Advantages and new trends in digital payments

Digital payments are the future. But in the present they have become fundamental. In this post, we will look at their advantages, both the immediate and the less intuitive (but no less interesting) ones.

Digital has changed our lives. It has made them simpler, more interconnected, more efficient. It has transformed our societies and revolutionized our economies and even our deep rooted production systems. These changes aren’t entirely new, however, in the current time of this unexpected, unforeseen, and unpredictable crisis, digital is doing much more. It is literally saving us. 

It is allowing us, as individuals, to carry out urgent and non-returnable practices directly from our computers and smartphones, without requiring us to encounter large groups of people or otherwise engage in in-person activities that could endanger our health and that of others.

Also thanks to digital, we are managing to entertain and distract ourselves in such a difficult time. It’s also allowing us to stay in touch, albeit at a distance, with our loved ones, our friends and family. And, last but not least, digital is what is making it possible for economic, manufacturing, and administrative life to go on, albeit in the midst of a thousand difficulties, thanks to smart working, storage and sharing platforms, dematerialization, and all the other tools made available by digital transformation.

These tools have already become increasingly essential in “normal” times. Today they are vital and indispensable. Tomorrow, once the emergency is over, we know that their role will be increasingly central. Among these tools, one of the most important and consolidated is that of digital payments. In this post, we will start by looking at the current situation. We will then analyze the advantages and benefits of digital payments, compared to traditional payment methods: both macroscopic and less obvious (but not less important). Finally, we will try to identify new trends within this sector.

 

Where are we now?

It only takes a few data points to realize how digital payments are taking on an increasingly important, generalized, and pervasive role.

For example, in 2019 the digital payments market had a global value of $3885.57 billion. According to the most authoritative estimates, this value will reach $868.68 million by 2025, with a composite annual growth rate of 13.7% (source). Some industry giants are consolidating their positions, such as the Chinese WeChat Pay, AliPay, the now “classic” PayPal, Apple Pay. However, they are moving in the same direction such as those by Amazon, Google, and Samsung.

It is not only technology companies who are moving in this direction; in their wake, for some time now, public administrations (with the consequent legislation) are moving in the same direction, along with companies in almost all sectors. For example, consider the Utilities sector and the many advantages that we all experience with online bill payment (which keeps us out of the physical location, which is even more important at this point in time). It also allows us to perform this task in just a few clicks, or in a few taps on our smartphone.

Smartphones… precisely. It is expected that by the end of 2020, about one billion people worldwide will make digital payments from their mobile device. In just three years, by 2023, this number should rise to 1.31 billion. In addition, in 2024, the total value of digital payments is expected to be $3081 billion; compared to “only” USD $881 billion in 2018, a truly impressive annual growth rate of +23.2% (source).

So what is the source of the massive and widespread growth in digital payments? The answer is very simple: from the enormous benefits it brings, for individuals, businesses, and administrations. In the following paragraph, we will identify the main benefits.

 

The multiple benefits of digital payments

The advantages of digital payments over traditional methods are many indeed; they affect individuals, businesses and their customers, and administrations. In short, they affect everyone. Some of these advantages are very direct and intuitive; others are indirect but no less valuable.

Here we will examine them all in three macro-areas. The first two are now established. The third, instead, is less obvious (but very interesting):

 

1. Economic (and time) savings

Digital money, first of all, costs less, mainly because it is more “efficient.” Administrations, companies, and individual citizens waste a lot of time and resources to make payments in traditional ways. 

With digital, all these delays are replaced by a few clicks.

 

2. Security and transparency

In the past, one of the great fears about digital payments was the issue of security. Today this is no longer the case, and the relationship has been reversed.

Digital money passes through hyper-secure (and constantly improving its performance) platforms. And, today, it’s much easier to have cash money stolen than digital money. Think about the possibility of blocking your digital accounts in case of theft or cyber attacks; the same can never happen if your wallet is stolen.

In addition, there is the issue of transparency, which is vital for administrations and for companies. But it is also a growing demand by individuals. With digital payments, everything is tracked and stored efficiently, conveniently, and is easily retrievable. 

 

3. A better relationship between people and companies (or administrations)

The moment of payment has always (and always will be) one of the most slippery touchpoints in the relationship between a customer and a company, as well as between a citizen and an administration. Of course, paying can hardly turn into a pleasure; but it is also true that it must not turn into an odyssey, or a continuous chain of annoyances.

Some companies (and administrations) have managed to transform this point of contact into a moment of dialog with the user, who can pay in just a few clicks, in the maximum comfort and transparency. Customers can also communicate with the company in a simple and personalized way. In short: the task of payment, can be transformed into a window of dialog, in a Customer Care opportunity.

An example? The “personalized bill” by Doxee, which has been used by Utility Industry giants A2A, Engie, and Fastweb.

 

The future trends in digital payments

It is now clear: the future of payments is digital. And, the complicated crisis we are currently experiencing will only accelerate this trend which is already under way.

Within this general trend, what are the specific trends in digital payments that are already taking shape today? Below we identify 5 of them.

 

1. Generation Z

These are the young people born between the second half of the 1990s and the end of the 2000s and for whom the world has always been a “digital place.” For these segments of the population, digital payments are the norm. 

 

2. Mobile first

More than a trend, mobile is a reality that is here to stay. There are about 3.5 billion smartphones in the world (source). It is natural that the vast majority of digital payments, therefore, come from these devices. We have already seen above the powerful numbers that detail this growth. All of this translates into the need to design intuitive and optimized platforms for this type of navigation.

 

3. Reward

Switching to digital payments is more convenient, more efficient, and safer. But sometimes this is not enough to change the habits of a certain type of user, citizen, or customer. One way to elicit change can be to guarantee personalized benefits and rewards. This is a strategy implemented by most all players in the digital payment industry.

 

4. More and more personalization

We have seen above how the moment of payment can become a delicate and fundamental node in the dialog between company and customer, between administration and citizen. To make this dialog work at its best, the best way is personalization. No longer a one-to-many communication—cold and the same for everyone—instead, it’s about using many individual tailor-made communications, in a one-to-one perspective, like those designed by Doxee for any type of sector.

The User Experience, in fact, will increasingly be the factor that will decide a company’s reputation, loyalty rate, and competitiveness.

 

5. More and more technology… and more and more security

There are many innovations on the horizon in the field of digital payments. Almost all of them are aimed at increasing cyber-security, an aspect that can only be a priority.

There are possible applications of blockchain technologies, the increasingly decisive shift from cards to “codes,” new authentication methods (such as biometric authentication), so-called mobile wallets, cashless payments, and a whole series of other innovations that go in the same direction: more security, more personalization, more immediacy (for more trends in the payment industry, see this post).

Digital is saving us. It is mitigating the effects of a very complicated crisis. In the future, it will be up to all of us to exploit these enormous advantages even more intelligently, and on a human scale.” 

 

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