In the highly connected and digital world that we live in today, cash no longer serves the needs of the modern consumer. Factors like speed, transparency, security, and reliability are gradually tilting preferences towards digital payments.
As more and more shoppers rely on online shopping, the confidence in digital transactions grows. From contactless payments to mobile wallets, payment providers are supporting this change, offering solutions that both businesses and customers can take advantage of.
But why are digital transactions dominating the scenes and what does this mean for businesses?
In the following sections, we answer these questions and more.
The rise of digital transactions
In 2024, the transaction value in the digital payment segment is valued at $11.53 trillion. At the same time, the digital payments market is forecasted to reach $16.59 trillion by 2028.
These findings only prove what most businesses are already detecting based on payment analysis – digital transactions are here and they’re here to say.
Part of this movement began during the COVID-19 pandemic when due to health concerns, people were advised to reduce physical contact to a minimum. To support this process, many businesses switched to contactless payments like mobile wallets and NFC-enabled cards.
Another reason for the shift to digital transactions is the innovation in technology, facilitating this transition. Today, consumers can make payments from the comfort of their smart devices. Payment companies have created new ways for people to send and receive money quickly and easily, with just a few clicks. This completely eliminates the need for physical currency.
Unattended payment terminals like kiosks and vending machines have also grown in popularity, enabling companies to receive money via digital transactions with zero reliance on staff.
With more and more businesses accepting digital payments and a vast range of security measures that protect customers’ sensitive data, digital transactions have turned into one of the most preferred ways to pay today.
Benefits of digital transactions over cash
Naturally, when compared to cash, digital transactions provide multiple advantages.
First, they guarantee a quicker payment process, making them more convenient than physical currency. Without having to waste time visiting a physical location or carrying cash around, individuals today can shop online, pay bills, and send money to friends and family.
Second, we mentioned security as one of the biggest concerns when it comes to payments. Unlike physical money, which can be easily stolen, digital payments offer an extra level of safety thanks to advanced security mechanisms, including multi-factor authentication, tokenisation, and encryption.
Third, with digital transactions, tracking becomes easier than ever, both for consumers and businesses. On one side, shoppers can manage their spending and view historic purchases. Meanwhile, companies can gather valuable purchase data from digital payments, allowing them to create more personalised customer experiences online and offline.
Finally, it’s important to note that moving to digital payments can also lead to cost reductions. Cash payments or cash use in general go hand in hand with ATM fees, theft risks, and more.
The most popular digital payment options
In the realm of digital payments, there are few payment options that take leading positions, dominating over others.
These include:
• Credit and debit cards
• Mobile wallets
• Buy Now, Pay Later (BNPL)
• Contactless payments
Here’s what you need to know about each one.
Credit and debit cards
Credit and debit cards are among the first non-cash forms of payment.
Today, card payments have turned into a trend around the world. Just in the European area, they were responsible for 54% of all non-cash payments in 2023. These numbers are only natural, considering how much easier it is to spend using a card rather than having to rely on cash.
Providers like Visa and Mastercard facilitate safe digital transactions and are globally accepted, paving the way for consumers to take advantage of
Mobile wallets
Thanks to the rise of different mobile wallet solutions like Apple Pay, Samsung Pay, Google Pay, and others, mobile wallets have turned into one of the most preferred and popular payment methods.
More than 50% of the total eCommerce expenditure around the world is paid via digital wallets. This payment option is incredibly convenient for shoppers as it automatically stores payment data, allowing consumers to pay in a matter of seconds without any manual data entry.
At the same time, they’re reliable and secure, minimising the risks of data theft.
Buy Now, Pay Later (BNPL)
Another popular type of cashless payment today is Buy Now, Pay Later.
This form of payment enables shoppers to purchase products or services that would otherwise be unaffordable for them. Under this payment type, consumers can divide a large purchase into smaller payment chunks.
BNPL is an especially attractive payment method in industries like eCommerce, especially when it comes to expensive, big-ticket purchases.
According to studies, 3 in 5 people have relied on a BNPL service.
Contactless payments
From $25.90 billion in 2023, the contactless payment market is expected to grow to $35.4 billion in 2025.
This secure payment option works via RFID (Radio Frequency Identification) technology and near-field communication.
Just like the name suggests, with contactless payments, the consumer doesn’t need to establish any contact between their debit card, credit card, or smart card. All they have to do is tap or wave the card close to a POS terminal that is powered by the same technology.
Apart from these cashless payment options, shoppers today can also rely on payment options like bank transfers, cryptocurrencies, Peer-to-peer payment apps, and more.
What the shift to digital payments means for businesses
To stay ahead of the curve and maintain a competitive edge, businesses must adapt to the changing consumer needs and preferences in payments.
By partnering with payment providers that offer digital payment solutions, companies can gain access to a broader market, boost customer experience, improve security, and achieve exceptional levels of operational efficiency.
When selecting the right payment systems, companies can also bring down transaction costs and collect valuable data.
However, to achieve all of this, it’s crucial to implement the right infrastructures, research the preferred payment methods of your target customers, and make sure you’re fully compliant with standards and regulations like the PCI DSS, GDPR, and others.
Conclusion
As consumer preferences change due to innovations in technology, businesses are forced to adapt. One of the key changes today is the gradual shift towards digital payments and less and less reliance on cash.
Companies that successfully implement diverse digital payment options will naturally be better positioned to capitalise on emerging trends and build a bigger and more loyal customer base.
