2019 Trends in the Global Digital Payment Market
February 6, 2019
One trend that merchants in every industry should keep an eye on is the explosive growth of the global digital payment market. Business analytics firm Envision Intelligence recently reported that, as of 2019, the digital payments market compound annual growth rate is 14.4 percent and is projected to increase along similar lines through 2025.
Your business can capitalize on this trend if you have an understanding of what digital payments entail and the benefits they offer to consumers and merchants.
What is a digital payment?
Despite common misconception, digital payments are not a 21st-century innovation. A digital payment is any payment made when a customer or merchant use an electronic device to facilitate a transaction.
If, like most businesses, your organization accepts credit and debit cards via electronic PIN pad at point-of-sale, you technically accepts digital payments.
However, contactless digital payments that (transactions that don’t require a physical interaction to be processed) — such as those made via an online store, mobile application or chipped card are driving the recent growth in the global digital payments market.
What are the different types of electronic payments?
Magnetic stripe payment card: The most common type of digital payment in the U.S.
Magnetic stripe prepaid, debit and credit card payments are typically processed through an electronic payment terminal that captures the account information stored on the card’s magnetic stripe via swipe or insertion into a digital card reader.
Chipped payment cards: Chipped payment cards The successors to magnetic stripe payment cards.
Instead of storing card data on a magnetic strip, chipped cards store unique tokenized information that can be used to authorize payments on a computer chip that is embedded in the card, creating a more secure payment process. Newer chipped payment cards can transmit data wirelessly via near-field communication (NFC) and can authorize payments without making physical contact with a merchant’s payment terminal.
Online sales: The most recent popular type of contactless digital payment.
Online sales are processed through an application that captures a customer’s credit card or other payment information. Because of the mechanics involved in processing online sales, many merchants utilize a third-party electronics payment app to accept digital payments online.
ACH and e-checks: A preferred form of payment for many consumers and organizations
Although their popularity is waning, with the proper payment processing partner, merchants can accept automatic clearing house (ACH) and other electronic check payments in-store and online.
Mobile payment applications and e-wallets: The fastest-growing segment of the digital payments market.
E-wallets and electronic payments apps allow consumers to make contactless payments for goods and services with their smartphones via NFC. Because of their novelty and growing popularity, mobile payment apps are typically what the media means when discussing digital payments.
How digital payments benefit consumers
The global digital payments market is currently enjoying robust growth because it offers consumers a few key benefits over traditional payment options. The first is ease of access. The unprecedented success of Amazon is proof that consumers love being able to order almost anything online and have it delivered to their home.
Similarly, the ability to pay for things via smartphone is incredibly convenient. Instead of having to dig through a wallet or purse to grab cash or a credit card, consumers can pay with a device they likely already have in hand.
Lastly, making contactless mobile payments is very popular with tech-centric millennials. Since 90 percent of the world’s largest consumer demographic is in close contact with their smartphones on a daily basis, digital payments are a natural fit for the millennial lifestyle.
Why merchants should consider accepting electronic payment apps
Digital payments offer a number of benefits to merchants, as well as consumers. First, the ability to accept digital payments from consumers offers brick-and-mortar business a robust second revenue channel.
Second, transactions involving electronic payment apps can be completed quickly. With a processing time of 2.5 seconds, apps are faster than cash, check and both types of card payment at POS. Expedited transaction times can be hugely beneficial to companies looking to reduce their cart abandonment rates.
Third, as time goes by and more tech-friendly consumers begin using electronic payment apps by default, merchants that don’t accept this payment type will inevitably lose business. Conversely, merchants that are currently equipped to accept mobile payments can get an edge on their less forward-thinking competition.
If your organization is interested in offering mobile payment acceptance, contact JetPay today. We have the expertise and resources to handle all of your company’s payment processing needs, regardless of payment type or channel.
Sign up for more from the blog.
Get weekly updates and summaries.