A new research paper by 451 Research, commissioned by Discover Global Network found digital payment services and financial technology partnerships are reshaping the way in which consumers around the world send, spend and store their money.
The COVID-19 pandemic shed light on the influence of these digital payment services – as they grew market share and consumers accelerated their usage and adoption of these products.
State of the Union: Global Digital Payments and Fintech Ecosystem analyses these shifts and other trends prevalent within the industry.
“With nearly 3 in 5 people using at least one type of digital payment service in their day-to-day spending, the State of the Union report shows the importance of digital commerce for consumers around the globe,” said Kiran Pookote, director of business strategy at Discover.
“These statistics reflect the impact of COVID-19 on digital behaviour and the ways it will continue to shape the economy post-pandemic.”
In order to address these trends, partnerships between FinTechs and payment companies will likely be critical, highlighting the need to work together on developing technologies for the evolving payments ecosystem. 86% of FinTech vendors said they are reliant on payment companies to help them implement payment technologies.
“FinTechs looking to quickly innovate and address customer demand on a global scale can benefit from pursuing partnerships with a company like Discover Global Network – that provides them with customized payment solutions, expertise and has a history of successful partnerships,” said Pookote.
Impact of COVID-19 On Digital Payments
- Globally, 1 in 3 consumers said they began using digital payments for the first time within the last year, while more than half (52%) said they transitioned all or most of their in-store spending to online. Further, 49% say they are now more comfortable with making digital payments as a result of COVID-19.
Consumer Shift to Digital Wallets
- According to the report, in 2020, digital wallets are reported to represent 27% of in-store spending, 41% of e-commerce spending and 46% of mobile commerce spending. By 2025, digital wallets are projected to account for more than $10 trillion in global transaction volume between in-store and e-commerce.
Partnerships for Fintech Vendors are Key
- Nearly 9 out of 10 fintech vendors said contactless payments and linking loyalty programs and rewards to a customer’s payment card were relevant to their business needs.
- Seventy eight percent of FinTechs indicated they currently partner or work with a payment network, and an additional 18% said while they don’t currently, such a partnership is possible.
Global Payment Adoption
- Digital wallets ranked as the most widely used digital payment service overall, with respondents in Singapore (74%), India (70%) and China (61%) exhibiting the highest increase in usage. In these markets, many digital wallets have evolved into “super apps,” encompassing a wide range of services, from payments to purchasing movie tickets to insurance.