Digital payments are transforming economies globally on an unprecedented scale and speed. As per Visa‘s estimates, worldwide digital payment volumes amounted to over $10 trillion in 2020 alone. From major credit card networks and cross-border remittances to mobile money services, digital payments are emerging as the preferred mode for commerce and peer-to-peer transfers the world over.
The Global Rise of Electronic Payments
In markets ranging from the Nordics and China in the East to Nigeria and the United States in the West, the proportion of transactions involving physical cash is declining every year. A World Bank Global Findex survey found over 82% of consumers in the US making or receiving digital payments. Chinese adoption stands above 80% driven by mobile payment apps like Alipay and WeChat Pay that have revolutionized shopping experiences there.
Even in lower income economies like Kenya and India, mobile-based payment platforms like M-Pesa and PayTM respectively have brought millions of unbanked citizens into the formal financial fold.
The size of the global digital payments market stood at $80 billion in 2021. But with rising smartphone access bringing billions more online this decade, the industry is estimated to grow to over $167 billion by 2030!
What Constitutes a Digital Payment?
But before going deeper, what exactly constitutes a digital payment?
Simply put, any transfer of value done electronically without physical cash or checks can be considered a digital payment.
Today‘s major digital payment methods include:
- Online Bank Transfers via portals and mobile apps
- Payment Cards – Credit, Debit and Prepaid
- Mobile Wallets/Payment Apps like PayPal, Apple Pay etc.
- SMS/Text-based Transactions in developing countries
- Cryptocurrency Transactions
- Contactless ‘Tap-and-Go‘ Payments using NFC, RFID technologies
The common theme is the leveraging of digital networks to move money between endpoints – whether consumers, businesses or peers.
And there is now a complex infrastructure of payment rails facilitating such transfers globally:
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Several private companies and banking consortiums continue upgrading these payment highways by investing in newer and faster transaction settlement technologies.
Public sector central banks are also trialing Central Bank Digital Currencies (CBDC) and blockchain-based fiat tokens to modernize finance for the 21st century digital economy.
Top Players Defining the Digital Payments Value Chain
Hundreds of companies globally currently facilitate some aspect of the digital payments value chain – right from the interface layer of apps and portals down to the underlying clearing and settlement networks.
Here we profile the 10 Largest Digital Payments Firms worldwide based on their market capitalization valuation:
- Visa – $420 billion
- PayPal – $127 billion
- Adyen – $50 billion
- Block (Square) – $41 billion
- Shopify – $40 billion
- Global Payments – $33 billion
- FIS – $31 billion
- Fiserv – $28 billion
- Affirm – $12 billion
- Remitly – $7 billion
Below we analyze their offerings across the payments value chain and competitive positioning.
Largest by Network Volume and Valuation – Visa
Visa started back in 1958 as a BankAmericard credit card offered by Bank of America. Today, Visa has evolved into the payments network processing the highest transaction volume globally – estimated to have cleared $10 trillion in purchases in 2020 alone!
Key Stats:
- 500 million transactions daily
- 3.5 billion cards issued globally on its network
- Accepted at 200 million merchant outlets worldwide
- $11 trillion in payments volume in 2021
- $420 billion valuation
Visa continues to dominate the card network space through scale, security and reliability. It is also betting heavily on contactless payments via NFC through Visa Contactless cards, payment-enabled accessories like ring and watches and platforms like Visa Checkout.
The Pioneer of Online Payments – PayPal
PayPal pioneered how we conduct commerce on the internet when it launched in 1998 as one of Silicon Valley‘s early breakthrough startups. Through its digital wallet linked to user bank accounts and cards, PayPal enabled a trust layer for payments on e-commerce platforms like eBay.
Key Stats:
- 426 million active user accounts
- Supported across 200 markets worldwide
- 15 trillion transactions worth $1.25 quadrillion since launch
- $1.2 billion transactions in Q3 2022
- $127 billion valuation
While facing competition from BigTech firms entering payments, PayPal continues updating its product stack from cross-border remittances to buy-now-pay-later financing as adoption of electronic wallets keeps rising exponentially.
The Checkout Layer Leader – Adyen
If PayPal powered e-commerce 1.0, Adyen is leading the new wave. Launched in 2006 by a group of ex-PayPal engineers, Netherlands-based Adyen has emerged as the payment processor of choice for modern digital firms. Itsunified commerce stack is utilized by Uber, Spotify, Netflix and even Walmart.
Key Stats:
- 500+ payment methods supported
- Processed over €516 billion in 2021
- 8,000+ direct merchant integrations
- 50% transaction volume growth in 2021
- $50 billion valuation
Adyen continues growing rapidly by focusing relentlessly on enabling frictionless consumer journeys with fast checkout flows across any device or context.
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Profile of other major players – Square, Shopify, Global Payments, FIS, Fiserv, Affirm, Remitly
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New Ideas Reshaping Digital Payments
Beyond the current industry leaders, several interesting startups globally are pioneering ideas that could further transform payments:
1. Ubiquitous Access – Cellulant
Valued at over $1 billion, this African payment infrastructure provider focuses on empowering gateways between telcos, banks and businesses to enable payments via both USSD interfaces and mobile money for communities without smartphones.
2. Decentralized Finance – TRM Labs
This crypto risk monitoring startup analyses blockchain data to provide actionable metrics around crypto money laundering risks for both retail and institutional firms across CeFi and DeFi.
3. Embedded Financing – LazyPay
India‘s LazyPay allows consumers flexible credit lines to buy goods and service subscriptions now while paying later transparently.
4. Super Apps – Toss
South Korea‘s Viva Republica has built Toss into not just a Venmo equivalent but also a portal for banking, investment management and credit scoring – a blueprint followed by Southeast Asia‘s super apps too.
5. Smart Contract Payments Protocol – Request Network
Built over Ethereum, Request allows creating trusted information flows and automatic payments executions atop blockchain through immutable ledger integrations.
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So beyond the card networks and wallets making headlines today, teams globally are rethinking parts of economic exchange with alternative approaches.
The Impacts of Surging Digital Payments
However, as the move toward instant, invisible and ubiquitous payments gains pace globally, what are some wider implications?
On the positive side, electronic payment access spurs entrepreneurship and enables more participants to engage with the formal economy. Microsavings and credit unlock through mobile interfaces now allow female entrepreneurs in developing countries to smooth incomes and minimize disruptions more easily.
However, as Aadhar-linked payments expand financial inclusion in India for instance, concerns around surveillance, authentication failures and privacy abuses have also emerged periodically. And while Nigeria has built Africa‘s biggest fintech ecosystem, spiking youth unemployment rates alongside have worried economists there.
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Similarly, discuss other dimensions like security, inequality, transformation of jobs etc.
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So ultimately, while the march toward digital payments presents a hugely powerful platform, impact depends on how ethically and equitably the technology gets implemented across communities.
The Road Ahead
As smartphones and internet connectivity diffuse globally this decade, digital payments will continue rising exponentially in utility and adoption.
From India to Nigeria to Sweden, markets where cash usage has plummeted demonstrate various models where electronic payments uplift both economies and lives.
Spurred by trends like embedded fintech, crypto wallets and open banking, payment experiences will also blur further with day-to-day apps and interfaces.
And while early pioneers like Visa and PayPal currently dominate, new innovators like Sweden‘s Klarna keep emerging each year too.
Ultimately, payments sit right at the intersection of finance, technology adoption and user trust – making it both a necessary infrastructure and hotbed for innovation as the world goes ever more digital!
