The Digital Payment Market is projected to reach $274.61 billion by 2029, at a CAGR of 16.6% during the forecast period of 2022–2029. Factors such as increased adoption of digital payment modes, rising government initiatives for the adoption of digital payment and growing partnerships between banks and fintech to leverage customer experience are expected to drive the growth of the overall digital payment market growth. In addition, the increasing use of payment applications across different industry verticals and the rising adoption of contactless payment are expected to offer significant opportunities for market growth. However, a low level of awareness of online payments in rural areas can restrain the growth of this market.
Impact of COVID-19 on the Digital Payment Market
In the first quarter of 2020, the world was hit by the outbreak of COVID-19, which was declared a global pandemic by the WHO, as the virus spread to many countries across the globe, with cases growing multifold within a few weeks.
The COVID-19 pandemic accelerated digital transformation and the adoption of digital payments worldwide. The pandemic made a marked impact on non-cash payments. In particular, the total value of non-paper-based or digital credit transfers grew strongly in advanced and developing economies. These payments include transfers initiated via online banking, a mobile banking app or an automated transfer. As a result, the growth in total credit transfer usage was so strong that the share of non-cash payments in total GDP sharply increased across the globe. In low and middle-income economies (excluding China), over 40[PT1] % of adults who made merchant in-store or online payments using a card, phone, or the internet did so for the first time since the start of the pandemic.
The COVID-19 pandemic accelerated consumer interest in adopting digital banking and payment interactions. For example, Americans set a record with 1.2 billion transactions on the instant payment network Zelle in 2020, a 62% increase from the previous year. Meanwhile, in October 2020, more than 53% of consumers who had access to a smartphone and a bank account stated that there had been an increase in the utilization of banking apps compared to the pre-COVID-19 pandemic scenario (Source: MasterCard).
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The Increased Adoption of Digital Payment Methods is Expected to Drive Digital Payment Market Growth
In the past few years, major technological advances, massive shifts in consumer buying behavior, government policies and regulations, sharp e-commerce growth, and the global proliferation of connected devices have driven significant changes in digital payments.
The adoption of digital payment modes, such as internet banking, mobile money, and card payments, has rapidly increased in recent years and is a cornerstone for financial inclusion initiatives in various countries. Payments are becoming increasingly cashless, and the industry’s role in fostering inclusion has become a significant priority. Rising government initiatives for the adoption of digital payments, the proliferation of smartphones, increasing e-commerce sales, and rising internet penetration are driving the adoption of various digital payment modes worldwide.
According to a report by FIS (U.S.), a financial services technology group, the use of digital-wallet-based transactions grew globally by 7% in 2020 and predicts that digital wallets will account for more than half of all e-commerce payments worldwide by 2024, as consumers shift from card-based to account and QR code-based transactions.
In addition, due to the COVID-19 pandemic, the adoption of contactless payment methods increased worldwide as consumers preferred low- or no-touch interactions. Digital wallets are becoming the mainstay of in-store payment choices, with contactless cards, kiosk payments, and QR codes increasing in popularity for a safer commerce experience. According to Visa's Back to Business Study, 63% of consumers indicated switching to a business offering contactless payment options.
The impacts of the COVID-pandemic accelerated the adoption of a broader range of digital banking offerings and shifted consumers of all ages away from traditional banking branches at an unprecedented pace. Thus, the rising adoption of different payment modes has accelerated market growth.
Key Findings in the Digital payment Market Study:
In 2022, the Solutions Segment is Expected to Dominate the Digital Payment Market
Based on offering, the digital payment market is segmented into solutions and services. In 2022, the solutions segment is expected to account for the largest share of the global digital payment market. Growth of this segment is attributed to the factors such as the wide adoption of payment processing solutions to enable customers with seamless online shopping experiences, developments in mobile payment technology, and increased use of mobile wallets to make payments.
In 2022, the Digital Wallets Segment is Expected to Dominate the Digital Payment Market
Based on payment mode, the digital payment market is segmented into digital wallets, banking cards, point of sales, internet banking and other payment modes. In 2022, the digital wallets segment is expected to account for the largest share of the global digital payment market and is expected to grow at the highest CAGR during the forecast period. The emergence of payment-enabled mobile phones, connected & real-time marketing, and the increasing shift to QR code-based transactions are the major factors impacting the growth of this segment.
Asia-Pacific to be the Fastest-growing Regional Market
Based on geography, the market is segmented into North America, Europe, Asia-Pacific, Latin America, and the Middle East & Africa. Asia-Pacific has seen significant growth in the digital payment market in recent years and is projected to register the highest CAGR during the forecasted period. The increasing penetration of smartphones and widespread internet usage has accelerated the adoption of mobile wallets in the region. China and India currently account for more than 50% of the smartphone population across the globe and have universally adopted the use of digital wallets. They are now at the forefront of payment change, offering payment processing convenience and security.
In addition, the desire to minimize contact during the COVID-19 outbreak pushed 91% of consumers in Asia-Pacific to pay with cards or mobile apps, instead of cash, according to a Visa study. Excluding Mainland China, where mobile payments are already well established, McKinsey expects mobile-payments users to double by 2025, exceeding two billion. Asia-Pacific will grow fastest, with cashless transaction volume growing by 109% until 2025 and 76% from 2025 to 2030. (Source: PWC).
Key Players
The report includes a competitive landscape based on an extensive assessment of the key growth strategies adopted by the leading market participants in the digital payment market. The key players profiled in the digital payment market report are PayPal Holdings, Inc. (U.S.), Fiserve, Inc. (U.S.), FIS (U.S.), Block, Inc., formerly Square, Inc. (U.S.), Stripe, Inc. (U.S.), Visa, Inc. (U.S.), Mastercard (U.S.), Worldline (France), Temenos (Switzerland), PayU (Netherlands), Apple Inc. (U.S.), JPMorgan Chase & Co. (U.S.), WEX Inc. (U.S.), ACI Worldwide, Inc. (U.S.), and FleetCor Technologies, Inc. (U.S.)
Scope of the report:
Digital Payment Market, by Offering
- Solution
- Payment Gateway Solutions
- Payment Processing Solutions
- Payment Wallet Solutions
- Payment Security and Fraud Management Solutions
- Point of Sale Solutions
- Services
- Integration Services
- Support Services
- Consulting Services
Digital Payment Market, by Payment Mode
- Digital Wallets
- Banking Cards
- Point of Sales
- Internet Banking
- Others Payment Modes
Digital Payment Market, by End User
- BFSI
- Retail
- Travel & Hospitality
- Healthcare
- IT & Telecom
- Media & Entertainment
- Other End Users
Digital Payment Market, by Organization Size
- Large Enterprises
- Small and Medium-sized Enterprises
Digital Payment Market, by Geography
- North America
- Europe
- U.K.
- Germany
- France
- Italy
- Spain
- Denmark
- Sweden
- Rest of Europe
- Asia-Pacific
- China
- India
- Japan
- Singapore
- Malaysia
- Indonesia
- Rest of Asia-Pacific
- Latin America
- Brazil
- Mexico
- Rest of Latin America
- Middle East & Africa
- UAE
- Israel
- Rest of the Middle East & Africa
Key questions answered in the report:
