Digital payments refer to the transfer of money or digital currencies between different accounts using virtual technologies like mobile payment apps or wallets. Thanks to pandemic-driven digitization, card and electronic transfers are expected to surge, and the market is already shaken by the latest options like cryptocurrencies. This article will help you understand the state of the industry in 2023, as well as the improvements and changes that are expected to occur.
Digital payments involve several different systems. First, there are electronic payment networks like bank transfers, eChecks, and BNPL (buy now, pay later) solutions. Next, there is also a rise in the use of mobile payment apps such as Cash App, Venmo, Zelle, and others. And finally, a large number of users opt for mobile wallets like PayPal, Apple Pay, Google Pay, and Samsung Pay.
Thanks to their convenience and high levels of security, digital payments are getting more attention from online shoppers than ever. In fact, their total transaction value is expected to reach $9.46 trillion in 2023. And by 2027, the market is projected to reach a revenue of $14.78 trillion. Nowadays, the systems have entered all sorts of markets, but the following two really stand out:
Online casinos are gradually becoming the preferred gambling method for many players in the world, and thanks to the latest tech advancements, the majority of operators accept digital payment systems for all transactions.
Digital payments experienced tremendous growth in the e-commerce industry. For example, in 2022, mobile wallets accounted for almost 50% of all e-commerce transactions in the world, and the share is projected to increase to over 54% by 2026. Moreover, the use of digital systems in the online shopping sphere continuously evolves, and consumers are getting used to fresh innovations like the use of blockchain, voice commerce, and artificial intelligence.
Let’s go over some of the most influential innovations that are commonly used in the industry:
Machine learning and artificial intelligence are currently the two most significant technologies that are used to reshape the digital payment industry. As online shoppers continue to make transactions using their favourite systems, such technologies are able to study their experiences and transform them over time. As a result, consumers will get to enjoy more personalized interactions, as well as greater fraud protection.
Contactless payments are a big thing when it comes to digital transactions, and such systems rely largely on magnetic secure transmission (MST) and NFC technologies. NFC provides a connection between two different devices over a small physical distance. This enables users to make payments using their mobile devices. Meanwhile, MST makes use of the magnetic signal sent from the mobile device to a card reader.
A distributed ledger is a database that is present across different locations. As opposed to centralized databases that only exist in a fixed location, it eliminates the need for any third parties. At the moment, blockchain is the most widely used type of distributed ledger. Its main perks lie in the fact that it offers exceptional security with a log of sensitive activity that is almost impossible to hack.
Biometric verification allows devices to identify individuals using distinguishing biological traits like voice recognition, fingerprints, retina patterns, and signatures. In the world of financial services, biometric verification is used by mobile apps and other digital services for the purpose of transaction authentication. On top of that, smartphones can send behavioral biometric information with all payment requests, which is then used for further improvements. Thanks to such additional signals, the biometric verification process continues to improve the effectiveness of fraud detection.
Consumers continue to digitize their payments, and this year we will see a 9% growth in the number of peer-to-peer mobile payment users. The increased demand for innovative payment systems spiked the trends of real-time non-card payments, as well as cross-border transactions.
Other factors that are expected to reshape the state of digital payments are:
Digital payment systems are gradually becoming the most popular way to make transactions, and people use them to make purchases in all sorts of industries. Thanks to the latest technological trends, the industry is expected to evolve even more, and it will be incredibly exciting to see what the future brings beyond 2023.
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