The Rise of Online Payment Gateways

The Rise of Online Payment Gateways




The cashless payment system is growing exponentially with evolving payment methods, rising e-commerce use, enhanced broadband connectivity, and emergence of new technologies. Can increasing incidences of cyberattacks and spams make difficulty the growth of online payment market or will it continue to grow at a rapid rate?

The global digital payment industry is expected to hit the USD6.6 trillion mark in 2021, registering around a 40% jump in two years. The cashless payment methods are rapidly evolving with ground-breaking innovations such as mobile wallets, peer-to-peer (P2P) mobile payments, real-time payments, and cryptocurrencies. In the growing digital age, many payment technology companies are collaborating with traditional financial institutions to cater to the latest consumer and merchant preferences. Due to enhanced broadband connectivity, increasing mobile commerce, emergence of new technologies such as Virtual Reality, Artificial Intelligence, and rapid digitization, billions of people have started embracing contactless payments in both developed and emerging countries. Besides, surging e-commerce businesses, digital remittances, digital business payments, and mobile B2B payments are boosting the non-cash transaction ecosystem.

Cashless transaction method users across various generations are widely adopting the digital peer-to-peer (P2P) apps as they are more alluring and flexible to use. In-app payments or tap-and-go transactions take seconds at the checkout and allow users to make payments anytime and anywhere. Tokenization, encryption, obtain Sockets inner (SSL), etc., offer multiple ways of securing payments while enabling digital transactions. additionally, the users do not have to fill in information every time to complete the payment course of action. consequently, online payment gateways play a crucial role in the economic growth, enabling trade in the modern economy. With social distancing rules in place, digital payments have become an obligation for contactless transactions instead of just a transaction different to prevent the spread of coronavirus.

Digital Commerce Empowering Businesses

Electronic payment systems have become a crucial part of businesses as consumer inclination towards online shopping is expanding. With broadening internet penetration, increasing use of smartphones, and different options for e-transactions, most consumers are preferring online channels over traditional brick-and-mortar stores for shopping. consequently, businesses are shifting online with an electronic payment solution to maximize their profit earnings. Automating the electronic payment system eliminates the scope of errors and saves a important amount of time and effort. High standards for detecting and preventing fraud in digital transaction systems and AI-based fraud detections protect users from security breaches. By providing the flexibility for making payments by credit/debit cards, mobile money, e-Wallet, etc., the businesses can expand their customer base. The electronic payment course of action improves customer satisfaction as customers do not need to count cash or deal with paperwork whenever they want to make the transaction.

Biometric Authentication Enhancing Security

Biometric authentication involves recognizing biometric features and structural characteristics to verify the identification of an individual. The verification method can include fingerprint scanning, facial recognition, voice recognition, vein mapping, iris detection, and heartbeat examination. With the rise in identity theft and fraud, biometric authentication has become a reliable and obtain different for making digital transactions. According to a recent research, biometrically verified mobile commerce transactions are expected to constitute a enormous 57% of the total biometric transaction by 2023. Biometric payment cards are also becoming popular as they sustain tap-and-go payments, allowing users to make faster digital transactions. The digital payment technology provider, Worldline is partnering up with the French FinTech, A3BC (Anything Anywhere Anytime Biometric Connection), to protect mobile phones from intrusion with a two-factor authentication course of action. The combined solution eliminates identification by a single touch, rather it recognizes fingerprints by a picture of the hand. MasterCard is planning to bring FinGo’s vein-scanning payment solution that facilitates users to authenticate transactions.

Dominance of Mobile Wallets

In 2019, mobile wallets overtook credit cards to become the highly adopted payment kind globally. Digital wallets offer flexibility to users to store multiple payment methods in one digital home and turn cash into electronic money required for online or in-store purchases. Financial institutions have already started to embrace the digital wallet trend by offering virtual cards to business customers. The virtual cards stored in digital wallets consist of details like 16-digit card number, CVV code, date of expiry and work just like the physical plastic card. Currently, only 37% of merchants sustain mobile payments at the point of sale, but with the rising adoption, merchants are willing to invest in technologies easing digital wallets. The virtual wallets can save money due to low processing costs as they limit transaction values and frequency. Artificial Intelligence (AI) is improving the user experience with regards to transactions with ChatBots, designed to execute and robotize basic exchanges as per the user’s interest. Besides, cryptographic money-based e-wallets are being embraced by new companies to small-medium organizations for storing digital money. Smart voice technology is contributing to the growth of smart voice wallets ever since Amazon propelled the rule of this platform, which is now being followed by Google and Apple.

E-Commerce expansion Accelerating Digital Payment Market Growth

E-commerce growth at an exponential rate is creating shock groups, and the sonic expansion is reverberating across the FinTech sector. The growth of many e-commerce companies is pushed by the kind of financial sets they provide. Digital transactions make it functional for the buyer and seller to make transactions and keep loyal to the market space. The COVID-19 pandemic additional a different size to e-commerce innovation, introducing newer trends such as payment alternatives at checkouts (not with digital wallets), virtual cards, QR codes, and other touchless transactions. Besides, the Buy Now Pay Later (BNPL) trend is dominating the e-commerce industry as it relieves the financial burden on the buyer. BNPL involves a soft credit check, so the consumers can buy what they need, keep the inventory moving, and pay overtime without affecting their credit score. BNPL provides businesses with much-needed liquidity and greater flexibility at the checkout.

Influence of COVID-19 Pandemic on Digital Payment Market Growth

Digital payment systems have moved beyond their peer-to-peer (P2P) transfers and bill payments. The COVID-19 pandemic allowed digital payment systems to showcase their strengths, such as a strong understanding of hyper-local markets and its ability to establish strong local partnerships. Businesses and consumers increasingly “went digital” for providing and purchasing goods and sets online. When the pandemic hit, people did not want to touch or exchange cash due to the paranoia of catching the infection from physical currencies. Several governments around the world introduced digital financial transfers to provide COVID-assistance. Owing to lockdown measures, consumers shifted to online platforms, which catapulted the need for digital payment systems. Now, digital platforms have become an basic part of people’s lives, and consumers are more likely to continue shopping online in the post-pandemic period. The emotional shift in consumer behavior is likely to augment the need for e-payment systems already more. consequently, companies are focusing their attention on digital mediums to meet the new customer demands and thrive businesses in the changing market scenario. Organizations are reimagining customer journeys to reduce friction and provide new security features. Payment companies such as PayPal and Square Cash are staffing up across the board to better understand the rearrangement of societal norms and stabilize the business in the near future.

e-Payment Systems are the Future

With increasing smartphone and internet penetration, consumers are becoming tech-savvy, which presents endless opportunities for the digital payment markets. Post-pandemic, digital payment systems are expected to continue to prosper over the years to come. While cards keep the first choice for payments around the world, mobile wallets are quickly gaining traction. The traditional cash flow is declining in bank branches and ATMs, demonstrating a strength move towards a cashless society. Currently, China dominates the global mobile wallet consumption, followed by South Korea. However, there are nevertheless many countries that are highly dependent on cash due to without of trust towards financial institutions and without of proper broadband infrastructure, etc. In the near future, social media-initiated payments, biometric payments, voice-activated payments are likely to become mainstream in developing countries in addition.

Cybersecurity and Privacy Concerns with Online Payment Solutions

Cybersecurity and privacy threats have become a troubling concern with the increasing incidences of online fraud. According to the Mastercard survey, one out of four consumers experienced some kind of fraud in 2020, ramping up the cybercrime rate by 49%. In the first half of 2020, online scams increased by 73.8% from 2019. However, adopting new-age technologies such as multifactor authentication, biometrics, 3D security, Artificial Intelligence, and Machine Learning can help control fraudulent activities such as phishing, virus attacks, etc. Shifting to contactless cards, QR codes, and tokenization can also help mitigate risks associated with digital payment solutions. Besides, sensitizing end-users about the obtain application of e-payment solutions by amplifying efforts towards building financial literacy can help to prevent frauds. The emergence of mobile commerce and the evolution of e-payment platforms backed by strong security solutions can help to excursion the goal of making the economy truly cash-less.




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