The Dawn of Digital Payments

The younger generations have begun seeking alternatives to replace traditional methods. Modes of payment, where financial sectors play a major role, have also undergone a three-dimensional change due to this hunger for innovations as major populations globally have begun to accept this change favorably.

FREMONT, CA: A huge escalation in digital payment methods is witnessed as the future of payment methods has begun to dominantly rely on technology. Innovative solutions such as cryptocurrency, digital cards, biometric payments, open banking, and BNPL (Buy Now Pay Later) have secured a predominant place in customers' everyday lives. 88 percent of people have already jumped into this trend of payment as per records of the previous year, where 39 percent preferred a tappable smartphone mobile wallet, 29 percent’s preference was BNPL, 20 percent opted for cryptocurrency, and the remaining 18 percent used payment enabling wearable tech devices. This increase is largely due to the increase in diverse methods of purchasing via voice assistants and social media applications.

An Inverse Variation Between Digital Payments and Cash Decline

A survey on payments over the last annual period shows that only 29 percent of consumers use traditional payment methods, while 66 percent have already shifted to digital payments such as cards, SMS payments, digital money transfer applications, and instant payment services. The shift towards these digital modes of payment continues globally with security and rewards as their major considerations, along with promotions and easy access. Thus, countries like the UAE, where 36 percent of consumers consider social and environmental benefits, hold sustainability as their principal factor.

87 percent of consumers are familiar with how BNPL works, while 46 percent have chosen it as their preferred mode of payment. Consumers expect flexibility and security along with security, where BNPL comes as a perfect option as it enables emergency and big-ticket purchases. Despite mainstream awareness regarding cryptocurrency and NFTs, an in-depth understanding of them is lacking among 74 percent of consumers who state that they could make the fullest use of cryptocurrency with a thorough understanding. While consumers seek more education, security, and flexibility in managing crypto assets, 66% believe that NFTs and other digital assets could be good investments.

Nearly 67 percent of customers have adapted crypto-related activities such as opening a crypto wallet, buying, trading, or holding crypto as an investment. Since there is a lack of stability in the market, individuals who are acquainted with cryptocurrencies feel that regulation is especially necessary, whereas banks are the most trusted form of representative for driving digital currencies. Consumers seek great opportunities for optimizing bill payments, prioritizing control, flexibility, convenience, and integrated payment technologies. 83 percent of consumers use account-to-account payment options, while 70 percent prefer bill transactions that assist them in paying monthly bills with irregular income.

Digital finance options provide open banking benefits such as speed, convenience, and transparency, allowing customers to speed up their daily financial tasks. With 81 percent of consumers approving of open banking, a report states that over 55 percent of people feel digital transactions are more secure, while 50 percent of consumers are sharing their trusted financial data information for the effective management of their money. 71% of consumers prefer biometric access to payment over a card or device. The potential for security optimization is also evident to consumers, with the majority of consumers' agreement over biometrics technology for payments being much more secure than two-factor authentication. Time management comes as the most important perk of biometric access due to which over 82 percent of people are getting adapted to the biometric mode of payment, especially a fingerprint, while several other biometric options avails, such as facial recognition, palm or hand scans, retina scans, and voice recognition.

Despite security and data privacy concerns, younger generations are more likely than older generations to adapt to digital modes of payment. Along with digital payment modes, they have begun exploring various options such as crypto or buying virtual products in the metaverse. Gen Z is getting well accustomed to the digital mode of payment which digital payment modes are dawning on a rapid scale.