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The global digital payment market size was valued at USD 3.53 trillion in 2018 and is projected to reach USD 19.89 trillion by 2026 in terms of transaction value, exhibiting a CAGR of 24.4% during the forecast period.
Digital payment refers to the transferring of funds through electronic media such as mobile, tabs, laptops, and others. This technology has been continuously advancing throughout the past few years. Many new payment options have been added to the digital payment system, starting from online transactions, swapping cards to tapping NFC cards, and scanning codes. This continuous upgradation and various payment options are boosting the adoption of the digital payment. Also, the growing of internet connection at every place possible is boosting the demand for digital payment. The penetration of smartphones is also encouraging users to go for digital marketing.
Mobile payment adoption is likely to witness tremendous growth in the market, followed by digital wallets and point of sale. Technologies such as Near Field Communication (NFC) and Quick Response (QR) code are trending in the market. A digital wallet offers direct transfer from one account to another, which can be prepaid or through bank account. Point of sale payment is made at the purchasing counter. Recently, many companies have invested in providing NFC through cards, which offer instant transfer of funds from the prepaid account. These various payment options are boosting the digital payment market growth.
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Digital payment has provided businesses to communicate with the customer on various channels. For instance, a customer can shift from Omni channel retailing store and purchase & pay through any medium such as card or digital wallets. Thus, providing all the payment gateways to the customer is essential for the retailers. The retailer also offers a reward, loyalty points, and cashbacks for using gateways during payment. Thus, the customer is present on most of the available channels. All this is creating various opportunities for the providers and the businesses in the digital payment market.
“Growing E-Commerce and Technology-led Initiatives to Augment Market Growth”
The emergence of e-commerce and technology-led initiatives are key factors that are fueling the digital payment market trends. In recent years, Samsung Pay, Google, Alipay, and Apple have emerged as the top players in the digital payment market. These players have done massive investments in advanced technologies and have expanded their businesses in the digital payment services. For instance, Alibaba, a China-based e-commerce company, created Alipay to facilitate the payment services between sellers and customers to enhance their operations and improve customer engagement.
Moreover, the adoption of Distributed Ledger Technology (DLT) offers several benefits, such as scalable and decentralized business continuity. For instance, Civic, a provider of the e-KYC platform, offers secured digital identity at reduced cost. Similarly, cloud technology has also driven the research and development in digital payment offerings. For instance, Paygilant is a cloud-based service that identifies fraud at the time of payment using an innovative mobile-based payment application. All these advancements in technology is likely to drive the digital payment market growth.
“Increasing Adoption of Digital Payment Among Generation Z to Contribute to the Growth of the Market”
Consumers are rapidly adopting non-cash payment methods which offer a simpler and convenient way to transfer money across bank accounts. With this, lower-cost terminals and asset-lite modes such as QR code are expected to see prominent growth in the coming years.
This rising digital payment trend is mainly due to rapid adoption of digital payment services by millennials. Generation Z is naturally more inclined towards adoption of digitized services. Online banking is the most frequently used banking channels among youth. While there is a growing demand from the generation Z for more personalized, flexible, and highly relevant consumer experience. Additionally, growing demand for enhanced user experience is also a key factor driving business growth. As payment services evolve, providing better customer experience becomes more competitive. With these services, providers are able to connect with their customers. This is one of the growing trends in the digital payment industry.
Several market players offer rewards on digital payment transactions, which happens to be a recent market trend. Banks and retailers are making significant investments in offering reward points to digital payment users. For instance, Amazon offers a fare discount on the total purchasing amount if the money is paid through net banking or a specific credit card. The trend is likely to create intense competition and significant market opportunities for the digital payment market players.
“Mobile Payment and Digital Wallet Segments to Generate the Maximum Revenue during the Forecast Period”
Payment type segment is categorized into mobile payment, online banking, point of sale (POS), and digital wallet. Among these segments, mobile payment segment is further categorized into proximity payment and remote payment, while the point of sale (POS) segment is sub-segmented into debit card at POS, credit card at POS, and near field communication through the card at POS.
Mobile payment is the transaction of money through mobile devices using application-based payment solutions. Mobile payment technology adoption is increasing mainly due to the proliferating smartphone adoption and rising purchasing power of the users. The penetration of internet facilities along with high-speed mobile network is shifting users to adopt mobile payment solutions. With technological advancements, advanced mobile payment services are offered in the payment market. In mobile payment technology, proximity payment is expected to gain the highest growth during the forecasted period.
Similarly, QR code is mostly used for peer-to-peer transactions in which the money is transferred directly to the bank account of the service provider. There is a significant adoption of QR code in the retail sector. The other type of proximity payment is Near Field Communication (NFC) payment. In this payment process, the user can pay through card swipe, tapping, or waving the card.
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Digital wallet enables the user to perform online transactions by using electronic devices. Digital wallets can be accessed through mobile, laptops, tabs, and computers. In digital wallets, users can store the debit or credit card details and directly pay through it. For example, Samsung Pay, Google Pay and Apple Pay enables the user to pay through their card linked to their wallets. In addition, peer-to-peer transactions can also be done using digital wallets. For instance, Samsung offers cash backs or rewards to the user for purchasing Samsung products via their digital wallet.
In the digital payment market report, the online banking segment covers payment through digital platforms along with the banks such as internet banking, National Electronic Funds Transfer (NEFT), Real-Time Gross Settlement (RTGS) among others for transferring funds. The point-of-sale payment type offers money transfer during in-store purchases. In this, credit or debit cards can be swiped at the purchasing counter. The NFC card is now available in the market which can be tapped, waved, or swiped at the desk for payment. The NFC at POS is expected to gain the maximum traction in the POS payment type market.
“Industries Such as BFSI and Retail to Exhibit a Significant CAGR during the Forecast Period”
The industries covered in digital payment are media & entertainment, retail, BFSI, automotive, medical & healthcare, transportation, consumer electronics, and others (education, IT & telecom, etc.).
The digitalization of payments is creating a vast scope in the retail industry. The retail sector is the early adopter of digital payment. In the early stages of digital payment, the payment through debit and credit cards were mostly used in retailing. At present, the retailers have upgraded their payment devices with advancements in the payment industry. With the rising adoption of mobile payment and digital wallets, the retailers also offer a payment option as per the request of the customers. Moreover, vendors are offering NFC compatible payment devices, QR code scanners, and cards at POS systems.
Moreover, the expenditure on upgrading the payment devices and system is not very high. The new payment types, such as proximity payment and payment at POS, are compatible with the earlier versions of card swipe machines. This high adoption of various digital payment technologies is mainly for creating customer relationships during the payment process. Providing good customer experience is one of the major objectives of retailers. Offering personalized payment system used by the customer will not only create a positive impact on the transaction, but it will also make the payment process easy and fast. Vendors can analyze the geographical data and buying patterns of the customer through digital payments. This data can be used to provide a better customer experience.
Digital payments in BFSI started with the emergence of online banking tools such as NEFT or RTGS. Traditional users find online banking more secure than any other, mostly due to the acquaintance with the process. With online banking payment, the user can transfer funds, pay fees or bills, manage accounts, or can even apply for saving options, investment plans, and insurance policies. For mobile payment type, banks are offering a partnership with other banks for directly transacting through bank accounts. With this facility, users are able to complete the transaction in less time. This has led to the significant adoption of online payments for purchasing, online shopping or in-store, and paying bills, among others, according to the digital payment market analysis.
In media and entertainment, providers are opting for various payment channels to reach users. The media and entertainment industry offers digital payment technologies such as credit cards, debit cards, digital wallets, and mobile payments, among others. For instance, users can apply for and do top-ups of their subscription of the video-on-demand content through different digital wallets. For purchasing music, different music apps have collaborated with several payment channels to improve the user engagement. This offers instant and ease of process to the user and thus boost the digital payment market demand. The other industry adopting digital payment technologies is the gaming industry. With the availability of various online games, users can directly purchase the online game on mobile, laptop, or tabs.
Asia-Pacific is anticipated to lead the digital payment market, with India and Japan set to gain more traction during the forecast period. In APAC, the adoption of mobile payments and digital wallets are likely to be higher compared to other regions. India and China being high population countries, smartphone penetration is high due to which there are lucrative opportunities for digital payment market.
India has shifted towards mobile payment and digital wallet after demonetization in 2016. Indian government initiatives such as Digital India are expected to further boost the digital payment market revenue in the coming years. Revenue generated through the e-commerce giant, Alibaba Ltd., is expected to create more than 50% of the online transactions in China.
North America Digital Payment Market Transaction Value Size, 2018 (USD Trillion)
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North America is expected to witness the second-highest market share in the global digital payment market. The preferred payment mode in this region is cash or debit/credit cards. The region consists of some of the best financial institutions in the world. The user also prefers online banking owing to its security and policy. With different strategies being applied by the digital payment providers, the growth of digital wallets and is likely to increase in the forecast period.
Europe has a mature mobile and banking industry. In Europe, majority of the population has bank accounts and, therefore, digital wallets are likely to have maximum growth till 2026. As various companies such as Telefonica and Vodafone are investing in NFC services through mobile and cards primarily in the UK and Germany, the technology is expected to expand the market size in the region.
The Middle East and Africa region is expected to exhibit steady growth in the global digital payment market. Internet and mobile penetration are increasing in the region. Visa and MFS Africa Ltd., a Pan-African fintech company, have collaborated with an aim to interconnect the evolving mobile money ecosystem in Africa and the online digital payments across the world. Similarly, Latin America is an emerging market for digital payment technologies. Brazil and Mexico are likely to account for substantial e-commerce sales through mobile, according to MasterCard. Companies and governments are making substantial investments in these technologies.
“Market Players to Focus on Providing Mobile Payment Apps to Strengthen Market Position”
Some of the key players in the mobile payment technology market are MasterCard, Visa, PayPal, Google, Amazon, Alipay, among others. These companies are contributing majorly in this market by adopting strategies such as collaborations and partnerships to provide digital payment solutions across the regions. Furthermore, the players are highly investing in customizing their products as per the demands of the market, the digital payment market forecast states. These advancements are executed keeping in mind the current payment devices so that the cost is not high for the provider adopting the new technology.
For instance, MasterCard and Eventim, a UK based events and ticket agent and one of the major subsidiary of Europe’s largest retailer CTS Eventim, entered into a marketing and technology partnership to launch contactless payment on-site at various music events and venues. In the U.K., people prominently adopted MasterCard payments and mobile wallets. Also, to encourage the users to adopt digital payments, they were offered a discount on the total beverages they bought using MasterCard payment.
Guests at the festival were also given live-demos of the digital payment system. This on-site marketing helped MasterCard to drive technological innovation and shape customer behavior, which would help the company to strengthen the customer base.
An Infographic Representation of Digital Payment Market
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The report provides detailed information regarding various insights into the market. Some of them are growth drivers, competitive landscape, regional analysis, and challenges. It further offers an analytical depiction of the digital payment market trends and estimations to illustrate the forthcoming investment pockets. The market is quantitatively analyzed from 2019 to 2026 to provide the financial competency of the market. The information gathered in the report has been taken from several primary and secondary sources.
Transaction Value (USD trillion)
By Payment Type
Fortune Business Insights says that the market size is projected to reach USD 19.89 trillion by 2026 in terms of transaction value.
In 2018, the market was valued at a transaction value of USD 3.53 trillion
Growing at a CAGR of 24.4%, the market will exhibit a remarkable growth in the forecast period (2019-2026)
The mobile payment technology segment is expected to be the leading segment in the payment type market during the forecast period
Availability of various payment options is driving the growth of the digital payment market
MasterCard, Visa Inc., Alipay.com Co. Ltd, Amazon Inc., PayPal Inc., and Google Inc. are some of the top players in the digital payment market
Asia-Pacific is expected to hold the highest market share in the digital payment market
The industries such as retail, BFSI, and media & entertainment are expected to gain traction in the digital payment market in the forecasted period
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