Payment Solutions That Will Transform the Way We Spend
How people pay for goods and services has massively evolved over the past few decades. For millennia, we bartered with coins, paper money, or items of similar value, but economic systems were drastically reshaped once the digital revolution came about.
Even though many like to think that electronic payments are an invention of the 1990s, the reality is that credit cards debuted in the 1950s, introducing the concept of replacing cash and checks with something more effective and electronic-based. Electronic funds transfer systems popped up in the 1970s, with the US’s Automated Clearing House enabling digital money transactions between banks. In the 1980s, point-of-sale terminals emerged. PayPal paved the way for digital wallets and peer-to-peer transfers as the 1990s were drawing to a close.
Today, the value of the digital payment market is estimated at $20 trillion, with a 13.6% yearly expansion in the next five years, with the mobile section being the sphere’s most dominant sub-market. Thus, this indicates that more and more individuals are favoring frictionless payments, craving the convenience they provide. Here, we will look at the novel solutions that have appeared in the past two decades, redefined how money moves, and impacted trade.
Top Emerging Payment Solutions
At the tail-end of the 2010s and the start of the 2020s, mobile wallets such as CashApp, Venmo, Apple Pay, Google Pay, and WeChat Pay seemed to become cornerstones of retail and online payments. The global market for this segment is projected to see an over 40% jump in the next decade due to expanding mobile networks and swelling awareness about these methods.
The Asia-Pacific region is noting the most impressive growth with WeChat Pay and Alipay leading the way, as these apps are conquering dormant territories, integrating services like messaging and ride-hailing. Yet, they have not become a top payment method for iGaming platforms, which was a realm that gave birth to many famed e-wallets, such as Skrill and Neteller, as it spurred on digital money transfers in a big way at the start of the 2000s. Cryptos and electronic pocketbooks dominate online gambling right now, with card transfers slowly getting phased out in this landscape.
It is vital to note that many parts of the globe have shunned global choices for ones backed by local payment processors. For example, in India, PhonePe, Paytm, and Airtel Thanks are top picks, despite Indians having access to Google Pay. These options have the same Near Field Communication (NFC) technology as global market choices and can ensure just as secure, encrypted transactions, but with interfaces catered to locals.
Indonesia has DANA, Sweden Klarna, Brazil PicPay, the US CashApp, the Philippines GCash, etc. All of these leverage similar concepts and face similar challenges regarding interoperability issues between competing platforms. Privacy concerns are also a significant hurdle for them, as many believe these solutions leave them vulnerable to identity theft. This is so, even with regulations like the EU’s GDPR trying to mitigate this.
By 2018, the world started to take Bitcoin and other blockchain-powered currencies seriously. Since then, cryptos and DeFi platforms have changed the game, so to speak, eliminating intermediaries like banks. But, digital coins have oversaturated the market, with Tangem estimating that more than thirty-seven million unique ones now exist. Still, the most established ones process millions, if not billions, in daily transactions and have found thriving ground in nations like Venezuela, where hyperinflation has crippled traditional finance.
Impact on Consumers & Businesses
As noted above, convenience is the number one pro of modern payment solutions, as these options foster speed and inclusivity. They reduce checkout times to seconds. Moreover, most apps have BNPL - buy now, pay later - services that empower consumers to manage budgets flexibly.
Decentralized finance has done a good job of extending financial access to the unbanked and giving individuals a new avenue for participation in economies where their transfers remain untracked. Tokenization in mobile wallets has reduced fraud risks that were present with traditional card use, and such features are super appealing to tech-savvy demographics.
Faster transactions improve customer satisfaction, and if that is paired with low fees, then everyone is happy and stimulated to use modern methods. Cryptos facilitate transactions to persons anywhere in the world, with the same network charges for all, because transactions happen on digital ledgers that no central body looks to profit from.
Payment innovations drive financial inclusion, as evident by mobile platforms like M-Pesa, launched in 2007, bringing banking to millions of Kenyans, and crypto adoption rising in Nigeria post-2020, driven by remittance needs.
The Future of Payments
Most experts agree that mobile wallets will evolve into super apps that are already happening and integrate features like investing, insurance, and healthcare services. Biometric payments will also become standard, with wearables like smartwatches enabling this to a degree of seamless authentication not possible before.
BNPL models will undoubtedly mature, and central bank digital currencies will try to reshape crypto’s role. Artificial intelligence will also sweep over to this field, fueling advanced fraud detection tools that can analyze billions of transactions in real time, flagging suspicious activity with staggering accuracy. AI will also likely optimize payment routing, selecting the cheapest/fastest methods based on user preferences and automating institutional operations.