EXCLUSIVE: What Factors Have Boosted The Digital Payments Market
In recent times, the move to ‘go cashless’ has been a point of contention within our society, however it is the inevitable next-step of our payment journey. The Digital Payments market is here to stay. We all know it, but do we all know why? Let’s take a look at what factors have boosted the digital payments market.
The evolution of the digital wallet is a key factor. No doubt accelerated by increased digitisation throughout the coronavirus pandemic, the digital wallet has shown its usefulness in society. The seamless ease of using ApplePay is a prime example, with more than 65 million more global iPhone users activating Apple Pay in 2020, and an overall user count of well over 220 million.
The explosion of financial superapps like Curve also reflect the usefulness of digital wallets. Curve allows all of your cards to exist on one usable card and in one usable app, again showing how holding a mobile phone can generate huge financial opportunities in the digital payments space.
This is best exemplified by the likes of M-Pesa too, who essentially convert a mobile device into a bank account, a digital wallet. As Africa’s leading fintech platform, M-Pesa has over 50 million monthly active customers, which is astonishing but also represents something of value in a cultural sense too.
When M-Pesa was launched 14 years ago, for many customers it was their first, and often only, access to financial services. This was such a revolutionary experience, resulting in lifting roughly 2% of Kenyan households out of extreme poverty from 2006-2019. Collectively, more than 500,000 businesses transact more than US$7 billion (€5.8 billion) every month on M-Pesa too. All of this digitisation is why people are more committed to the digital payments market.
Simplifying System Architecture
It’s clear that things like the digital wallet and enhancements in technology could not have been done without the simplification in system architecture to create this more efficient, seamless process in the digital payments space that consumers love. And a key reason for that is the change to viewing and investing in IT as a profit centre, not a cost centre.
Alexandre Bove, CEO of Nexi Digital, rightly highlighted that “IT helps businesses to grow once they understand how technology can underpin their needs of doing additional business. It is a profit centre because any part of a business initiative in any sector can be improved by IT and allow you to create and exploit opportunity.”
It’s hard to not mention transitions to the cloud here. The names alone of the top cloud providers immediately denote how impactful the trend has become. AWS, Microsoft Azure, Google Cloud and various other SaaS players have changed the game and become the de facto choice of IT, accelerating digital transformations and the digital payments market in the process.
Cloud computing can process large volumes of data to facilitate global development. Technologisation enhances globalisation, and with that more activity is had online, more business is done online and more payments are made online. The mobility is invaluable, the cost benefits are agile and reliable, convenient and a collaborative mechanism that has nudged tus towards the digital payments market too.
Many people are fearful that when embracing the digital payments market, the risk of fraud is higher. This is no doubt a valid concern, as fraudsters seek to insert themselves into the earlier stages of a financial transaction now, compared to arriving at the point of sale.
Having said that, research accumulated from 400 CFOs indicated that 94% of companies making the transition to digital payments are implementing fraud detection systems into their operations too, including data mining, deep learning neural networks and rules-based algorithms. Physical cash poses a much starker risk when it comes to direct theft, whereas digital funds are more traceable, visible and accountable across the entirety of the financial process.
So in a weird way, the increased skills of fraudsters in both the physical and digital worlds has actually led to the greater adoption into the digital payments market, as there is greater evidence of more being done in the space in the interests of customer security and protection by financial organisations. Whether it’s HooYu and Mitek protecting customers in the KYC and ID Verification space, or other firms with significant ML capabilities to spot suspicious activity, the space is being made more secure.
A High Tech Talent Pool
I end on this point because all of the above factors are impossible without this one vehicle for change; the people. Creativity will win the war for talent, because it has to. This industry will not work if we don’t have the right talent in it, and that talent has definitely served in boosting the digital payments market.
Cecil Edwards, Group Chief Operating Officer at GPS, was in attendance at this year’s PAY360 conference in London and noted the importance of continually recruiting and consolidating the talent pool in our industry. “We need more talent to capitalise on the opportunities here. Where is your execution capability coming from? You can knock off your competitors but you haven’t raised the number of people in the quota.”
Continually expanding the high tech talent pool has no doubt improved the quality of the producers in the digital payments market, resulting in more people being impressed and trusting to embrace it.
Nexi Digital have established partnerships with universities and research institutions in Italy and Poland to identify special talent, new recruits and collaborate on the development of digital solutions, contributing to digital innovation in under penetrated markets. Alexandre Bove, CEO of Nexi Digital, explained how “we don’t care if they know nothing about payments. That’s not an issue. We will teach them. They have only to be curious.” Curiosity killed the cat, but it will save our industry. Let’s see how far our digital payments market can go?