Fewer and fewer companies, as well as individuals, are using banknotes or coins to manage their financial affairs. The estimated number of Europeans using cashless payments is set to reach 705 million by 2023.
We have been moving in this direction for some time now. In 2017, there were over 601 million people in Europe using digital payments. Over the last three years, this number has increased to more than 660 million.
The total transaction value of digital payments in 2019 was $4.1 trillion. In 2020, it was expected to reach nearly $4.8 trillion (Statista, 2020) and it is predicted that by 2023, over 1.31 billion people worldwide will be using mobile payments apps to handle their day to day finances (eMarketer, 2019).
There are two main factors that influence the digital payments scenery’ fast development significantly.
Shifting from cash
The global shift from using cash is a rising tide that is shaking all boats within the payments industry. Since smartphones have become an inseparable part of our lives, we are simultaneously supporting the growth in digital payments. A younger, more tech-focused consumer population; online gaming with in-app purchases; growth in domestic and global travel; ridesharing services (as well as pay-per-minute scooters and motorized bicycles); and peer-to-peer payment systems – they all have a huge impact on the digitalization process.
The rapid growth of e-commerce is spreading into all other business sectors.
Being in the situation we are in today, consumers, in general, make more purchases from the comfort of their homes because of the convenience of buying online or via mobile apps. The global digital payments industry has seen many innovations over the past few years, including mobile wallets, P2P mobile payments, real-time payments, and cryptocurrencies. Mass digitalization is pushing the end-users to demand fast, frictionless and borderless payments whether it is for retail purchases or business transactions. This no longer only affects the e-commerce scene, but we are talking about all kinds of businesses, big or small.
After 2020 more and more businesses are moving towards cashless and contactless payments and in 2021 we will be presented with even more ways to pay than ever before. Keeping in mind the situation surrounding the pandemic, almost every country has seen the growth of small and individual businesses operating from home. Nowadays anyone can be an international merchant without even leaving the comfort of your home. Thus, banks and acquirers who are used to targeting primarily large retailers are forced to change their perspective — a large part of their acquiring portfolios will most probably include everybody and anybody who accepts digital payments and payments via mobile, from a plumber and pop-up store to a babysitter in the suburbs.
Most likely it will not take long for not just merchants but all companies worldwide are moving towards digital payment gateway platforms and we will all have forgotten the outdated bank link payments and maybe even stop using cash payments once and for all. These platforms help to process cross-border payments quickly, frictionless, cost-effectively, and are easy to use also for end-customers.