How Digital Payments Changed the Game: A Look at the Past, Present, and Future

The methods through which a buyer can finish a transaction have been drastically transformed during the last few decades. From the barter system to telegraph money transfers and now digital payments, payment methods have come a long way. 

‍From Bartering to Digital Payment Systems

Digital payment systems have come a long way since the days of bartering. Before the invention of money, people would transact business directly for products and services. Over time, the idea of money developed, and people began exchanging goods using precious metals like gold and silver. Coins and paper money were eventually adopted as a more practical means of exchanging goods and services.

‍The Emergence of Digital Payment Systems: How digital payment systems came to Be and their early adopters

Western Union introduced the electronic fund transfer (EFT) in the United States in 1871, marking the beginning of modern electronic payments. For the first time, consumers could purchase products and services and pay for them without physically being present. 

Since then, other payment methods have changed, including the introduction of the first credit card of the contemporary era. Although they have been around since the late 1990s, digital payment systems didn’t start to take off until the early 2000s. One of the first businesses to accept digital payments was PayPal, which soon gained popularity as an alternative to more conventional payment methods.

Early in the new millennium, China saw a rise in the popularity of digital payments. China’s digital payment revolution began in 2003 with the launch of Alipay, Alibaba’s escrow-based online payment solution, and subsequently in 2005 with Tencent’s first online payment brand, Tenpay. 

While the first online payment systems in India date back to 1996. The Industrial Credit and Investment Corporation of India (ICICI) was the first to offer online banking services to their customers at their retail branches. In recent years, India has risen to the forefront of digital payments, developing an ecosystem that facilitates the adoption and use of digital payments. Many countries are currently attempting to duplicate India’s payment systems, especially the Unified Payments Interface. (UPI). Transactions in the country grew from 23.4 billion in 2019 to 46.7 billion in July 2022. 

The Present State of Digital Payment Systems- Current Trends and market dominance of digital payment systems

By 2025, the global mobile payment market is anticipated to be worth $4.7 trillion. With 950 million mobile payment transactions globally, the number is predicted to soar to 1.31 billion users by 2023. With the rise of smartphones came the rise of mobile payment systems such as Apple Pay, Google Wallet, and Samsung Pay. These apps acquired a lot of momentum since they allow users to complete transactions with only a few taps on their mobile devices.  

Digital payments market revenue is expected to reach US$310 billion by 2030, up from US$68 billion in 2021. Between 2022 and 2030, it is predicted to expand at a CAGR of 18.6%. Many people now use digital payment systems as the norm. Mobile payments and digital wallets have made it easier to pay for goods and services on the go than ever before. The total value of global mobile payment transactions is estimated to reach $4.7 trillion in 2022, up from $930 billion in 2018.

The digital payments retail segment, which currently holds the greatest market share, is anticipated to grow at a CAGR of 12.2%. The modes of payment a consumer chooses while making a purchase have been redefined by digital payments against the backdrop of a cashless economy and the increasing availability of smartphones. The fact that healthcare has the second-largest market share after retail shows how increasingly people are choosing convenience. 

‍The Future of Digital Payment Systems- Emerging technologies and trends that will shape the future of digital payments

With many rising technologies and trends on the horizon, the future of digital payment systems appears bright. 

QR codes will become more popular as a secure and quick payment method. Despite the ubiquity of QR codes in some countries, such as China, other countries, particularly the United States, have been slower to adopt the payment method. Cryptocurrencies, blockchain technology, and biometric authentication are just a handful of the many developments that will influence digital payments in the future. 

by connected. Following growth in connected automobiles, smart homes, wearables, and other IoT components, consumer demand for connected payment technology has been fueled. Nearly 60% of consumers are interested in using a smart home gadget to make connected payments. Digital payment capabilities will be integrated into all types of systems throughout the next ten years, greatly enhancing consumer ease and accessibility. 

The global unbanked and underbanked population will further present room for expansion and innovation within the digital payments industry and will support the overall expansion of digital payments. Better regulation of the digital payment industry and room for innovation will be made possible by financial inclusion. 

‍Conclusion:

In conclusion, digital payment systems have fundamentally changed how we pay for products and services and are still rapidly developing. Digital payment systems have gone a long way from their early days in the late 1990s to their current domination of mobile payments and digital wallets. Emerging technologies like blockchain and biometric verification will undoubtedly have a huge impact on how digital payments are developed in the future, it is obvious as we look to the future. Businesses must implement digital payment systems now more than ever to be competitive in the modern digital world as the global market for digital payments expands.