Historical records suggest that human beings have always had a payment system from their earliest interactions with one another. Whether it involved trade by barter with merchants or exchange for goods and services with precious metals, the payment experience is not new to man.
Thankfully, however, with the advantage of technology and e-commerce, many countries are fast moving away from the current over-reliance on cash. With the world now going digital, new payment methods are available through QR codes, credit and debit cards as well as specialized apps on smartphones.
Even more recently, digital currencies like Bitcoin, Ethereum, and Tether have grown in popularity. All of these modern payment tools are not only changing the way we exchange goods and services, but they are part of a revolution that’s improving the world of business.
What is the Digital Payment Revolution and Why Does it Matter?
Despite the buzz around the payment revolution, it’s not uncommon to see that some business owners and private individuals lack the necessary understanding of digital payment processing. But not to worry, Kate Richardson is a professional financial consultant with years of experience working to develop digital-driven business models. Here, the author traces the recent history of going digital and its benefits.
While there have been many attempts to introduce a cashless society as early as the 1960s, this move was typically opposed by cash-dependent small and medium-sized enterprises. Nevertheless, the shift to cashless payments and even greater payments began in full force in the 1990s, starting with electronic banking and cards. This later morphed into digital wallets and NFC payments like Alipay and Apple Pay with widespread mobile ownership in the late 2010s.
The COVID-19 pandemic would accelerate cashless payments and even greater innovations in the digital services ecosystem. For the first time, lockdown regulations forced even hawkers to adopt contactless QR code payments, among other examples.
During its early years, the digital transformation was criticized as being unable to completely replace cash. However, today, digital wallets have proven to meet payment needs in ways cash could never have. Besides, Southeast Asia is well-primed to become one of the first set of countries to fully adopt digital payments across businesses of all sizes.
There is no doubt that the digital revolution is the backbone of the economy of the future. As such, it is important to follow the trends and stay up-to-date with developments fuelling the shift to cashless payments.
Five Innovative Ways Digital Wallets and Payment Methods are Revolutionizing Transactions
As far back as 2012, Peter Olynick, a senior staff at tech consulting company Carlisle & Gallagher remarked: “Within five years, half of today’s smartphone users will be using their phones and mobile wallets as their preferred method for payments.”
Olynick’s prediction proved true. A research by Deloitte in 2018 revealed that 73% of respondents use online banking on their smartphones for transactions.
Several years later, the payment transformation is still sweeping across the globe, and in this section, let’s take a look at how it is changing how the world does business.
- Open Banking and Improved Access to Rural Areas
With the digital economy set to replace traditional banking systems, newer payment platforms are democratizing access to financial transactions. Before now, most people in rural areas barely had access to banks, ATMs, and credit or debit cards. However, thanks to mobile penetration in these areas, e-wallets and other alternative methods are helping bank the unbanked.
- Lower Transaction Fees for Bills and Cross-Border Transactions
Not only does the digital payment transformation allow businesses to process bills online, it also helps facilitate cross-border payments. This means that people and corporate entities can transfer money, and pay for utility and other bills without appearing in person. Even better, they don’t have to fear that their check or paper invoice will get lost or delayed in the postal mail.
In addition to this convenience, most digital transactions attract extremely low fees compared to their traditional banking counterparts. Customers engaged in cross-border payments can enjoy low-cost, seamless payments using their mobile devices or cards.
Some common examples of payment processing apps that allow international transactions with low fees include Zimpler, WeChat Pay, and Promptpay. Bookies that accept Zimpler, for example, permit players to make e-wallet payments through open banking APIs with extremely minimal charges.
- Wider Variety of Options for Customers
Another perk of embracing the payment evolution is that both businesses and individual users get to enjoy a broader range of options for their transactions. Unlike with traditional banking where the options were limited to cash and check, today, there are hundreds of payment methods to choose from.
From card payments to e-wallets, cryptocurrencies, mobile banking apps, and even contactless QR code payments, the available options are limitless. This allows for more flexibility in transactions.
- Real-time Secure Payments for Everyone
Interestingly, digital payments combine the benefits of convenience and swiftness. But that’s not all.
“Whilst usability is key for payments, security is a necessary condition for people to use them. Balancing Usability and security is one of the keys to healthy relationships between OEMs and end users. I think we’ve seen HCE take off in a big way in the last few months. I think it’s positive. We got all the tech moving in the right direction,” said Peng Ning, Samsung’s VP of Engineering.
This shows that security is just as important as convenience and swiftness. Fortunately, with modern payments, your money remains intact even if you lose your smartphone or card. Third-party access is also highly restricted through two-factor authentication methods and other security features.
- Digital Integration in Areas Dominated by Traditional Payments
According to data from the World Bank, the number of companies, especially in East Asia, investing in digital payment solutions saw a meteoric rise from 13% in 2020 to 54% in 2022. This has translated to modern payment tools infiltrating markets that used to be dominated by traditional payment systems.
For instance, in consumer goods purchase, transport, and gambling, there is greater acceptance of digital payments, even though the industries used to be dominated by cash moving around.
Final Thoughts: PwC Predicts 80% Increase in Global Cashless Payments
Without a doubt, the future is primed for a complete evolution. Leading Big Four firm, PwC revealed that between 2020 and 2025, global cashless payment volumes are predicted to grow by over 80%. In Southeast Asia alone, payments via e-wallets stood at $22 billion in 2019 and is set to cross $114 billion in 2025. Other data suggests that the digital payment market will record a volume of $24.31 trillion by 2030.
With more e-commerce platforms lowering the barriers to electronic payments and aggressive investments by central banks, the world may well leapfrog past these predictions. However, to ensure that no one is left behind, international institutions can help countries that desire modern payment benefits while also unable to afford related transformation costs.
