www.coherentmarketinsights.com/market-insight/digital-payments-market-5055
Key Developments:
- In November 2023, Payment24, a global provider of fuel payment solutions headquartered in Cape Town, South Africa, introduced Cloud Switch, a cutting-edge cloud-based financial product. This innovative payment platform serves as a fully integrated, hardware-free payment switch tailored to accommodate diverse payment methods, specifically catering to the requirements of retailers, merchants, fuel retailers, and acquiring banks.
- In April 2023, Visa Inc., a prominent player in digital payments worldwide, unveiled a collaboration with PayPal and Venmo to introduce Visa+, an advanced service aimed at simplifying secure money transfers across various person-to-person (P2P) digital payment applications. This initiative will allow users of Venmo and PayPal in the U.S. to effortlessly exchange funds between the two platforms starting later this year.
- In April 2023, GrubMarket, a San Francisco-based company at the intersection of food tech and e-commerce specializing in the food supply chain, introduced GrubPay, a cutting-edge payment processing platform aimed at enhancing secure transactions for food wholesalers and distributors. This launch establishes GrubMarket as the pioneer in offering a fully integrated payment processing solution specifically designed for the fresh food industry.
- In February 2023, HDFC Bank, the largest private sector bank in India, initiated a pilot program in collaboration with Crunchfish, a Sweden-based provider of digital cash solutions, to trial offline digital payments for merchants and customers as part of the Reserve Bank of India's (RBI) Regulatory Sandbox Program called OfflinePay. This pioneering solution enables transactions to be conducted without requiring an internet connection, with the goal of promoting digital payment adoption in regions with limited network connectivity.
- In November 2022, Mastercard, a leading global technology company specializing in payment solutions, revealed a long-term strategic alliance with the Arab African International Bank (AAIB) as part of efforts to expedite Egypt's financial ecosystem's digital transformation. This partnership will concentrate on formulating and executing AAIB's digital transformation strategy, introducing advanced payment solutions that cater to the growing consumer preference for straightforward and secure digital payment options.
Key Players:
ACI Worldwide Inc., Adyen N.V., AliPay, Amazon Payments Inc., Apple Pay, FIS, Fiserv Inc., Global Payments Inc., Mastercard Incorporated, PayPal Holdings Inc., Paytm (One97 Communications Limited), Square, Inc., Stripe, Inc., Visa Inc., and Worldline S.A.
