There have been some major changes in the realm of payments. Cash is going the way of the dinosaur- meaning in a few short years; it will be very rare to see a transaction completed using physical money. The digital currency has sprung up in its place, enabled by the advent of a number of new technologies that ensure swift, secure, and trackable transactions. Let’s examine the trends and technologies that are involved in bringing the future of payments to your door. Let’s dive in below.
Why are Digital Currencies Becoming More Popular?
The future of payments becoming more digital, while not a new phenomenon, has been increasingly prevalent within the global economy as of late. This trend was accelerated even more by the COVID-19 pandemic, which made it the new norm for most shopping to take place online. Without a physical interaction taking place between a buyer and seller, companies began to turn to online payment methods in order to ensure the transaction could still take place.
The Steady Decline of Cash is Not a New Trend
Prior to the pandemic, the use of cash had already been in a steady decline. In 2015, only 24% of Americans did not use cash in any given week, preferring to conduct their payments with their cards or other virtual forms of currency. This trend has only been exacerbated with each following year. In 2022, this number had jumped to 41% of Americans. It is predicted that by 2025, 50% of Americans will not use cash on a weekly basis, and each subsequent year will further this trend. This prediction spells out a dire future for cash and its role as a commonly used medium of exchange.
With several options for sending and receiving money, such as account-to-account exchanges, credit and debit cards, and digital wallets, the need for physical cash is simply not as necessary anymore. Analysts expect that by 2030, cashless transactions will have more than doubled from their already steadily increasing usage.
Digital Wallets are Becoming Popular
In this new age of digital transactions, new payment methods are appearing every day. For example, digital wallets have been immensely popular with the general public, already being used by 49% of the population. Rather than carrying cash or cards, an individual can receive or send money directly from an app on their smartphone. These apps include the likes of Apple Pay, CashApp, PayPal, and Venmo. Projections indicate that digital wallets will only continue to grow in use, and by 2025, 53% of all eCommerce transactions globally will use digital wallets.
PayPal is Becoming Increasingly Popular in Niche Industries
PayPal, in particular, has reached a high level of success in a rather surprising niche industry: the online gambling industry. As a platform, it has already amassed a large number of users, clocking in at 431 million users by 2023. These users are exchanging a whopping $337 billion through the app. A hefty portion of this amount is coming from online casino payments, where gamblers are able to receive digital payments for their successful wagers in a variety of games, such as blackjack, craps, and roulette. This practice is already very popular in many places around the world, including Europe, India, and Japan. The United States has been rather slow to adopt this trend, as currently, there is only one casino using PayPal to disperse their players’ winnings. But only time will tell if the trend continues in the United States as it has in these other countries.
Cryptocurrencies as Popular Forms of Acceptable Digital Payments
Cryptocurrency has also been another budding form of virtual payments that has garnered a lot of interest recently. This digital currency utilizes blockchain technology to record transactions, which helps support autonomous, unmodifiable, and irreversible payments from one account to another.
Some of the most popular crypto coins include Bitcoin, Ethereum, and Tether USDt. Crypto tokens and non-fungible tokens (NFTs) also help construct the world of cryptocurrency. The use of these cryptocurrencies has already gained a huge network of millions of users. In the United States alone, there are 3.3 million adults who pay with crypto. Their payments have contributed to the worldwide crypto market being worth a staggering $9.3 billion.
The Rise of Central Bank Digital Currencies (CBDCs)
Another form of digital currency that is on the horizon is central bank digital currencies (CBDCs). CBDCs are a digital form of a country’s official currency that is issued by the central banks and can be used by their citizens in any transaction. Already, 11 countries have adopted CBDCs, including the entire Eastern Caribbean region, Nigeria, and India. Additionally, 53 countries are in the advanced planning stages of releasing their own form of digital fiat currency, followed by 46 countries that are beginning to research the topic. It is highly probable that within the next decade, the majority of countries around the world will have issued their own CBDCs, furthering the trend of decreased cash usage.
Bringing it All Together
As cash continues to fall from its once-solidified place of supremacy among payment methods, it can be expected that even more digital payment methods will continue to crop up. Already, digital wallets, cryptocurrency, and CBDCs have gained a huge amount of support from many across the world, and this trend will only continue as more and more of our shopping takes place online. There have already been shifts in the online gambling industry to accommodate this change, and many more industries will have to follow suit in order to adjust as well. The onset of the global pandemic provided the perfect incubator for this technology to take center stage, and soon, cash will be a relic of the past.
How have digital currencies impacted your work and life? What trends, in addition to these, do you expect to come across in the realm of digital payments? Let us know more about your experiences in the comments.