Digital Payments Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Digital Payments Market is Segmented by Mode of Payment (Point of Sale and Online Sale), End-user Industry (Retail, Entertainment, Healthcare, Hospitality), and Geography.

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Market Snapshot

Digital Payments Market Summary
Study Period: 2020-2027
Base Year: 2021
Fastest Growing Market: Middle East and Africa
Largest Market: North America
CAGR: 12.38 %
Digital Payments Market Major Players

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Market Overview

The digital payments market is projected to register a CAGR of 12.38% during the forecasted period. The expansion of the market is being fueled by the widespread launch of mobile wallets and the rise in various technological developments in smartphones, digital payment cards, and POS at retail terminals. The market's growth is anticipated to be positively impacted by the quick increase in smartphone penetration across emerging economies, particularly in the Asia-Pacific region.

  • Governments are introducing digital payment options to their initiative. For instance, Indian Prime Minister Narendra Modi introduced e-RUPI, a customized and purpose-specific digital payment solution, in August 2021. Furthermore, emerging economies and developing countries worldwide are witnessing prominent growth rates in the adoption of mobile payments, not only due to ease of performing transactions or penetration of smartphones but also because of the financial inclusion features offered by the technology.
  • Moreover, stores and services worldwide are rapidly adopting and integrating mobile payment applications, such as PayPal, Samsung Pay, Apple Pay, AliPay, and WeChat Pay, to accept digital payments. This trend and scenario are anticipated to continue over the projected period due to changing lifestyles, daily commerce, and rapid growth in online retailing. Although card-based transactions account for a sizeable portion of non-cash transactions, growth has slowed due to local and regional payment methods like EuPay, EPI, and Verve Card, which are challenging the worldwide card market.
  • Vendors are also launching cloud-based digital payment solutions. For instance, in October 2021, J.P. Morgan announced the launch of Digital Bill Payment, powered by Paymentus, a cloud-based bill payment technology, and solutions provider. With Paymentus, the firm will equip businesses with a single, modern platform for customer engagement, bill presentation, and payments. Also, banks are innovating their digital payment products to integrate with a complete health ecosystem. For instance, in December 2021, the Bank of Baroda (BOB) joined hands with the National Payments Corporations of India (NPCI) to launch bob World Wave, a wearable line of products for payments integrated with a complete health ecosystem.
  • Further, North America is increasingly adopting mobile payment methods, with government regulations and other hurdles influencing growth. Various vendors are working with the government to develop rules and norms to help embrace the technology. In January 2022, Rêv USA, Inc., a payment products innovations company, announced the nationwide availability of The X World Wallet, an app-based multi-currency debit account combining a loyalty program, a travel bookings portal & discounts with an integrated global sustainability initiative. The X World Wallet account quickly loads from a user's existing bank account(s). It is linked to physical and digital Visa cards that can be easily added to Apple, Google, and Samsung Pay digital wallets for tap-and-go convenience.
  • The wide acceptance of digital payment methods is expected to augment post-COVID-19 and play a significant role in the long-term market scenario. With cash being a potential carrier for the virus, regulatory bodies and governments discourage its use. For instance, cash use in Britain has halved in recent days following the government-imposed lockdown, and essential good stores are increasingly avoiding cash transactions. Various mobile payment vendors in the market are expected to focus on increasing their user base during this period and returns post-COVID-19 scenarios, owing to which vendors are offering benefits, offers, and waiving their fees on the use of their services.

Scope of the Report

Digital payment is one that is made using digital channels. Both the payer and the payee send and receive money using digital methods in digital payments. Another name for it is electronic payment. Digital payments don't include real money. As per industry standards, DP is referred to as non-cash transactions carried out via digital platforms. The report's purview is limited to consumer transactions made through digital commerce (payments made through online payment gateways for card payments, direct debit, and mobile point-of-sale transactions).

The Digital Payments Market is Segregated by Mode of Payment (Point of Sale and Online Sale), End-user Industry (Retail, Entertainment, Healthcare, Hospitality), and Geography.

Mode of Payment
Point of Sale
Online Sale
End-user Industry
Retail
Entertainment
Healthcare
Hospitality
Other End-user Industry
Geography
North America
Europe
Asia Pacific
Latin America
Middle East and Africa

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Key Market Trends

Retail Industry to Drive Market Growth

  • The payment market is changing significantly in line with consumer behavior. A few trends influencing the payment market are the cashless economy, mobile banking, instant payments, digital commerce, and the expanding influence of regulatory authorities. Additionally, consumers benefit from contactless payments because there are fewer lineups, no longer a problem with having too much cash on hand, etc.
  • The Asia-Pacific region is anticipated to witness massive growth in the market studied as countries, such as China and India, adopt the digital mode of payment using digital and mobile wallets. The ubiquitous mobile devices, advanced digital infrastructure, and the growing usage of apps drive digital/mobile wallets to increase in Asia-Pacific.
  • Further, e-commerce is witnessing a spike in demand as consumers order essential items such as food, clothes, and others through e-commerce websites. Most consumers prefer the digital mode of payment. The Reserve Bank of India’s (RBI) digital payments index (DPI), launched in January 2021 to indicate the extent of digitization of payments in India, shows the index for September 2021 stood at 304.06 against 270.59 in March. This means the rapid adoption and deepening of digital payments across the country.
  • Furthermore, the rise in strategic partnerships has allowed the players to expand their footprint in the retail market. For instance, in October 2021, Ezetap, a digital payment leader, partnered with Axis Bank to introduce the latest offering, My Vyappar, to retail businesses in India. The partnership will facilitate over 50,000 smart POS devices with My Vyappar across 1600+ cities. Also, In May 2021, Phone pay announced the processing to acquire mobile platform Indus OS for USD 60 million to up their game in digital payments and compete better with well-established players in the market such as Alibaba-backed Paytm, Google Pay, and Amazon Pay. Therefore, such initiatives are driving opportunities for various emerging vendors in the market.
  • According to Ericsson's data, the total number of smartphone subscriptions worldwide in 2021 was around 6,259 million, and it is expected to reach approximately USD 6,567 million by the end of the year 2022. Also, it is forecasted to reach a landmark of roughly 7,690 million in 2027. Hence with the rise in the total number of smartphone subscriptions worldwide, the market for Digital Payments is presumed to face a vast range of lucrative growth opportunities in the next upcoming days.
Digital Payments Market: Number of Smartphone Subscriptions, Global, 2016 - 2027 (in millions)

North America to Account for the Most Significant Share

  • The preferred method of payment for Americans is anticipated to be the digital payment. For instance, according to Capgemini's projections, 41% of all shoppers in the nation expect their smartphone or tablet to replace their traditional shopping cart as their primary tool. Additionally, among millennials, digital payments are the preferred method of payment.
  • E-commerce sales in the country are also rising significantly with the improvement of the digital payment experience. This increase also demonstrates how easily customers are with online purchasing and how frequently they utilize handheld and mobile devices.
  • Google has pushed the UPI model of digital payments for the U.S. Federal Reserve. Infibeam Avenues Ltd, a digital payment solutions and enterprise software platform provider, announced that it had made inroads into the United States, the world's second-largest digital payments market by revenue.
  • In February 2022, Apple announced plans to introduce Tap to Pay on iPhone. The new capability intends to empower millions of merchants across the United States, from small businesses to large retailers, to use their iPhones seamlessly and securely to accept Apple Pay, contactless credit and debit cards, and other digital wallet payments through a simple tap to their iPhones with no additional hardware or payment terminal.
  • According to Newzoo, the United States will rank third in the total number of smartphone users in 2021. Also, per the data forecast from U.S. Census Bureau, there is a 1.7 billion U.S. dollar increase in the sales value of smartphones sold in the United States, for a total of 74.7 billion U.S. dollars in sales in 2022 as compared to the previous year. Therefore, with this rise in the total number of smartphone users and the increase in the sales value of smartphones, it is evident that the market for Digital Payments in the region will face various growth opportunities in the coming era.
Digital Payments Market - Growth Rate by Region (2022 - 2027)

Competitive Landscape

The Market for Digital Payments is moderately concentrated. The rivalry among the firms in the market is moderate. Due to several market participants operating, firms must keep innovating their products to gain a sustainable competitive edge over their opponents and offer differentiation in their product offerings.

  • June 2022 - Verizon Business is partnering with First National Bank of Omaha (FNBO) and Mastercard to introduce a credit card targeted to bring value to small business owners. The Verizon Business Mastercard is available to companies with an online account and fewer than 100 lines. It will involve reward points on every single purchase from the credit card.
  • May 2022 - Visa partnered with Fundbox, a working capital platform, to convert its overall operation into digital payment solutions aimed at small businesses. The first phase of the entire process is to introduce Fundbox Flex Visa Debit Card, issued by Pathward N.A.
  • March 2022 - Visa has accomplished its acquisition process of Tink – an open banking platform that allows fintechs, merchants, and financial institutions, to create financial products and services and helps monetary transactions. Tink has collaborated with over 3,400 banks, financial institutions, and millions of bank customers across Europe.

Major Players

  1. Paypal Holdings Inc.

  2. Visa Inc.

  3. Mastercard Incorporated (Mastercard)

  4. Amazon.Com Inc.

  5. Alphabet Inc.

Digital Payments Market Concentration

Recent Developments

  • June 2022 - PayPal Holdings Inc. extended and declared increasing its credit offerings to include a business credit card for small business owners. Issued by WebBank, The PayPal Business Cashback Mastercard is the first business credit card by PayPal. With no annual fee along with 2% cashback on all purchases with no rewards earning caps or expiration.
  • June 2022 - Ninth Summit of the Americas, Mastercard, and DFC declared the joint program in response to the Call to Action for Northern Central America introduced by the Vice president in May 2021. The Call to Action is built to deepen financial inclusion in El Salvador, Guatemala, and Honduras, thus creating economic opportunities for small businesses and individuals.
  • March 2022 - Visa initiated a new program to help creators such as musicians, filmmakers, fashion designers, and artists expand and speed up their small businesses using non-fungible tokens (NFTs). The operation is named Visa Creator Programme'. The initiative will help next-generation entrepreneurs use and understand NFTs.

Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Assumptions and Market Definition

    2. 1.2 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET INSIGHTS

    1. 4.1 Market Overview

    2. 4.2 Industry Stakeholder Analysis

    3. 4.3 Industry Attractiveness- Porter's Five Forces Analysis

      1. 4.3.1 Bargaining Power of Suppliers

      2. 4.3.2 Bargaining Power of Consumers

      3. 4.3.3 Threat of New Entrants

      4. 4.3.4 Threat of Substitutes

      5. 4.3.5 Intensity of Competitive Rivalry

    4. 4.4 Payments Infrastructure and Evolution of Payment Landscape

    5. 4.5 Regulatory Sandbox

      1. 4.5.1 Regulatory Landscape Across the World

      2. 4.5.2 Business Models with Potential Regulatory Roadblocks

      3. 4.5.3 Scope for Development in Lieu of Evolving Business Landscape

    6. 4.6 Impact of COVID-19 on the Market

    7. 4.7 Analysis of Digital Payment Infrastructure

  5. 5. MARKET DYNAMICS

    1. 5.1 Market Drivers

      1. 5.1.1 High Proliferation of Smartphones and Digital Initiatives

      2. 5.1.2 Favorable Changes in Regulatory Frameworks Across the World

    2. 5.2 Market Challenges

      1. 5.2.1 Operational Challenges Involving Cross-border Payments

  6. 6. MARKET SEGMENTATION

    1. 6.1 Mode of Payment

      1. 6.1.1 Point of Sale

      2. 6.1.2 Online Sale

    2. 6.2 End-user Industry

      1. 6.2.1 Retail

      2. 6.2.2 Entertainment

      3. 6.2.3 Healthcare

      4. 6.2.4 Hospitality

      5. 6.2.5 Other End-user Industry

    3. 6.3 Geography

      1. 6.3.1 North America

      2. 6.3.2 Europe

      3. 6.3.3 Asia Pacific

      4. 6.3.4 Latin America

      5. 6.3.5 Middle East and Africa

  7. 7. COMPETITIVE LANDSCAPE

    1. 7.1 Company Profiles

      1. 7.1.1 PayPal Holdings Inc.

      2. 7.1.2 Visa Inc.

      3. 7.1.3 MasterCard Incorporated (MasterCard)

      4. 7.1.4 Amazon Payments Inc. (Amazon.com Inc.)

      5. 7.1.5 Alphabet Inc.

      6. 7.1.6 Apple Inc.

      7. 7.1.7 Mobiamo Inc.

      8. 7.1.8 Paytm (One97 Communications Limited)

      9. 7.1.9 Stripe Inc.

      10. 7.1.10 Alipay.com Co. Ltd

      11. 7.1.11 Fiserv Inc.

      12. 7.1.12 Wordplay Inc. (Fidelity National Information Services)

      13. 7.1.13 ACI Worldwide

    2. *List Not Exhaustive
  8. 8. INVESTMENT ANALYSIS

  9. 9. FUTURE OF THE MARKET

**Subject to Availability
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Frequently Asked Questions

The Digital Payments Market market is studied from 2020 - 2027.

The Digital Payments Market is growing at a CAGR of 12.38% over the next 5 years.

Middle East and Africa is growing at the highest CAGR over 2021- 2026.

North America holds highest share in 2021.

Paypal Holdings Inc., Visa Inc., Mastercard Incorporated (Mastercard), Amazon.Com Inc., Alphabet Inc. are the major companies operating in Digital Payments Market.

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