The global payments industry is set for transformation with growing adoption of digital payments. In this article, Canadian FinTech Specialist Ferhan Patel unpacks how digital payments are shaping the global payment industry, the transformation of the payment ecosystem and what it means for businesses and consumers.
With consumers demanding frictionless experiences and seamless transactions across channels, companies are exploring new ways to make payments more convenient for users. As a result, there has been a rapid adoption of digital payment services in recent years. These include mobile wallets, e-wallets, virtual accounts and other similar services. Below, Ferhan Patel takes a look at how digital payments are shaping the global payment industry and how businesses can leverage these trends to grow their business in this rapidly changing landscape.
How digital payments are shaping the global payment industry
Digital payments are playing an instrumental role in the fundamental transformation of the global payments landscape by reducing friction and enabling convenience for businesses and consumers. The rapid growth of digital payments has been enabled by several factors, including a growing internet user base, rising smartphone penetration and advancements in technology. With consumers now accustomed to digital services that offer seamless user experiences, businesses have to adopt digital payment services to meet their expectations and remain competitive.
Digital payments have been a significant disruption to the global payments landscape, changing consumers’ behaviour, the way they make and receive payments, and also how businesses operate. While digital payments are widely adopted in developed economies, several emerging economies are also witnessing a rapid adoption of digital payments as consumers shift from cash to digital payment channels, explains FinTech executive Ferhan Patel.
Payments in e-commerce
The rise of digital commerce has contributed significantly to the adoption of digital payments. E-commerce sales are growing globally, led by the rapid rise of online shopping in emerging economies as consumers become increasingly comfortable with online purchases. E-commerce is expected to grow at a compound annual growth rate (CAGR) of 16% in the following year. The penetration of digital payments in e-commerce is also rising rapidly as businesses adopt digital payments to reduce the cost of checkout and improve the customer experience.
Consumer behaviour and expectations are driving change
With consumers now accustomed to frictionless, seamless experiences across channels, businesses are exploring new ways to make payments more convenient for users. Businesses are looking to integrate digital payment services into their ecosystems to optimise their operations and provide ease-of-use for customers.
The rising adoption of new technologies, such as artificial intelligence (AI), machine learning, and blockchain, is also impacting the way payments are being processed and managed globally. For example, Ferhan Patel adds, AI and machine learning will bring significant efficiencies to the payment process, enabling real-time payments, fraud detection and risk management.
Digital Transformation of the Payment Ecosystem
The digital payments ecosystem is undergoing a significant transformation, driven by the need to digitise payment processes, reduce fraud, and increase operational efficiency. The payments ecosystem comprises banks, financial institutions, digital wallets and technology providers. Traditional payment processes are being digitised, and payment systems are being transformed to offer real-time payments and facilitate interoperability. Digital wallets are playing a key role in this transformation of the payment ecosystem. In recent years, digital wallets have evolved from simple business models to become full-fledged financial services platforms.
