In today’s world, digital contactless payments have taken the lead in several regions, allowing for more convenient transactions via smartphones, watches, or bank cards. However, traditional cash still exists in many places, and the future of payments remains a topic of discussion. So, how will we be making payments in 10 years? The answer is simple – digitally!
Digital contactless payments around the world
Today, many countries around the world operate on a cashless basis. They have implemented digital contactless payment systems through smartphones, watches, or bank cards, allowing people to make transactions quickly and efficiently. Among these countries are Sweden, Denmark, Norway, South Korea, and China.
In these countries, people can pay for food, transportation, and even purchase a home with a simple tap of their smartphone or bank card. Such advanced payment systems minimize the reliance on traditional cash, and this trend is expected to continue to grow globally.
Traditional cash is still in use
Despite the rise of digital payment systems globally, it is still the case that traditional cash is necessary in some regions. Places where there is no infrastructure to support digital payments or where people cannot afford smartphones or bank cards continue to rely on cash transactions.
However, as countries continue to develop digitally, we expect that in the near future, traditional cash transactions will decline, and more people will adopt digital payment systems.
The growth potential of the digital payment market
Research conducted globally in the payment industry suggests that in 10 years, the digital payment market could reach $500 billion after a compound annual growth rate of 15.6%.
The increase in the digital payment market provides an opportunity to improve financial inclusion for people who previously had no access to banking or digital payment systems.
Countries leading the way in digital payments
Some countries have already established a lead in digital payment systems that are expected to continue to grow. These countries include Sweden, Norway, and Denmark, where digital transactions make up more than 50% of all payment transactions.
For instance, the UK has a specific division of its national financial markets regulatory authority dedicated to regulating the digital payment industry. This regulatory authority serves as an indication of the UK’s dedication to continuous growth in digital payment systems.
Statistical projection for UK digital payment growth
According to Statista, the UK’s total transaction value is expected to show an annual growth rate of 13.97% between the end of this year and 2027. This growth could result in a projected total amount of US$741.30 billion by 2027, demonstrating an unparalleled opportunity for digital payment systems.
China has a massive digital payment market
China’s digital payment market is one of the largest in the world, expected to reach a cumulative transaction value of US$3,639.00 billion by the end of this year due to the country’s reliance on electronic payments and mobile phones.
Considering that China’s economy relies heavily on electronic payments, it is no surprise that the entire economic and commercial ecosystem is operated through mobile phones. China’s enormous digital payment market presents an excellent opportunity to observe the potential of digital payments.
Accelerating the global uptake of digital payments
Digital payments are accelerating rapidly in uptake across the world, and the UK is one of the world’s leaders in moving this forward. Cashless transactions have exploded, and with the ongoing ease of access to banking facilities and mobile technologies, the trend is likely to continue.
Importance of Choosing the Right Partner for the Digital Journey
Choosing the right company as a partner on the digital journey is critical. Modern FinTechs, such as Apple Pay, Google Pay, or PayPal, are natural choices as they provide traditional banking services using advanced technology.
Digital payments will rise and traditional cash transactions will decline globally. Countries with well-established digital payment systems, such as Sweden, Denmark, and China, will continue to lead, while other parts of the world are catching up.
For countries like the UK, digital payment systems provide significant opportunities for financial growth and inclusion. Surging growth rates in digital payments exhibited so far suggest that the future of payments is digital, presenting exciting opportunities for FinTech companies striving to be a part of this dynamic change.
