The digital shift in consumer behavior, leading to the growth of the e-commerce industry is due to the growth in computer and mobile technology. But another factor has also played an important role in this growth. According to an article by Business Insider, this growth can be attributed to a large extent to the advances in online payment technology.
The Growth of Online Payment Methods
In the past, the only way to make payments were either through cash or by checks. And then came the credit cards, while allowed for electronic banking. And then, thanks to the evolution of technology, alternate online payment methods began to crop up.
While credit and debit cards remain the most popular online payment methods, other third-party payment services have also been launched that have proved extremely effective. These include digital wallets such as PayPal, Amazon Pay, G Pay (also called Google Pay), Apple Pay, Skrill, Neteller, and so on. There are also other options such as electronic checks, bank transfers, mobile payments, charge cards, prepaid cards, gift cards and so on.
And of course, there are cryptocurrencies and blockchain-based payment options. Blockchain technology is very new, but payment options such as Ripple can reduce the cost of account reconciliation by as much as 70%. In fact, based on how this technology is developing, there is a good chance that digital currencies could soon become a significant player in the online payment arena.
Reaching Beyond the Retail Industry
The e-commerce industry isn’t the only that has had an impact on online payment options. The online gambling industry has also contributed hugely to the growth in online payment services. In fact, there are now online payment methods specifically targeted at online casinos, such as MuchBetter Casinos.
MuchBettter Casinos is an internet-based payment app – an e-wallet if you will – that charges among the lowest fees among all e-wallets in the industry. This app is available globally and allows players to carry out real-time transactions in the blink of an eye.
Such payment methods are becoming more and more common, especially in the online gaming world. Their selling point is that they allow you to make transactions securely and safely.
There is also an increase in the growth of P2P payments using digital methods. And remittances have also become increasingly digitized. In fact, by 2024, about $459 billion in remittances will be transferred across the globe annually.
Interestingly, it isn’t only the consumers that have gone digital. Even businesses across the world are beginning to switch to the convenience of digital payments. One study has revealed that by switching to online digital payment methods, companies can improve efficiencies by a massive 73% and also decrease costs by 81%!
How the Pandemic Has Impacted Online Payments
While we could already see growth in the online payments industry, the 2020 COVID-19 pandemic has markedly speeded up the development and adoption of online payment methods.
A large number of brick-and-mortar establishments have had to shut down due to the worldwide lockdowns, forcing even more people to turn to online shopping. According to an article by Payments Journal, while online shopping had more or less become the norm for Millennials and Gen-Zs, this pandemic has also pushed the older demographics – the Baby Boomers and Gen-Xs – to turn to online shopping – and gambling.
Due to this massive increase in e-commerce, payments methods have also grown in 2020. An interesting finding is that it isn’t the big-brand credit cards that are controlling the online payments market right now. Almost 70% of the online payments are being made by local payment methods (such payment methods were earlier referred to as Alternative payment methods). So, you will find payment options like AliPay, GrabPay and WeChatPay dominating in Asia, while you will see PayPal, Visa and MasterCard being used in the US.
The Future of Online Payments
According to another report by Business Insider, digital payments are currently generating $128.4 billion in e-commerce sales, and this number is expected to go up to as much as $418.9 billion by 2024.
More people are expected to switch to various forms of online payments. For example, mobile wallets are expected to grow by 64% by the end of 2020. Yet another study has revealed that 23% of online buyers surveyed state that they are willing to switch from mobile banking apps to e-wallets.
Another trend that is fast emerging now and is expected to grow in the future is invisible payments. Currently, when you need to make an online payment, you need to fill in your particulars every time you carry out a transaction. Software is being developed so that payments are into apps so that users have a seamless payment experience.
Conclusion
The biggest learning point for businesses today is that customers are looking for a positive experience, where their payments are instantly processed, where the payment method is convenient and safe. In fact, according to multinational professional services company Accenture, customer experience is going to be the main differentiator between the many online payment companies.
And with the emergence of so many new online payment channels, customers now have the choice selecting the payment channel that suits them the best. This means that the traditional payment providers such as Visa and MasterCard will face much tougher competition and will need to up their game if they wish to keep their customers.
