Virtual Payments Market - Forecast(2024 - 2030)

The Virtual Payments Market is estimated to surpass $58.5 billion mark by 2026 growing at an estimated CAGR of more than 18.9% during the forecast period 2021 to 2026. Increased use of technology in financial transaction and rise in various e-commerce platforms are expected to accelerate the mobile payment market during forecast period. In 2019, according to report given by Government of India, India has over 16 digital wallets or e-wallet companies out of which 14 are Indian based mobile wallet companies. Mobile Payments in India are witnessing thriving growth with a compound annual growth rate of 12.7% in the number of non-cash transactions. Similarly, China mobile wallets are growing at rate of 22% with the total transaction volume of $41.1 trillion in 2019. Increasing adoption of non-cash transaction will likely to create the demand for Mobile payment market.

The report: “Virtual Payments Market– Forecast (2021-2026)”, by IndustryARC covers an in-depth analysis of the following segments of the Virtual Payments Market.

By Type: Solutions (Payment Gateway, Payment Processing, Payment Wallet, POS Solutions, Payment Security and Fraud Management), Services (Professional Services, Managed Services, Consulting Services, Support and Maintenance Services, Integration and Deployment Services)

By Type of Payments: Remote Payments, Proximity Payments

By Payment Nature: Person to Person (P2P), Person to Business (P2B), Business to Person (B2P), Business to Business (B2B)

By Deployment Mode: Cloud, On Premises

By Application: Money transfers, Bill Payments, Airtime Transfer and Top-Ups, Travel and Ticketing, Merchandise and Coupons and Others

By Industry Vertical: BFSI, Telecom and IT, Media and entertainment, Healthcare, Retail, Travel and hospitality, Transportation and logistics, Energy and utilities, Others

By Geography - North America (U.S, Canada, Mexico), Europe (Germany, UK, France, Italy, Spain, Russia, Netherlands and Others), APAC (China, Japan India, SK, Australia, Indonesia, Malaysia and Others),South America(Brazil, Argentina, Chile, Colombia and others), and RoW (Middle east and Africa).

During the forecast period, Proximity Payments segment is expected to grow at a CAGR of 28.7%. Mobile phones and POS devices are used to make the proximity payments. A number of companies currently offer applications allowing proximity mobile payments. It is further referred to as in-store payments with respect to payment through a merchant's POS terminal in the case of a retail store or in-location payments. For short distances and work, proximity payments are specifically enabled when both the payer and the payee are present in the same place. This payment system uses either barcodes or contactless interfaces to initiate the mobile money transaction. This is done through Near-field communication (NFC)-based technology present on an NFC-enabled phone, which has comprehensive details about the mobile wallet placed in the cloud or debit / credit card. This payee information is stored on the device in the POS terminal which is read by the corresponding NFC reader. Proximity digital wallets differ markedly from remote payments, as it involves the presence of payment card details from one's own bank account and does not require any relation with a payment processor to facilitate the transaction. The increasing adoption by brick- and mortar-based companies of mobile payment technologies further drives demand for proximity payments.

In terms of industry, the Virtual Payments Market is mainly bifurcated into travel and ticketing, banking, and e-commerce services. Further analysis of each segment indicates banking and travel and hospitality to be the fastest growing application segment for the Virtual Payments Market, which are projected to grow at a CAGR of 24.2% and 27.8%. Companies like MakeMyTrip, Yatra, Ibibo, Cleartrip (for airlines and hotels), redBus (for buses) are examples of online travel booking companies in India, which are fueling the Virtual Payments Market, by facilitating booking only through online platforms. A study by India Brand Equity Foundation (IBEF) found that 81% of existing digital wallet users in India favor the digital and mobile money mediums for banking over other electronic payment solutions.

North America, which has displayed affinity over the years in adopting newer technologies, is the most lucrative region for the Virtual Payments Market, generating a global demand share of 34.3% in 2020. With several innovative key market players located in North America such as PayPal Holdings, Inc. and Microsoft Corporation, this region is leading the innovative front with development of novel technologies such as contactless payments and near-field communication. A high rate of internet penetration, growth of e-commerce and micropayment options has contributed to the popularity of the Virtual recurring Payments market in North America.

Mobile point of sale has really taken advantage of the smartphone's ability to accept payment on the spot. mPOS is the technology that frees all businesses from their brick-and - mortar and in-store transactions. mPOS device limits liability because transactions are encrypted and card information is not stored on the mPOS device, which minimizes the risk of security breaches and makes it easier and quicker to comply with regulations. Biometrics such as fingerprint and facial recognition can also be used with mPOS to confirm customer identities during payment, adding another level of security to mobile money payments. With mPOS, staff can see past transactions, online browsing history, loyalty rewards, digital wallets and other things that help staff understand the customer's need. These features have not only added to customer satisfaction but also improvement in staff performance.

The COVID-19 pandemic has had a significant impact on the mobile money market, as consumers and businesses are forced to change their buying habits. There has been an incredible spike in the adoption of mobile wallets, as contactless payments have become vital for purchases. Avoiding cash and card transactions to keep COVID-19 from spreading has prompted many subscribers to try out mobile wallets. Since the COVID-19 crisis complicates every day, consumers become accustomed to Virtual recurring Payments, making mobile money important for each transaction.

Low trust in Virtual Payments is a major factor which will hamper the market in the forecast period. For instance according to the report given by YourGov, about 43% of the digital users don’t trust Virtual Payments and 38% have low confidence on security. Similarly, most of the consumers are reluctant to adapt to Virtual Payments as mobile payment presents huge unknown risk and fraud like leaked data, hacking and digital wallet vulnerabilities. Moreover less awareness about the benefits of using Virtual Payments over using cash or credit cards and debit cards for online payment and buying expensive items. All these conditions will restrain the market growth in the forecast period

Product launches, acquisitions, and R&D activities are key strategies adopted by players in the Virtual Payments Market. Apple, PayPal, Samsung, JP Morgan Chase, Amazon, Tencent, Google, Ant Financial, One97 Communications Limited, Vodafone, Skrill, American Express, Sprint Corporation, Well Fargo, Mastercard, Visa, First Data, and AT&T are considered to be the key players of the Virtual Payments Market.