The Future of Digital Payments
- October 4, 2022
Digital payments are revolutionizing the way we interact with money. It is estimated that in 2023, the number of people using mobile payment methods is expected to reach 1.31 billion in 2023, a significant increase from 950 million users in 2019. This seismic shift away from physical cash and checks is having a profound impact on businesses and consumers alike. So, what does the future of digital payments hold?
One of the most intriguing aspects of digital payments is the rise of cryptocurrencies such as Bitcoin and Ethereum. Cryptocurrencies are digital or virtual tokens that use cryptography to secure their transactions and to control the creation of new units. Bitcoin, the first and most well-known cryptocurrency, was created in 2009 in response to the global financial crisis. Since then, dozens of other cryptocurrencies have entered the market, with a total market capitalization of over $1 trillion as of 2021.
While cryptocurrencies are still in their infancy, they show immense promise as a means of payment, despite the crypto lag being experienced at the moment. Cryptocurrencies are borderless and can be used to purchase goods and services online without the need for a bank or other financial institution. They also offer greater privacy than traditional payment methods, as they are not subject to government regulation or surveillance. Moreover, cryptocurrencies are becoming increasingly accepted by businesses and merchants as a form of payment. In fact, major companies such as Tesla, Microsoft, and Starbucks now accept Bitcoin as payment.
The Rise of Contactless Payments
Another trend that is reshaping the future of digital payments is the rise of contactless payments. Contactless payments allow customers to make purchases by waving their debit or credit card near a reader instead of swiping or inserting their card into a terminal. With the outbreak of COVID-19, contactless payments have seen a surge in popularity as they provide a convenient way to pay without coming into contact with surfaces that may be contaminated.
In addition to being more hygienic, contactless payments are also faster and more convenient than traditional methods such as cash or check. Studies have shown that customers who use contactless methods spend 20% more per transaction than those who don’t. This trend looks set to continue in the future as more businesses adopt contactless terminals and more customers become comfortable using them.
The Growth of Mobile Wallets
Another trend that’s shaping the future of digital payments is the growth of mobile wallets. A mobile wallet is a digital version of a traditional wallet that allows users to store their debit and credit cards, loyalty cards, and other information on their smartphone. Mobile wallets make it easy for consumers to make contactless payments—all they need to do is wave their phone in front of a contactless reader. But mobile wallets offer more than just convenience—they also provide businesses with valuable data about their customers’ spending habits.
According to Forrester, there are currently more than 200 million active mobile wallet users in the US alone. And that number is only going to grow in the years to come—by 2025, Forrester expects that nearly half of all US adults will be using a mobile wallet. As more consumers adopt mobile wallets, businesses will have an increasingly valuable opportunity to collect data about their spending habits and use that information to improve their marketing and sales strategies.
There’s no question that digital payments are becoming increasingly popular and transforming the way we interact with money. For businesses, this shift presents both challenges and opportunities. On the one hand, businesses need to be prepared to accept a wide range of payment types from their customers. On the other hand, they can use digital payments to improve their bottom line by reducing transaction costs and increasing customer loyalty. As digital payments continue to grow in popularity, businesses that are able to adapt will be well-positioned to succeed in the new economy.
Global Legal Law Firm
At Global Legal Law Firm, our lawyers have decades of expertise in ISOs, processors, commercial collections, credit card brands, and other forms of electronic payment processing litigation. Let us guide you through this new and volatile environment, rather than attempting to navigate it on your own.
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