Mobile payments to overtake cards by 2024
The COVID pandemic has accelerated the adoption of digital transactions and mobile payments, including the use of digital cards. With enhanced security and ease of use, they have become part of consumers’ daily life. Financial institutions must consider how to enhance their mobile payment offerings to remain relevant to this changing consumer behaviour.
By 2024, more than half of e-commerce payments worldwide are expected to be made through digital and mobile wallets, eclipsing those transacted through credit and debit cards. The latest estimates by payment processor WorldPay point to the share of global e-commerce payments made via digital wallets rising to 51.7% by 2024, versus those of credit and debit cards which will account for 20.8% and 12% respectively. In 2020, mobile wallet payments to e-commerce merchants made up 44.5% of the global total, compared with the 22.8% share of credit cards and 12.3 % of debit cards.
Even for transactions at point-of-sale (POS), payments methods in 2024 will be dominated by mobile wallets, making up 33.4% of POS payments worldwide against 22.8% and 22.4% made through credit and debit cards. In 2019, contactless payments made via digital wallets in-store were only 25.7% of the worldwide total, not far from the 22.4% share of credit cards and 22.3% share of debit cards.
There’s no turning back for digital and mobile payments
Digital and mobile payments increased in popularity with the explosion of e-commerce in 2020, the first year of the COVID-19 pandemic. As consumers continue to stay home and purchase more goods online, global e-commerce revenues are set to reach $15.3 trillion by 2023 from just $6.9 trillion four years prior, according to a report by McKinsey.
With mobile payments set to sustain this growth trajectory, payment service providers are now challenged to facilitate transactions that are simple, seamless, and secure. To date, traditional banks are partnering with network payment processors like Visa and Mastercard as well as original equipment manufacturer (OEM) providers like Apple, Google, and Samsung to enable payments online or contactless in stores through quick response (QR) codes and near-field communication (NFC) technology.
Co-branded payment and card products with retail merchants are also on the rise, thanks to loyal customers seeking to reap benefits from card use. Partnerships with third party fintech service providers have also been growing to create a better payment experience. Experts at Entrust, a global payments, identity and data protection solutions provider, caution that consumers want flexibility so banks and other financial institutions must rise to the occasion to stay competitive.
Senior Regional Sales Manager,
Asia Pacific, Entrust
“Customer behaviour is changing and issuers must be equipped to provide their customers with their preferred choice of payment method to seamlessly transact, whether online or in store,” said William Cheong, Entrust’s senior regional sales manager for Asia Pacific.
A one-stop solution for all digital card services
In response to the fast-changing demands of the digital payments landscape, the Entrust Digital Card Solution enables all digital card management and payment features via one software development kit (SDK). The digital-first solution comes with a simplified integration to the bank’s mobile app, and provides a unique digital card experience. The Entrust Digital Card Solution is compatible with various operating systems like iOS or Andoid, and covers all digital card use cases, to reach a wide range of users.
With the help of the solution, the bank's mobile app can enable contactless payments, and conveniently and securely push card transactions to e-commerce merchants. The solution also enables the bank's mobile app to securely display the card information for customers to pay online without a physical card.
Along with a strong customer authentication, users can easily access their personal identification number (PIN) without the need to send a PIN mailer. While customers remain comfortable with still having physical cards, evolving security threats now make it a market standard for card issuers to digitalise their card portfolio to support the tokenisation system of e-merchants.
This effectively adds another layer of security to transactions to minimise fraud. The Entrust Digital Card Solution is already a step ahead in the game as it also supports and enables various token requestors like Apple Pay and Google Pay, as well as the issuer’s own wallet and e - commerce platforms like Amazon and Netflix.
It is likewise certified with Visa Token Service and Mastercard Digital Enablement Service (MDES). On top of the digital card issuance solution, Entrust also provides end-to-end services for issuers beginning from conceptualising the digital card issuance set up requirements up to supporting the implementation, integration, and development of mobile applications. "Entrust provides issuers consulting services and professional services. We also offer a total issuance solution by creating integrated, seamless physical and digital payment experiences f or your customers." said Cheong.
In planning for digital card issuance, Entrust recommends issuers to identify their client base and preferences, as well as financial and technical resources for the project. Issuers are also urged to review the regulations and compliance requirements in the countries they operate in and the need for subsequent compliance audits post implementation.
After the implementation, issuers can constantly review successes and pitfalls by creating some monitors that include card usage, such as what kind of card is used, where it is used, and the frequency of usage. This information helps reveal customer payment behaviours and provides additional insight into how to better service and support cardholders in their transaction needs.
To learn more about the Entrust Digital Card Solution, download the whitepaper here.
This is a sponsored article and does not necessarily reflect the opinion of the publisher.
Keywords: ECommerce, Mobile Wallets, Digital, QR, NFC, Fintech, Data, Data Security
Institution: William Cheong
Guest: William Cheong