Cash has had its day
Whether paying the baker quickly using your watch, settling an evening meal by wallet or booking a holiday on the credit card, digital payment has long been part and parcel of everyday life. Coronavirus has also played its part: according to a study by the University of St. Gallen and Zurich University of Applied Sciences, the pandemic brought about a huge shift in payment habits. While the virtual wallet is gaining in popularity, in Switzerland one in seven people surveyed (14%) have now given up carrying any cash with them at all. This trend is not limited to the local region either, having been evident at global level for a number of years already. An analysis by Mastercard from 2020 comes to the conclusion that seven in ten consumers expect digital payments to replace cash. Half of those questioned are already planning to do without coins and notes altogether.
Mobile payment is popular
The use of e-payment systems has many benefits. For one thing, they are fast, simple, secure and convenient. They also enable consumers to keep control of their transactions. The mobile payment sector is particularly popular, with more and more people preferring to use smart watches to pay, as well as smartphones. Every credit, debit and prepaid card can be stored in a payment app or wallet and used for contactless payment via NFC. Other technologies such as SMS-based transaction payments and direct mobile settlement likewise enable smooth transactions. According to forecasts from Allied Market Insight, the market for mobile payment will grow by an average compound annual rate (CAGR) of 30.1% until 2027. Experts cite the increasing dissemination of smartphones across the whole world and the rise in the m-commerce sector in emerging countries as the main drivers of the dynamic expansion. The Asian-Pacific sphere is reckoned to enjoy the highest growth rate thanks to the rapid development of fintech infrastructure and huge investment by both the private and the public sector there.
Global market worth trillions
It is not only the mobile sector that is enjoying dynamic growth, though: payment in digital commerce, in other words online trading on the internet, is also making rapid strides. According to figures from data platform Statista, this will make up the largest segment of the all-encompassing digital payments trend with a projected total transaction value of USDtn 5.45 in the current year. Digital payments overall are expected to reach a value of USDtn 8.56 in 2022 and climb by a CAGR of 12.7 % until 2026. That would bring the volume to a massive USDtn 13.85 in four years.
Many companies are interested in getting a slice of this ever-larger digital cake. Right at the front of the queue are payment services providers such as Adyen, Block (formerly Square), PayPal and even Worldline. With their technologies, they are ensuring that virtual wallets are becoming more and more widespread. Adyen is a good example of this: last year the Dutch company managed to increase its global transaction volumes by a healthy 70% to EURbn 516. PayPal is operating on an even higher level, the US group handling some 5.61 billion payments across its system in the first quarter of 2022 alone, posting a transaction volume of USDbn 323. By comparison, five years ago the number of payments stood at “only” 1.4 billion, which means that transactions have quadrupled since then. This growth is set to continue, too: although PayPal is already the most accepted digital wallet in Europe and the USA, the company is still on an expansion drive. The group is reckoning on 15 to 20 million new customer accounts for the current year 2022.
Digital Payment Transactions volume