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August 17, 2023

Digital Payments : Pre and Post COVID

The best time to establish protocols with your clients is when you onboard them.


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In 2018, Global Payments Report made some bold predictions in reference to the eWallet payments. They predicted that the eWallets will dominate eCommerce payments by 2022 and will be nearly 47 percent, an 11 percentage point rise from 2018. They also predicted that eWallet will be second to Debit Cards in POS payment trends at 28 percent.

All these predictions were well before COVID.

Now, 10 months into 2022 and in a post COVID world, I think we are in a good position to see how digital payments have panned out. If we refer to the latest Global Payments Report which estimates the 2021 data has put Digital / eWallet payments for eCommerce at 49 percent globally. 2 percentage points more and a year earlier.

For the POS payment trend Digital/Mobile wallet now leads the segment and is the preferred mode of payment at 29 percent. Again 1 percentage point more and a year earlier.

Is COVID the only reason for this digital payment dominance?

As we tried to answer the question, prima-facie COVID was an obvious catalyst. During COVID as businesses were forced to operate in limited spheres, a lot of them moved online to survive and started to accept digital payments. It was during this time that wages and government benefits also saw a transformation from cash to digital. But all this would not have been possible if we did not have the adequate infrastructure and technologies to support this.

In our research we found out that over the last decade a lot of right things had happened which created the foundation of this digital payment explosion.

  1. Financial Inclusion
  • World Bank’s Global Findex 2021 report highlights that in the last decade we have moved from 58 percent of the adult bank account ownership to 76 percent. This is no mean feat by any standards. Though the jump was initially dominated by India and China, since 2017 globally 34 countries have shown double digit growth in account ownership.
  • During COVID this ownership became the foundation for the adult digital transformation in these countries. China saw 100 million adults whereas India saw 80 million adults making their first digital payments during this time. World also saw an increase in the making and receiving of digital payment. In developing countries it grew 12 percentage points (between 2014 and 2021) and is at 57 percent (in 2021). In developed countries it grew 29 percentage points from 2011 to 2021 and is at 71 percent (2021).
  • The World Bank also reported a decrease in the Gender gap in account ownership has narrowed, helping women have more privacy, security, and control over their money.

2. Smartphone Ownership

  • Smartphone ownership saw an accelerated growth over the last decade. Countries such as India and Vietnam had an ownership of 12.8 percent and 19.7 percent in 2013 and were in the bottom 5 of the top 50 countries. In 2021, India is at 2nd position in terms of absolute number of users (492 mil.) with 38.4 percent ownership and Vietnam is 9th in absolute number (66.9 mil.) with 68.2 percent ownership.
  • This clearly led to the enhanced accessibility and usage to digital payment application

3. Rise of Super Apps and Payment Applications

  • The Digital Payment explosion in Southeast Asia was led by Super apps such as PayTM in India and Zalo in Vietnam. Whereas WeChat and Alipay dominated the Chinese market. PayTM saw a 3.5x growth during COVID alone and became a preferred mode of payment across the country.
  • Europe and the US also saw giants such as Google and Apple coming with their own payment applications to provide seamless experience to their loyal customer base. These applications were in direct competition with the existing market which was dominated by PayPal and Venmo.

Apart from these major pillars which dealt with inclusion, ownership and access to modes to enable the digital payments across the world one key factor which played the major role was the Government led Digital Transformation push.

However, now the question remains will this sustain?

  • Reports from The World Bank to Global Payments paint a rosy picture that it will not only sustain but will rather grow. Global payment predicts that the Digital wallets will be more than 50 percent by 2025 for eCommerce and will be 40 percent for POS. BCG predicts that the Global Payments revenue is expected to grow to about $2.9 trillion by 2030 which is pegged at 1.6–1.7 as of 2022.
  • So if we go by the predictions and the current sentiments digital payments are here to stay and evolve into much more than just the financial transactions. More on this in our next article.

August 17, 2023
min read
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