Are online payment platforms the future of e-commerce?

SHOPPING online on e-commerce platforms has become second nature to most people as it has shaped the way the world comes together in business.

E-commerce has changed the landscape of making payments for goods and services from physical currency of paper and coins to numbers on computers, with users rarely needing to visit a bank or ATM.

Digital payments, while well-established, are also the future of e-commerce as advancements continue to emerge in this area, not only in how transactions are made, but also in the number of payment options available.

Consumers continue to indicate strong interest in new technologies, as the wave of personal consumerism surged again in 2021 and digital payments continued to be popular.

According to a 2021 McKinsey report, 80% of surveyed consumers made a digital payment in the previous year. For the first time, the level of use of digital payments was so high. Fast forward a few years and research shows that nine out of 10 people have now used digital payment options in the last 12 months.

Versatility and comfort

Online payment platforms provide consumers with quick and easy payment options for everything from weekly groceries to finding a hidden gem on an online auction site and funding an online casino account.

It is in this second area, gambling, especially in connection with the increase in the popularity of online casino games on mobile platforms, that digital payments have really been used. A great way to think about how far digital payment solutions have come is to look at one of the pioneers, PayPal.

Most people remember that PayPal was a leader when e-commerce sites like eBay gained popularity and revolutionized the online shopping experience. However, although it was initially a niche payment option for purchases, online casinos that accept PayPal are now popular because it is a convenient, user-friendly and accessible payment option. PayPal is proof of the versatility that digital payment options offer consumers.

On the rise

There is a clear demand for digital payments, and technology is now responding to this demand. In 2017, just 5% of UK point-of-sale transactions were carried out using an e-wallet or digital/mobile wallet. This percentage reached double digits for the first time in 2022, and in 2023, digital payments accounted for 14% of all point-of-sale purchases. This number is forecast to increase to 29% by 2027.

At this point, digital payments are expected to surpass the use of credit cards for the first time, and the gap between debit cards and digital payment options could be reduced from a 32% gap in 2023 to just 8%. The numbers clearly show how payments are likely to change in the future.

A wealth of choice

E-commerce sites typically offer multiple payment options and are another great example of the flexibility and convenience of online payment services. They are widely accepted by companies in almost every consumer industry. There is also plenty of choice when it comes to the different payment platforms consumers use to make payments, with options such as Payz, Apple Pay and Skrill dominating.

Given that digital wallets are free to sign up for and are extremely consumer-friendly in that they typically don’t charge fees for physical point of sale or online payments, the appeal to consumers is easy to see. In 2022, 35% of all UK retail transactions were paid using digital wallets.

Security

Digital payment solutions are also attractive because of the way they work. Either from funds loaded into a digital wallet or via a directly linked payment source such as a bank card, paying with a digital wallet means that no financial details are passed directly to the actual seller.

Virtual credit cards are a growing sector of digital payments. These cards can be used to make a one-time payment for online purchases and then thrown away. Virtual credit cards can be set up for one specific provider or even for a specific amount, which serves to protect your real financial information.

There are significant layers of security built into the nature of using digital payment solutions. Mobile apps have also played a big role in this as they add another layer of convenience and security with two-factor authentication and biometric security.

Strongest

The online shopping area is dominated by digital payments, which are carefully and naturally embedded in the industry. Given Gen Z’s alleged dependence on technology, demand for digital payments is likely to continue to grow.

Perhaps the biggest area of change in terms of growth in the future will be in-store shopping. The younger demographic naturally chooses electronic money as a modern payment method, especially with the convenience of paying by phone.

Connecting your phone to a point of sale has become second nature, and the digital habits formed through online shopping will increasingly transcend this divide to include physical purchases.

Anticipating the future

The world is now awash with artificial intelligence, which is likely to help further the growth and popularity of digital payment solutions in e-commerce, especially among small local businesses. A high street store that advertises its acceptance of digital payment options could be an outlet that encourages someone to shop there as society becomes increasingly cashless.

Artificial intelligence has the potential to redefine consumer shopping experiences on devices, tailoring the options offered to increasingly personal shopping experiences. Even now, you can take a photo of the clothes someone is wearing with your phone’s camera and find out where to buy them.

Voice commerce is also available through smart devices, and AI technology can speed up the process with augmented reality, which can increase impulse buying rates. There is also a social commerce aspect where social media platforms have become a powerful sales channel for businesses.

Combining this accessibility with a convenient digital payment solution makes everything intuitive as the way consumers shop continues to evolve.