Digital Payment technologies have revolutionized financial transactions today. They are more convenient and efficient, and they offer security and accessibility to businesses and even individuals. The data stored also helps companies to make more informed decisions.

What are Digital Payments?

Digital payments are the various digital solutions and methods that allow electronic financial transactions. It covers all the underlying infrastructure and tools to facilitate electronic payment. 

These offer a vast consumer lens and different services and systems to B2B and B2C customers. But why are digital payments important?

In today's world, paying, sending, exchanging, moving, and managing money is challenging because of multiple factors. One of the major factors to consider is an unprecedented level of transactional speed and efficiency. These allow transactions at the click of a finger or mouse. They also offer transactional security, data availability, easy cash management, and the advantage of decision-making for businesses globally.

The digital revolution has also made cross-border payment seamless, opening various new opportunities for small businesses to connect with customers across the world. Financial inclusion is another key advantage digital payments offer because people in today's world rely on mobile devices, which gives them access to one-click payment, allowing them to be a part of a more extensive and interconnected financial system.

Evolution of Digital Payment

  • Stanford Federal Credit Union was the first to offer an online payment system in 1994.
  • In 1998, PayPal created another prominent and watershed moment within digital payment. 
  • Later, in the early 2000s, tech giants like Alibaba and Tencent launched their own mobile wallet payment platforms and transaction systems.
  • Globalwest is catching up with mobile apps and wallets like Apple and Google Pay and Peer-to-peer payment.

Latest Trends Digital Solutions for Export Import Payments

The digital payment size was more than $111.2 billion in 2023. It is expected to grow at a CAGR of 11.8%  by 2028 and will be valued at around $193.7 billion in 2028. The rise of contactless payment technologies will drive the digital payment market, and it is only expected to continue to grow. 

Recently, several companies have adopted digital payment, which is powering this shift. For example, finance companies are quickly adopting the cloud to offer their customers a more seamless and efficient process. Users across the companies now want to conduct faster, near real-time payment requests rather than relying on traditional and relatively inefficient batch processing.

Role of Mobile Devices in the Digital Payment

  • The popularity and advantages of digital wallets have led to fewer people using cash and cards for transactions. 
  • This is mainly because of the rapid adoption of 5G networks, which have enhanced data transmission and communication and equipped users with increasingly faster networks. 
  • An estimated 6.84 billion people worldwide use smartphones, representing 68% of the world's population. 

Types of Digital Payment for Export Import Payments

For export import payments, digital payment includes more than wallets; it includes debit cards and online money transfers. Some of these include:

B2C Digital Payments

  • Mobile Wallets

Everyone with a smartphone has a mobile wallet on their phone. For example, North American and most European users mostly use Apple Pay, Google Pay, and Samsung Pay. Similar users in other regions use tech giants like Alipay, WeChat Pay, and Paytm.

With a mobile wallet, people can easily link their bank account or credit card and use their mobile device to pay for any purchase through QR code scanning, tapping, and contactless payment. Beyond the clear benefits and significant evidence that digital payments offer, they also provide enhanced security and accessibility and other benefits like loyalty and reward programs. Despite all of this,  mobile wallets also offer certain risks and considerations. 

  • Contactless Payments and Near Field Communication (NFC)

Contactless payments are similar to mobile wallets, which enable users to quickly pay by placing their phone, debit card, or other device near a point-of-sale terminal. Technologies like Near Field Communications (NFC), Radio Frequency Identification (RFID), and OR codes facilitate these transactions.

While making a contactless payment, a mobile wallet creates a token containing pertinent personal payment information, which is then transmitted to the recipient. This method is also more secure than traditional credit or debit card payments. Contactless payments are also faster than card or cash transactions, which improves transactional efficiency and reduces the end user's wait time.

  • Peer-to-Peer (P2P) Payment Apps

Peer-to-peer payment eliminates the need for an intermediary when transferring money to another person. It enables individuals to easily and conveniently send money to anyone across the world. Some of the most popular P2P platforms include PayPal and Venmo. Others, like Apple, AliPay, and WeChatpay, have their own in-built P2P, which positions them as multi-functional platforms. 

However, P2P transfers also have drawbacks. For example, some platform operators may charge substantial fees involving multiple currencies, while in most cases, platforms lack meaningful policies and protection against human error risks.

  • Cryptocurrency and Blockchain-based Payments

Blockchain technology is one of the recent technology trends within FinTech and digital payments as it facilitates the ability to conduct immutable transactions and activities, which are recorded and stored on a decentralized global network, which prevents tampering.

Cryptocurrencies are other popular consumer assets generated through a computer and an algorithm-driven process. One of the most common and most widely used cryptocurrencies today is Bitcoin, followed by Ethereum and Solana, which are the other two-thirds of the established and widely used cryptocurrencies. Although thousands of different coins and variations can be found across the market for users, the technology remains nascent and lacks widespread recognition and acceptance relative to currency. 

The advantages of cryptocurrencies and blockchain-based transactions are that they are immutably recorded on a decentralised ledger and cannot be tampered with. The lack of any central authority or intermediary financial institutions is both a benefit(democratisation) and a drawback (lack of oversight and monetary control).

B2B Digital Payment Solutions

The B2B market segment has also managed to recover as digital payments offer businesses new ways to process transactions, move money, and offer payment services.

  • Business Transactions

Technologies that facilitate internal business transactions include automatic payments, invoicing, and subscription billing, often offered as software (SaaS). SaaS companies increase efficiency and security in their financial transactions. Some of the key players include Chargebee, PayPal, and Stripe.

  • Payment Security

Payment security solutions promote, enforce, and maintain security and integrity during the payment process. These mainly use the latest technologies to ensure fraud prevention, transaction monitoring, and compliance. Netguardians uses AI to save users from financial crimes, and Corlytics offers regulatory risk intelligence analytics.

  • Payment Support Tools

These are primarily based on cloud payment support solutions, which streamline and optimise digital payment and related activities. These often include SaaS systems for payment checkout and monetization optimizations. GR4VY is one platform that offers a cloud-native payment orchestration system, and Stripe helps reduce instances of cart abandonment for businesses.

  • Payment Infrastructure

This infrastructure allows businesses to integrate and offer digital payment functionality within and across their platforms. It is a key function that lies at every cornerstone of online transactions and serves as the foundational pillar of support. Alipay, Bolt, and Arcus represent just a handful of the many big players within the payment infrastructure space.

  • Point of Sale System

Point of Sale refers to the hardware and Software through which transactions are completed. They also offer additional support services like real-time inventory tracking, sales reporting, and customer data management. Some of the key players include Clover and Pine Labs.

Advantages of Digital Payment Solutions for Export Import Payments

  • Convenience
  • Speed
  • Security 
  • Fraud prevention
  • Financial inclusion
  • Accessibility

Disadvantages of Digital Payment Solutions for Export Import Payments

  • Data privacy
  • Security issues
  • Regulatory and compliance complexities

Next in Digital Payment solutions

Digital Payments offer many relative advantages compared to traditional payment methods, such as ease and convenience. With their continuous pervasiveness alongside technology advantages like AI, big data, networks, SaaS, and more, digital payments are here to stay.

While the risk is accompanied by digital payments like fraud or money laundering, the ongoing institutions and governing bodies may likely continue to push to improve and ensure transactional security. The digitization wave will further facilitate digital inclusion and bring more and more people online for financial transactions, along with increasing seamless and efficient payment experience.