The rise of Digital Payment Systems

A digital payment, often known as an electronic payment, is the transfer of funds via a digital device or channel from one payment account to another and involves no physical money. Due to technological advancements and the increasing demand for speed, convenience and security, cashless transactions such as card payments, e-money and credit transfers have steadily gained popularity. The Covid-19 Pandemic accelerated these trends, and they continued to gain momentum.

According to Capgemini, the number of non-cash transactions reached 1.3 trillion in 2023. It’s forecasted to reach 2.3 trillion by 2027. Modern payment methods such as account-to- account, digital wallets, QR code payments and more are predicted to make up 30% of all transactions. The World Bank reveals that currently two thirds of adults worldwide are involved in digital payments.

There are many benefits from the rise in digital payment systems such as convenience. E-wallets enable consumers to store their favourite payments in one place including credit cards and gift cards etc without having to carry all the individual cards. It can also be seen to have improved customer experiences as it is a quick and efficient form of payment.

While the advent of cashless payments has transformed our transactional world, it does still present a range of challenges. One challenge is privacy concerns: Cashless transactions raise concerns about privacy due to the creation of digital footprints, leading to fear of financial data tracking, sharing or misuse. Also, with increased reliance on digital platforms, the risk of cyberattacks and data breaches grows which can pose a threat to sensitive information.