Global use of digital payment tech to grow by 23.7%

The global shift to digital payments is projected to grow at a 13.4% compound annual growth rate between 2020 and 2024, reaching $8.17 trillion by 2024. Although it was already underway prior to the COVID-19 pandemic, the shift to digital payments was positively affected by the crisis.

Research data analysed and published by Finnish website Sijoitusrahastot has indicated that digital payments were among the fintech verticals reporting the highest growth in 2020. The research revealed that during the first half of 2020, digital payments grew by 21% year over year (YoY) in terms of transaction volume. Other verticals that showed growth included digital custody (36%), digital asset exchange (33%), digital savings (26%) and WealthTech (24%).

Statista forecast the total transaction value in digital payments to grow at 23.7% in 2020 to reach $4.93 trillion. The number of digital users was forecast to increase by 10.1% YoY to 3.47 billion in 2020. Digital commerce is the market’s top segment, estimated to reach a total transaction value of $2.93 trillion in 2020, making a growth rate of 4.8% YoY. From 2020 to 2024, it is projected to grow at an 8.9% CAGR to reach $4.11 trillion. On average, the transaction value per user in digital commerce is estimated to total $843 in 2020.

China is forecast to lead globally in digital payments overall as well as in digital commerce. The country is set to generate $2.31 trillion in digital payments in 2020, while generating $1.17 trillion in digital commerce. For Asia as a whole, Statista predicts that digital payments will reach $2.88 trillion in 2020. As the top contributor to global payments revenue, it generated close to $900 billion in 2019.

A report from Data Search Consulting asserts that the APAC digital payments industry generated $1.9 trillion in revenue in 2019, with China contributing two-thirds of this total. The use of digital payments in Asia during the COVID-19 pandemic grew by 2.5 times compared to pre-pandemic figures. Moreover, 75% of users in APAC said they plan to continue using digital payments post-COVID.

Until 2017, Europe was the epicentre of digital payments globally, with North America close behind. Data from Capgemini revealed that Asia Pacific had a growth rate of 24.7% in digital payments between 2018 and 2019. In contrast, Europe grew at a 12.2% rate between 2018 and 2019 while North America grew at 5.6%. The global growth rate at the time was 14.1%.

In 2020, the market experienced significant growth due to the rising number of digitally active consumers and a thriving e-commerce market. Over the three-month period to November 2020, there was an increase of 20% in digital users making contactless payments in Asia.

It is estimated that, in 2020, mobile payments in APAC grew by 13.9% to reach $277.5 billion. Comparatively, the figure will be $229.1 billion in Europe and $184.8 billion in North America. For APAC, that translates to a growth rate of 13.9% YoY, compared to 6.2% for Europe and 3% for North America.

Capgemini theorised that the dominance of the APAC region is partially due to the dominance of mobile payments in the region. In China, 70% of consumers use mobile wallets on a regular basis, according to Finextra. In 2020, it is estimated that 80% of global mobile wallet revenues came from China.

In future, mobile payments are predicted to dominate the digital payments ecosystem, with the market to grow at a CAGR of 11% between 2019 and 2023. While contactless cards were the popular option in 2020, QR code payment options and digital wallets are forecast to bring mobile payments to the fore.

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