The payments sector is dynamic and robust. Digital and online transactions are fast becoming the norm across all sectors and regions. While it’s unlikely cash will die out completely (in the near future at least), digital is set to be king. Whether you’re mulling starting your own payments company, or considering what payments to integrate, this is the article for you. We will look at some key payments sector verticals and the facts and figures that matter to you.
Cross-border payments have grown exponentially over the last few years. In 2020, some $37.15 trillion was transacted internationally. This is on track to surpass $39.9 trillion by 2026. Corporate payments make up the majority of all payments of this type, but the value of retail payments has been steadily increasing, particularly in the last three years. Global consulting firm EY has said that the sector is growing at a sustainable rate of 5% CAGR each year.
They also noted that this sector is “ripe for disruption” as customer demands are increasing. This is in addition to growth in emerging markets and a higher level of financial inclusion. Amid this exciting landscape are some new names that are challenging the status quo. They are providing more innovative and convenient solutions for issues that other providers haven’t been able to fix.
If conventional cross-border payment facilitators want to compete, they must respond to these shifts in the payments sector. Additionally, they must adopt more competitive strategies to remain relevant. As for newcomers, there are plentiful opportunities for exciting solutions focused on the integration of emerging technologies.
When we look at digital payment and transactions, not just cross-border, we see that they totalled $5.44 trillion in 2020. This will more than double to $11.29 trillion by 2026. With a CAGR of 11.21%, this outpaces the growth expected from the conventional cross-border payments sector.
Drivers behind this growth include the COVID-19 pandemic, which made it crystal clear that eCommerce is here to stay. In fact, many businesses and economies were propped up by the swift transition to online shopping. This means digital payments are important tools and solutions for businesses. The reliance on digital payments and the way the eCommerce sector is growing paves the way for significant payments sector growth in the short and long term.
Even before the pandemic, there was a growing demand for cashless payments. This was driven by the proliferation of the digital economy, users that want more from their online services, and growing confidence in making payments online. At the same time, governments were trying to reduce costs related to printing money while also reducing counterfeit currency problems. This, when all combined, creates a situation that’s extremely conducive for the digital payments sector.
The most popular kinds of digital payments
When it comes to the digital payments sector, it’s not about which is the most popular right now. Remember, this is still an emerging sector. This means that conventional methods like cash or debit card may still be on top right now, but this could change in the future.
Some sources have suggested that digital wallets have already surpassed the popularity of cards. FIS, a company that performs financial and retail analytics, said that digital wallets are now more widely used than credit cards. This trend started in 2020 during the COVID-19 pandemic and has continued to accelerate.
Their figures say that digital and mobile wallets accounted for 25% of PoS spending in 2020 when compared to 22.4% for credit cards and 22.3% for debit cards. Cash fell to just 20.5% when compared to 30.2% during pre-pandemic times.
In terms of the eCommerce sector, digital wallets are more popular than cards. They accounted for 44% of transactions in 2020 and are expected to reach more than half by 2024.
As of the end of July 2021, there were, at least 1.5 million cryptocurrency transactions were happening each day. While in 2020, the number of transactions taking place grew by 14% when compared to the previous year.
In April of this year, the value of the cryptocurrency markets hit $3 trillion for the first time. This was fuelled by mainstream acceptance of cryptocurrency but also an interest in using it in the payment sector. More cryptocurrency merchants have popped up, and vendors are keener to allow payments in bitcoin and ether.
Findings from a recent survey by PYMNTS found that many people are eager to both own and use cryptocurrency for making payments. Some said they would do so more if the merchant accepted this form of payment. While overall, ownership is still low, all projects point to a situation where this will increase.
For those in the digital payment sector, or those thinking about what payments to include, cryptocurrency is certainly worth considering.
For over 23 years, Fast Offshore has worked with payments companies and providers. We’ve also helped customers from every sector, integrate the payment solutions that best suit them. If you’re an entrepreneur in iGaming, eCommerce, forex, or any other sector, we can help you pick the best payment solutions for you. Contact us here for professional, transparent, and friendly advice!
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