Industry News: Global Digital Payments Growth Forecast to 2026

7th June 2021 - Global Digital Payments Market projected worth USD 11.29 trillion by 2026

The transaction value for the Global Digital Payments Market was USD 5.44 trillion in 2020, and it is projected to be worth USD 11.29 trillion by 2026, registering a CAGR of 11.21% during the period of 2021-2026, according to Research and Markets.

The global nature of COVID-19 and its impact on e-commerce therefore is likely to encourage strengthened international cooperation and the further development of policies for online purchases and supply. The pandemic has made it clear that e-commerce can be an important tool/solution, especially considering the fact that the e-commerce sales can support small and medium businesses, that form backbone for certain economies. This is expected to substantially spur the growth of digital payment methods across various economies.

Further, even before the pandemic, the demand for cashless payments, was driven by greater convenience, favorable government policies, and evolving consumer behavior. The governments are also trying to reduce their cost of printing the currencies and counter the fake currency influx that disturbs the economic growth, with digitization, thereby, creating an environment conducive for cashless and digital payments.

Furthermore, the rapid rise in smartphone penetration across emerging economies, primarily in the Asia-Pacific region, is expected to have a positive impact on the market growth. Additionally, the introduction of mobile wallets across the world, wherein a consumer is asked to add money to the application and use it later within, or outside of, the merchant (if applicable), is rapidly propelling the adoption of digital payment services.

China is spending highly on payment services. For example, WeChat Pay allows a customer to pay quickly through in-app service and connected banks and book hotels, flights, trains, and buy movie tickets. As per ITU, the internet penetration was the highest in Japan, in January 2019, i.e., 93.4%, which is expected to continue, owing to favorable government norms and associated regulations. Currently, India has a relatively low penetration rate, as compared to Japan and China. However, this is expected to increase, owing to the rising smartphone users and government pushing toward digital payment wallet services.

Retail stores and services across the world are rapidly adopting and integrating mobile payment applications, such as PayPal, Samsung Pay, Apple Pay, AliPay, and WeChat Pay, to accept payments. Owing to changing lifestyles, daily commerce, and rapid growth in online retailing, this trend is expected to continue over the next six years.

The increasing government initiatives, in order to promote the digital economy and curb the usage of cash, have resulted in increased transactions through e-wallets and point of sale machines. For instance, in July 2019, the Finance Ministry of India announced that no merchant discount rate (MDR) shall be imposed on merchants that allow their customers to make payments through 'low-cost digital payment modes'. Such factors and above-mentioned trends are expected to aid in the growth of the market.

Competitive Landscape

The Digital Payments Market is moderately concentrated. The competitive rivalry in the market studied is moderate, as a good number of players prevail. Despite the existence of several companies in the market studied, firms are required to keep innovating their products, in order to gain a sustainable competitive edge over their rivals and provide product differentiation.

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