Digital payments are made over the online platform and mobile channels and can also be referred to as any payments sent electronically or by mobile computing and internet-enabled smartphones. This means that for digital transaction to take place, the source of the digital transfer must have a bank account, a means of online banking, a payment device, and a means of digital transfer, which means that either he or she could have signed up with a service provider or an entity, such as a bank account. The recipient of the payments must also have these means to accept payments, aside from the sender having those means. This implies that there must be a mode of digital transfer between the sender and the recipient where the former transfers in digital format rather than paying the latter in cash and physical form, implying that the transaction occurs through transmission modes of eCommerce or mCommerce.
Thus the “via media” by which the digital transactions occur is important which implies that the medium and the modes of digital transfer are also the key elements to ensuring the transaction is efficient. Payment digitization was indeed a big leap towards the objective of achieving a payment system that was quick, easy, fast, and reliable. Perhaps one of the greatest benefits of digital transaction market is that it speeds up the process of payment and no lengthy paperwork has to be filled in. There is no need to wait in a queue to withdraw cash from an ATM, or to carry cards in the wallet. Also, banking facilities would be open to consumers on a 24/7 basis and all days of the year, including bank holidays, with the switch to digital.
The possibilities digital payments market are infinite as more customers become technologically savvy, particularly as we are only now tuning into the unparalleled opportunity of global mobile penetration with 3.2 billion smartphone users in 2020 against a global population of approximately 7.7 billion. The influence of COVID-19 has further impacted the digital payments market due to increase in the change of payment habits, partly due to ease and partly due to guidance and focus on eliminating physical cash where feasible. In 2019, about 2.1 billion users have used mobile wallets. And by the end of 2020, digital payments market is bound to rise. Users can register for free at Global Market Database to understand the market forecast for Digital Payments Market for the next ten years.
Nothing but a smartphone wallet that attempts to imitate a real physical wallet is a mobile wallet solution. You can transfer money to other users with the aid of a mobile wallet, collect money from other users, and store money within the wallet. Not just that a person can also pay utility bills, purchase tickets, get discounts, and much more with the aid of a mobile wallet. Unsurprisingly, cards are still the preferred option for purchases worldwide, surpassing physical currency, but with the market expected to hit USD 1 trillion in 2020, mobile wallets are steadily gaining mainstream acceptance.
As per a report, India’s digital transaction market in 2019-2020 was worth around Rs 2,162 trillion. India’s digital transaction market is projected to rise more than three times in the next five years due to government initiatives on financial inclusion and rising retailer digitization. Over the next five years, cumulative mobile payment subscribers, currently standing at around 162 million, are projected to cross around 800 million that is expected to further boost the India’s digital transaction market. India’s digital payment transaction rose 55% last year, compared with 48% in China, according to data from the Bank for International Settlements (BIS). This was largely the product of the deep smartphone penetration of India’s vast population that was underserved by the conventional banks. As a result, digital transaction market have gained popularity, which also got a lift from the Unified Payments Interface (UPI), which makes real-time payments between bank accounts simpler.
Moving to the digital model for countries such as India indicates that there is a huge need and opportunity to get all the stakeholders in the payment value chain into the digital framework. Given that financial networks and links to banking facilities are largely situated in urban areas, the transfer of all individuals to the digital network poses tremendous challenges. Also, most merchants lack POS devices, and this is where the trick can be performed by service providers such as Paytm and the government’s newly introduced BHIM App. Furthermore, as much of the nation has already been identified under the Aadhar cards, using such biometric data, it is simpler for the government to build a digital backbone. Introduction of various applications and advancing technology in the sector has further boosted the India’s digital payment system. Therefore, while the path to a digital economy is still daunting, the basic elements exist to ease the journey of India’s digital transaction market.
As announced on October 21, 2020, Razorpay, a payment processing corporation, became the fifth Indian Fintech player to reach a USD 1 billion value. Over the last decade, this development in the fintech industry has come with a series of developments. China is a pioneer in digital payments currently, and India has become a capable follower. India records about one-eighth of China’s transactions, but it matches China’s rise. China is currently the world leader in the use of mobile wallets, with approximately 70% of Chinese users actively using mobile wallets. In 2020, the nation is estimated to produce approximately 80% of worldwide mobile wallets revenue, and with these numbers, China is also predicted to be a major contender in the fight for a truly cashless society.
In India, three out of four money transfers are carried out by cash due to only a third of the population of India having access to the internet. In comparison, 20% of Indians have no bank accounts. There has been a gradual but steady drive into digital transactions since 2016 and has now seen an increase in adoption of mobile wallets since the outbreak of the COVID-19 virus. Digital payments market are expected to continue to be impacted and influenced by the outbreak, but the infrastructure and mobile phone penetration enable digitalization for steady growth.