Digital Payments Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)

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

Market Snapshot

CAGR
Study Period: 2018 - 2026
Base Year: 2020
Fastest Growing Market: Africa
Largest Market: North America
CAGR: 11.21 %

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Market Overview

The transaction value of the 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. 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 e-commerce sales can support small and medium businesses that form the 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 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.
  • Furthermore, 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) should be imposed on merchants that allow their customers to make payments through ‘low-cost digital payment modes’. Such factors and the above-mentioned trends are expected to aid in the growth of the market.

Scope of the Report

Digital payment is a way of payment, which is made through digital modes. In digital payments, the payer and payee both use digital modes to send and receive money. It is also called electronic payment. No hard cash is involved in digital payments. As per industry standards, DP is defined only as non-cash transactions done through digital channels. Only consumer transactions are considered through digital commerce (payment processed using online card payments, direct debit, online payment gateways, etc.) or mobile PoS payments (payment processed at PoS using smartphone and wallet transactions).

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

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Key Market Trends

Healthcare Industry to Drive the Market Growth

  • The major driving force for the adoption of digital payment in Hospitals is the government’s efforts for improvement in infrastructure and the increasing number of patients, which leads to long queues. COVID-19 pandemic is proving to be an enabler for digital payments in the healthcare industry.
  • Moreover, with the aging population in several countries, having an easy-to-use digital payment method can be a progressive step to encourage wider digital payment adoption across various age demographics.
  • A survey conducted by Cedar, a patient payment and engagement platform for providers, on 1000 individuals found out that half of the consumers are significantly frustrated with their provider’s billing and collections process, especially those that are not yet digital.
  • Moreover, India-based Paytm was trying to create a payments mechanism especially for doctors to help them receive consultation fees using Paytm. This is because doctors do not accept digital payments, as they often visit multiple hospitals in a week, and there is no reconciliation method for all the payments. Also, in February 2020, Sphere collaborated with VisitPay, to develop and launch a Text to Pay Solution specific to the Healthcare sector.
  • In a significant boost toward a cashless and chequeless society, DBS Bank was working with Singapore’s three public healthcare clusters, the National Healthcare Group (NHG), National University Health System (NUHS), and Singapore Health Services (SingHealth), to transition all public hospitals, specialty centers and polyclinics to the nation’s unified payment code, Singapore Quick Response Code (SGQR), by end 2020.
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India to Account for the Most Significant Share in Asia-Pacific

  • Digital payments are a relatively new trend in India. However, it is growing at a fast pace due to a favorable regulatory environment, infrastructure upgrades, high smartphone penetration, and subsidized data plans.
  • The reason for high smartphone adoption is the launch of affordable phones by Chinese brands that offer flagship-grade features and capabilities. These brands’ target market is rural India, also, who are looking to upgrade their feature phones. Thus more Indians are relying on apps for facilities, such as grocery or fuel management. This is an enabler for mobile payments.
  • Demonetization was a massive currency-culling exercise taken up by the government, which made 86% of the currency in circulation invalid. The step was taken to fight against black money, terror financing, and counterfeit currency. This was a major driving force for the adoption of digital payments. ​
  • The Digital India program is a flagship program of the Government of India with a vision to transform India into a digitally empowered society. Ministry of Electronics & Information Technology (MeitY) is working on strengthening digital payment infrastructure and creating awareness through promotions of digital payments. ​
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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 several companies in the market studied, firms are required to keep innovating their products to gain a sustainable competitive edge over their rivals and provide product differentiation.

  • April 2020 - Amazon India planned to give zero-interest credit to customers to buy products on its platform or pay bills, partnering with lenders, like Capital Float and Karur Vysya Bank, for the initiative. The service may allow consumers to purchase essentials on Amazon’s platform.

Recent Developments

  • April 2020 - Paytm Payments Bank partnered with Mastercard to issue virtual and physical debit cards. The deal will see the bank’s beta customers issued with cards in an initial rollout, followed by its entire user base in short order.
  • February 2020 - Paypal Holdings Inc. announced to launch a peer-to-peer (P2P) payments feature in India. The service is based on Universal Payments Interface (UPI), India’s indigenous digital payments network, and will roll out in the near future.

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 DYNAMICS

    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 Threat of New Entrants

      2. 4.3.2 Bargaining Power of Buyers

      3. 4.3.3 Bargaining Power of Suppliers

      4. 4.3.4 Threat of Substitute Products

      5. 4.3.5 Intensity of Competitive Rivalry

    4. 4.4 Payments Infrastructure and Evolution of Payments 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 Market Drivers

      1. 4.7.1 High Proliferation of Smartphones and Digital Initiatives

      2. 4.7.2 Favorable Changes in Regulatory Frameworks Across the World

    8. 4.8 Market Challenges

      1. 4.8.1 Operational Challenges Involving Cross-border Payments

    9. 4.9 Market Opportunities

    10. 4.10 Analysis of the Digital Payment Infrastructure

  5. 5. MARKET SEGMENTATION

    1. 5.1 Mode of Payment

      1. 5.1.1 Point of Sale

      2. 5.1.2 Online Sale

    2. 5.2 End-user Industry

      1. 5.2.1 Retail

      2. 5.2.2 Entertainment

      3. 5.2.3 Healthcare

      4. 5.2.4 Hospitality

      5. 5.2.5 Other End-user Industries

    3. 5.3 Geography

      1. 5.3.1 North America

      2. 5.3.2 Europe

      3. 5.3.3 Asia-Pacific

      4. 5.3.4 Latin America

      5. 5.3.5 Middle-East and Africa

  6. 6. COMPETITIVE LANDSCAPE

    1. 6.1 Company Profiles*

      1. 6.1.1 PayPal Holdings Inc.

      2. 6.1.2 Visa Inc.

      3. 6.1.3 MasterCard Incorporated (MasterCard)

      4. 6.1.4 Amazon.com Inc.

      5. 6.1.5 Alphabet Inc.

      6. 6.1.6 Apple Inc.

      7. 6.1.7 CCAvenue (Avenues India Pvt. Ltd)

      8. 6.1.8 Paytm Mobile Solutions Private Limited

      9. 6.1.9 Stripe Inc.

      10. 6.1.10 Alipay.com Co. Ltd

      11. 6.1.11 First Data

      12. 6.1.12 Worldpay

      13. 6.1.13 ACI Worldwide

  7. 7. INVESTMENT ANALYSIS

  8. 8. FUTURE OF THE MARKET

**Subject to Availability

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Frequently Asked Questions

The Digital Payments Market market is studied from 2018 - 2026.

The Digital Payments Market is growing at a CAGR of 11.21% over the next 5 years.

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

North America holds highest share in 2020.

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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