Here at DalPay our corporate philosophy is ‘Get it right the first time, one customer at a time.’ Our job is to know the payments landscape like the back of our hands –that’s the only way we can truly provide the kind of value our clients deserve. That’s why, year after year, we go to great lengths to understand the state of the industry, how it got to where it is today, and how it’s likely to evolve from here. And then we ask ourselves ‘What does that mean for us and our customers, and how can we adapt our technologies and services to anticipate the needs of our current and future customers?’
By the beginning of 2014, total global e-commerce sales had reached a value of 1.5 trillion USD, an increase of 50% since 2012, and is predicted to reach 2 trillion USD in 2015. While non-cash payment volumes have been growing fairly steadily for over a decade, the causes of that growth in 2014 reveal some interesting changes in the market.
For years, the nature of e-commerce (including mobile- or m-commerce and other non-cash payment technologies), has been in flux. Market disruptors such as the unprecedented growth in developing markets, the rise of m-commerce, and the proliferation of “hidden” payments have defied expectations, while certain predictions such as the adoption of near-field communication (NFC) payments have failed to materialise.
Now industry trends are beginning to show signs of settling into a new paradigm: mobile transaction volumes grew more in the last year than ever before; the infrastructure is now in place for widespread connectivity in emerging markets; highly competitive alternative payments are catering to regional needs; and key regulatory and industry initiatives(KRIIs) have been shown to increase the efficiency and inter-compatibility of financial bodies.
Let’s take a closer look at some of the primary growth factors:
1. Economy recovery in established markets
Particularly in the US and the UK, where the industry value grew by 5% and 6.2% respectively in 2013, the growth over the last year has been primarily driven by the continuing economic recovery and by a public that is less wary about online shopping and eager to take advantage of new payment technologies.
2. The development of new and increasingly sophisticated payment alternatives
Cloud-based Software-as-a-Service (SaaS) technologies have reached a level of maturity that is allowing the financial industry to automate many complicated tasks, such as processing credit cards, maintaining digital wallets, coordinating shipping and calculating taxes. As new technologies and real-time payment infrastructures proliferate, the availability of alternative domestic and cross-border payment methods stimulates growth in non-cash payments.
3. The rise of m-commerce
In both established and emerging markets, growth is driven by the proliferation of innovative and competitive payment technologies, particularly those contributing to the rise of m-commerce. Coinciding with the widespread penetration of smartphones and tablets, m-commerce has reached a tipping point. The distinction between e- and m-commerce is vanishing as the same technologies are adapted for use across all platforms. Industry stakeholders, both traditional and alternative, have clued in to this new paradigm and are rapidly adapting their own technologies to suit these channels.
4. The explosive growth rate in emerging markets
The growth rate in emerging markets is significantly higher that of established markets, 20.2% compared to 5.6% respectively. This is thanks primarily to coordinated government initiatives to develop and upgrade the infrastructure necessary to allow non-cash payments to proliferate. Many developing countries have a relatively young population who for the first time have widespread, affordable access to the internet via laptops and smartphones. Due to the availability of mature cross-border payment platforms such as DalPay, these people are now able to participate freely in international e-commerce.
5. The implementation of SEPA
And finally, the Single Euro Payment Area is now in effect and is likely to set an example for many other parts of the world. As of August 1st, 2014, SEPA payments have replaced all national payments in the Eurozone, putting an end to the fragmentation of financial systems based on geopolitical boundaries. Every country in the Eurozone now uses the exact same payment systems and technologies, eliminating the barriers to making cross-border payments such as conflicting regulatory requirements.
A Bright Future
What’s particularly remarkable about the state of e-commerce, m-commerce and the rest of the non-cash payments industry in 2014 is that, perhaps for the first time, everything is going according to plan and everyone is working toward the same goals.
We’re now starting to see an answer to the question of how the payments landscape of the future is going to look – m-commerce is here to stay, and developing nations are not being left behind by the rapid technological growth in the developed world (in fact, they’re catching up!) The growth rates in emerging markets (20.2%) and m-payments (60.8%) signify that the e-commerce industry has reached the next tier of technological maturity. The technologies and infrastructure to allow these two areas to mature are now in place and available.
Going forward, there is still a lot of room for growth in cross-border payments, where there are many opportunities for businesses to leverage new technologies and tailor their offerings to specific regional and inter-regional needs. Visit the DalPay blog regularly for detailed articles about selling across borders, country-specific e-commerce reports, facts and figures about new technologies within the industry, and advice about how to get the most out of selling online.