Digital payments have advanced dramatically in recent years, prompting the question. Where will digital payment systems take us in the future? There are limitless opportunities as more customers become tech-savvy, especially. Since we are only beginning to tap into the unequally high potential of global smartphone penetration in 2020. With 3.2 billion smartphone users compared to 7.7 billion worldwide, or 41.5 percent, according to Statista.
COVID-19’s influence has accelerated the shift in payment preferences, partly due to convenience and partly due to guidance and a focus on avoiding physical currency. Regardless of the debate, digital payments will continue to grow in popularity in the next years.
Cards are, unsurprisingly, the most popular payment method worldwide, surpassing real money. While mobile wallets are rapidly gaining popularity, with the market estimated to reach a trillion dollars by 2020. Total digital payments in the Euro area increased by 8.1 percent in 2019. From EUR 162.1 trillion to EUR 98.0 billion, according to the ECB, with card payments accounting for 48 percent.
Of course, Europe’s digital payments system is sophisticated and well-established. And traditional cash infrastructure, such as banks and ATMs, has witnessed a decline. Demonstrating Europe’s shift away from cash. Indeed, according to a global study, Finland, Sweden, and the United Kingdom are likely to go toward cashless commerce.
On the other side of the globe, China is currently the world’s biggest mobile consumer wallet market, with over 70% of Chinese customers using mobile wallets on a regular basis.
With such figures, China is expected to earn around 80% of global mobile wallet income by 2020, and it is likely to compete well in the battle for a successful cashless corporation.
By 2022, however, China will have given South Korea a run for its money, with the majority of the infrastructure already in place and more than half of South Korea’s 1,600 bank branches no longer accepting cash deposits or withdrawals.
What does the future hold for electronic payments?
In the short term, social media payments were introduced, voice-activated payments were developed, cryptocurrencies were developed, and biometric payments were made even in person. One thing is apparent, and it is critical to pay attention to developing countries. That will almost certainly make a significant contribution to that progress. In the near future, mobile payments and mobile wallets will continue to be widely used.
Furthermore, NFC and QR codes will be accepted as secure and rapid payment methods. Despite the popularity of QR codes in China, other countries, particularly the United States, were sluggish to adopt the payment mechanism.
However, due to the cost-effectiveness of traders, who now require less infrastructure for payment processing> While providing greater convenience to customers, this is projected to alter.
After China, the United States and the United Kingdom are the second and third largest digital wallet marketplaces, respectively, with ApplePay being the most widely used product in both nations. Because e-commerce is now a global trend, digital consumption will continue to rise, and PayPal is now the world’s most popular digital wallet – formerly thought to be the worst business model in the check-writing era.
Because of the growing popularity of utilizing PayPal as a payment method. It has had a significant impact on businesses, particularly those in the financial sector. The Forex market is one example of this. Where the number of brokers who take PayPal deposits is growing all the time.
The global unbanked and underbanked sector has the greatest potential for development and innovation in the digital payment environment, and it also helps to improve overall digital payments. Fintech will be able to produce solutions that provide real value and address real needs as a result of financial inclusion, and the incumbents of emerging countries will be completely circumvented in the form of challenges for a more nimble and adaptable approach.
So, which country emerges victorious from a cashless society?
It’s wonderful to be on the cutting edge of digital technology. However, as financial sectors continue to make digital payments in all parts of the world, security and trust must play a key role, necessitating the establishment of a secure, dependable, and robust payment infrastructure.
What are the advantages and disadvantages of a cashless society?
The rising number of digital payment systems – such as peer-to-peer transactions, mobile payments, mobile point of sale, and digital currencies – gives businesses and customers a variety of alternatives for openness, accessibility, and reliability.
Cashless payment systems may help to boost development by making payments simpler and more pleasant, and hence easier to consume. They can save businesses time and money by minimizing manual reconciliation, counting, and cash management. As well as lowering the public costs of hard currency issuance.
Basically, scanning the payment process is useful. Since it makes cross-border payment and procurement theoretically inexpensive and effective.
If digital central-bank currencies are based on multiple currencies. They may reduce exchange risk and currency volatility from a macroeconomic standpoint. If centrally maintained, you can use digital currencies as economic levers in the same way that traditional currencies can. These are, of course, in addition to the apparent cost savings from not having to make coins and notes.
On the other hand, despite all of the big benefits from numerous digital payment solutions. Interoperability and business integration remain major issues. When digital paging becomes widely accepted and the standard, it may force users to use multiple services. With residual effects such as a decrease in the use of these payments.
Due to their digital nature, these technologies also create chances for information and data mining. It may jeopardize security and privacy while also raising the risk of cyberattacks. This can lead to data theft and exploitation. No regulation is initially insufficient, and it may allow for malfeasance and exploitation. Especially by service providers who are unsure how to monetize the data in their systems.
Furthermore, the dominance of technology corporations is growing, as evidenced by Facebook’s desire to create its own digital currency platform. If digital money is not issued or controlled by a central bank, the supply may not be restricted. It could lead to devaluation and uncontrolled inflation. The recent swings in Bitcoin based on Elon Musk’s investment are a good example of such volatility.
Payments: traditional vs. digital
While traditional banks with established systems may find the digital transformation process scary. As digital money becomes more prevalent, financial institutions such as FinTech. And others must reconsider how their services might be compatible with an increasingly digital environment.
Individual financial institutions, not central banks, are responsible for responding to digital currencies and FinTech solutions. There’s a risk that government-backed digital currencies will lead to deposits with a central bank. But there’s also a chance that they’ll lead to decentralized opportunities. Visa has released a set of application program interfaces (APIs) that allow ordinary institutions to trade bitcoin.
“Banks may prevail in their vast coffers if they feel that it fits their plan.”
Despite the fact that it has become increasingly clear that banks do not consider the provision of cash. And transactional services to be efficient, disaggregation might still cause them problems.
Many FinTechs, such as Monzo, Revolut, and Cashplus, started out as alternative transactions but have since evolved into full-fledged banks. Clients with auxiliary accounts can now apply for profitable commodities like unsecured loans through these firms.
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