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Cashless Society: The rise of digital payments and its impact on the global economy tends the market to cross USD 285 Billion by 2029.
Mar, 31
2024

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Cashless Society: The rise of digital payments and its impact on the global economy tends the market to cross USD 285 Billion by 2029.

 

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Digital payment, also known as electronic payment, refers to any transaction completed through an electronic device such as a computer, smartphone, or tablet, where the payment is made without physical cash or cheques. This innovative method of payment has revolutionized the financial landscape, providing a seamless, efficient, and convenient way to transfer funds, make purchases, and pay bills. Digital payments encompass a wide range of services including credit and debit card payments, mobile wallets, online banking transfers, and digital currencies like Bitcoin. The rise of digital payments has been driven by advancements in technology, increased internet penetration, and the growing preference for cashless transactions among consumers. This shift towards digital payments offers numerous benefits such as reduced risk of theft, improved financial inclusion, and the ability to perform transactions anytime, anywhere. In the dynamic landscape of modern finance, digital payment systems have emerged as transformative catalysts, reshaping the way individuals and businesses engage in transactions. Revolutionizing traditional monetary interactions, digital payment methods leverage cutting-edge technology to provide efficient, secure, and instantaneous financial transactions. This paradigm shift from conventional cash-based transactions to digital alternatives has not only streamlined the financial ecosystem but has also fostered unprecedented convenience and accessibility for consumers worldwide. With the proliferation of smartphones, the ubiquity of the internet, and advancements in encryption technologies, digital payments have become the cornerstone of a cashless society, empowering users to conduct transactions seamlessly, transcending geographical boundaries and time constraints. The adoption of digital payment systems has witnessed significant growth globally over the past few years, driven by various technological, economic, and societal factors. This shift towards cashless transactions is transforming the way individuals and businesses conduct financial operations, leading to increased efficiency and convenience. The adoption of digital payments is influenced by several factors, including the proliferation of smartphones and internet connectivity, the growing need for contactless transactions, especially in the wake of the COVID-19 pandemic, and the increasing preference for seamless and secure payment methods. Moreover, governments and financial institutions worldwide are promoting digital payments to reduce dependency on physical cash, curb black money, and improve financial inclusion. The adoption of digital payments also offers numerous benefits such as reduced transaction costs, real-time processing, enhanced transparency, and improved access to financial services for underserved populations.

According to the research report, “Global Digital Payment Market Research Report, 2029” published by Actual Market Research, the market is anticipated to cross USD 285 Billion by 2029, increasing from USD 112.53 Billion in 2023. The exponential growth of the digital payment industry can be attributed to a convergence of technological innovation, changing consumer preferences, and a global push towards a cashless economy. One of the primary drivers is the widespread adoption of smartphones and the proliferation of internet connectivity, providing the infrastructure for seamless digital transactions. The convenience and speed offered by digital payment methods have captivated consumers, eliminating the need for physical currency and reducing transactional friction. Moreover, the COVID-19 pandemic accelerated the adoption of contactless payments as hygiene concerns prompted a shift away from cash. Additionally, the rise of fintech startups and established financial institutions investing heavily in digital payment solutions has further fueled the industry's growth, fostering competition and innovation. The integration of advanced security measures, such as biometric authentication and encryption technologies, has bolstered consumer confidence in the safety of digital transactions. Furthermore, the expansion of e-commerce and the gig economy has driven the demand for digital payment platforms, providing users with efficient and reliable tools to manage their financial activities. The growth of e-commerce has also contributed to the boom in the digital payment industry, as consumers increasingly prefer to make online purchases using digital payment methods.

North America is a mature market for digital payments and has a well-established infrastructure for electronic transactions. The region is home to several major players in the digital payment industry, including PayPal, Apple, and Google. The high penetration of smartphones, coupled with the widespread adoption of e-commerce, has driven the growth of digital payments in North America. Additionally, the region has a favorable regulatory environment that supports innovation and competition in the digital payment market. Europe is another significant market for digital payments, driven by the high penetration of smartphones and the growing adoption of contactless payment methods. The region has a well-developed financial infrastructure, and governments are promoting digital payments to improve efficiency and reduce fraud. The European Union's revised Payment Services Directive (PSD2) has also created new opportunities for digital payment providers by enabling third-party access to customer data. Asia-Pacific is the fastest-growing market for digital payments, driven by the rapid adoption of mobile payment methods in countries like China, India, and South Korea. The region has a large unbanked population, and digital payments are seen as a way to improve financial inclusion. The growth of e-commerce and the increasing penetration of smartphones are also driving the adoption of digital payments in Asia-Pacific. South America is a developing market for digital payments, with Brazil being the largest market in the region. The region has a large unbanked population, and digital payments are seen as a way to improve financial inclusion. The growth of e-commerce and the increasing penetration of smartphones are also driving the adoption of digital payments in South America. In addition to that, the Middle East and Africa are emerging markets for digital payments, with the adoption of digital payment methods still in its early stages. The region has a large unbanked population, and digital payments are seen as a way to improve financial inclusion. The growth of e-commerce and the increasing penetration of smartphones are expected to drive the adoption of digital payments in the Middle East and Africa in the coming years.

The solutions segment of the digital payment market includes various types of payment gateways, mobile payment solutions, point of sale (POS) terminals, and other digital payment platforms. Payment gateways are software applications that enable merchants to accept online payments from customers. Mobile payment solutions allow customers to make payments using their mobile devices, such as smartphones and tablets. POS terminals are electronic devices used by merchants to process card payments. Other digital payment platforms include e-wallets, online banking, and cryptocurrency. The solutions segment is expected to hold the largest market share in the digital payment market due to the increasing adoption of digital payment solutions by merchants and consumers. The growing popularity of e-commerce and the need for secure and convenient payment methods are driving the demand for payment gateways and mobile payment solutions. The increasing use of POS terminals in retail stores and restaurants is also contributing to the growth of the solutions segment. The services segment of the digital payment market includes various types of payment processing services, such as payment authentication, payment authorization, and payment settlement. Payment authentication services verify the identity of the customer making the payment. Payment authorization services confirm that the customer has sufficient funds to make the payment. Payment settlement services transfer the funds from the customer's account to the merchant's account. The services segment is expected to grow at a significant rate during the forecast period due to the increasing volume of digital payment transactions. The growing need for secure and efficient payment processing services is driving the demand for payment authentication, authorization, and settlement services. The increasing adoption of digital payment solutions by small and medium-sized enterprises (SMEs) is also contributing to the growth of the services segment.

Domestic payments refer to digital payment transactions that occur within the same country or region. These transactions are typically processed through local payment networks, such as automated clearing houses (ACH) or real-time payment systems. Domestic payments are the most common type of digital payment transaction and account for the majority of the digital payment market. The growth of e-commerce, the increasing use of mobile payment solutions, and the adoption of digital payment solutions by small and medium-sized enterprises (SMEs) are driving the demand for domestic digital payment transactions. The domestic payments segment is expected to hold the largest market share in the digital payment market due to the high volume of digital payment transactions that occur within the same country or region. The increasing adoption of digital payment solutions by consumers and merchants, the growth of e-commerce, and the need for secure and convenient payment methods are driving the demand for domestic digital payment transactions. Cross-border payments refer to digital payment transactions that occur between different countries or regions. These transactions are typically processed through international payment networks, such as SWIFT or VisaNet. Cross-border payments are more complex than domestic payments due to differences in currency, regulations, and payment systems. However, the growing need for secure and efficient cross-border payment solutions is driving the demand for digital payment services that can facilitate international transactions. The cross-border payments segment is expected to grow at a significant rate during the forecast period due to the increasing volume of international trade and the growing need for secure and efficient cross-border payment solutions. The increasing adoption of digital payment solutions by SMEs that operate in multiple countries, the growth of e-commerce and the need for fast and reliable international payment methods are driving the demand for cross-border digital payment transactions.

Cards are the most widely used payment mode in the digital payment market. They include credit cards, debit cards, and prepaid cards. Cards are accepted by a large number of merchants and are used for both online and offline transactions. The increasing use of mobile payment solutions, such as Apple Pay and Google Pay, which allow users to store their card information on their mobile devices, is driving the demand for card-based digital payment transactions. ACH transfer is a payment mode that allows users to transfer funds directly from their bank account to another bank account. ACH transfer is commonly used for recurring payments, such as bill payments and payroll. The increasing adoption of digital payment solutions by businesses and consumers, the need for secure and efficient payment methods, and the growing popularity of e-commerce are driving the demand for ACH transfer-based digital payment transactions. Digital wallet is a payment mode that allows users to store their payment information, such as credit card and bank account details, on their mobile devices. Digital wallets enable users to make payments at physical stores, online, and through mobile apps. The increasing use of smartphones and the growing popularity of e-commerce are driving the demand for digital wallet-based digital payment transactions. Other payment modes include payment methods such as bank transfers, cash on delivery, and cryptocurrencies. These payment modes are less commonly used than cards, ACH transfer, and digital wallet, but are still important segments of the digital payment market. The increasing adoption of digital payment solutions by businesses and consumers, the need for secure and efficient payment methods, and the growing popularity of e-commerce are driving the demand for other payment mode-based digital payment transactions.

The global digital payment market can be segmented based on end-use industries into BFSI, healthcare, IT & telecom, media & entertainment, retail & e-commerce, transportation, and others. BFSI is one of the largest end-use industries in the digital payment market. The BFSI sector includes banks, insurance companies, and other financial institutions. The increasing adoption of digital payment solutions by banks and financial institutions, the need for secure and efficient payment methods, and the growing popularity of online banking and mobile banking are driving the demand for digital payment transactions in the BFSI sector. Healthcare is another important end-use industry in the digital payment market. The healthcare sector includes hospitals, clinics, and other healthcare providers. The increasing adoption of digital payment solutions by healthcare providers, the need for secure and efficient payment methods, and the growing popularity of online healthcare services are driving the demand for digital payment transactions in the healthcare sector. IT & telecom is a rapidly growing end-use industry in the digital payment market. The IT & telecom sector includes telecom operators, internet service providers, and other IT companies. The increasing adoption of digital payment solutions by telecom operators and IT companies, the need for secure and efficient payment methods, and the growing popularity of online services are driving the demand for digital payment transactions in the IT & telecom sector. Media & entertainment is an important end-use industry in the digital payment market. The media & entertainment sector includes music and video streaming services, gaming companies, and other entertainment providers. The increasing adoption of digital payment solutions by media & entertainment companies, the need for secure and efficient payment methods, and the growing popularity of online entertainment services are driving the demand for digital payment transactions in the media & entertainment sector.

Retail & e-commerce is one of the fastest-growing end-use industries in the digital payment market. The retail & e-commerce sector includes brick-and-mortar retailers and online retailers. The increasing adoption of digital payment solutions by retailers, the need for secure and efficient payment methods, and the growing popularity of online shopping are driving the demand for digital payment transactions in the retail & e-commerce sector. Transportation is an important end-use industry in the digital payment market. The transportation sector includes airlines, railways, and other transportation providers. The increasing adoption of digital payment solutions by transportation providers, the need for secure and efficient payment methods, and the growing popularity of online booking services are driving the demand for digital payment transactions in the transportation sector. Others end-use industries include education, government, and other sectors. The increasing adoption of digital payment solutions by these sectors, the need for secure and efficient payment methods, and the growing popularity of online services are driving the demand for digital payment transactions in these sectors. The increasing use of digital payment solutions is driving the demand for secure and efficient payment methods. Consumers are looking for payment solutions that offer fast and secure transactions, as well as fraud protection. (AI) and machine learning (ML) are being used to improve the security and efficiency of digital payment solutions. These technologies are being used to detect fraud, improve risk management, and enhance the customer experience.