Digital Payments: A Growing Trend | ApnaPay

What does future hold for the digital payments ecosystem? Some great improvements in simplicity and security of payment are already observed. Individuals are now waving their smartphones over a POS device to make payments with the full confidence about information security. Security has also seen great improvements with the involvement of biometrics in payemnts (i.e., fingerprint and iris scans).

Digital Payment market is constantly booming everywhere around the world. Thanks to the introduction of new technologies like POS machines, QR based payments, mobile wallets, etc., that continuously converge with others and encourage the emergence of innovative payment methods and consequently creating new and more business opportunities. Currently the most advanced solutions such as Mobile Payment and Contactless Payment surpass $ 50 billion globally in payments, a 21% of total digital payments by card, according to the Mobile Payment & Commerce Observatory of the School of Management of the Milan Polytechnic.

Until a couple of years back, one of the pillars of technological innovation driven by traditional financial institutions was the digital payments market. At that stage, the OTTs — Over The Top like PayPal, Amazon, Apple, Google and now Facebook showed up and the FinTech entered a tense arm in the region so as to deform it in no time, a true disruptive innovation that made lever on an exceptionally clear solitary element: the customer experience.

The prime motive of digital payments is to place the users and their experience at the focal point of the entire regulatory system by enforcing a complete modification of the rules and laws on digital payments: the two mainstays of this excellent change being more freedom and more choice. People must be have an option to use any digital tool (online sites, smartphones, POS machines, ATMs and cards, apps, wearable devices, etc.) to facilitate transactions and payments with utmost ease and security. The same goes to companies.

Digital payments: a market that shows no stopping signs

The digital payments market is anticipated to grow at an average annual growth pace of 18% between 2018–23, with a turnover expected to reach $ 87 billion globally by 2023, as per the ReportLinker report.

The factors that are driving the accelerator on the growth of the digital payments market include national and international initiatives taken to encourage digital payments, the elevated rate of smartphone adoption and the need to provide customers with better service and experience even at POS terminals.

According to the studies, there is a specific phenomenon to which we must pay attention, namely the rise of mobile wallets — in 2016 the electronic portfolios accounted for 8.6% of non-cash transactions, 71% of which were favoured by the OTTs and the BigTechs, the core business of which is not to give financial services yet to enhance the customers experience towards the purchase of other services through financial services offering.

Digital payments: 3 trends to monitor

There is a proliferation of payments acceptance at the point of sale, online and on the go. Payments that were location bound are now device enabled. Taking into consideration the changes in place, also in terms of legal regulation, and the propensities for individuals currently slanted to use any kind of digital services, some trends have been identified which are additionally helpful for those who don’t deal with financial services such as the retailers.

1) In-store payments through mPOS

The development and use of mPOS will increase exponentially with increasing demand and use of smartphones for making payments. People are already getting used to the idea of ​​paying with their smartphones instead of pulling out a plastic card from wallets. Consumers are more comfortable in making purchases in store with mobile devices, using digital payment methods or through the smartphone (text messages, apps, cards and virtual accounts) or using the mPOS in store (mobile POS machines with NFC technology).

The in-store payment apps like BHIM-UPI are also becoming more and more popular in India as they simplify the payment process without having to wait for the line to complete the transaction as every transaction just required to capture the QR code using smartphone that allows people to pay through a simple app.

2) Mobile wallets and payment applications

From exchanging cash to swiping cards to now making payments using mobile apps, payment methods are getting easier with every invention.

A mobile wallet lives on your smartphone as an app. Mobile wallets are the virtual wallets that stores card information of the card holder on his mobile phone. They provide convenient way for a user to make in-store payments as well as making payments online, all using a smartphone. Some of mobile wallets currently being excessively used in Indian market includes PayTM, Freecharge, Mobikwick, etc.

Generally it is a circuit (accessible and manageable via the app only) wherein the person can manage his own bank account by doing transactions such as transferring money to other users using the same circuit, reloading the mobile wallet account through different payment tools and systems, receiving or making payments simply using the app.

3) Social Commerce and Payments

Social networks are much more than just being an innovative method of communication. Now one can easily promote and sell their products directly through social media networks. Besides just selling products on social media, social media networks are also expanding their business by including payment solutions such as money transfer from one user to another (peer-to-peer) or direct payment within the network.

Social media has a massive database of users, it makes perfect sense to blend online payments with social media platforms.

4) Using identity for payments

Using one’s biometric for making payments is widely gaining popularity as it ensures enhanced security for the end user and speedy transactions. Biometric payment is a point of sale technology that uses biometrics (fingerprint or iris) for authentication to identify the user and authorize the deduction of funds from his bank account to make the payments.