Digitization of Payments — The Global View

Payments around the world are increasingly turning digital, with more people shedding their initial reluctance to change, and their apprehensions on security. In many parts of the world, especially in Asia and Africa, the transformation has been rapid.

The acceptance of change and technology by all sections of the population was the main driver of the digital revolution. The COVID-19 pandemic also acted as a catalyst, because users were left with no other option because of the severe restrictions imposed by various governments on travel, movement, and physical contact with others. Despite the so-called disadvantages and risks, digital payment options are growing exponentially in most regions of the world.

There are many forms of digital payments, the most popular of them being the use of credit and debit cards. With touchless options, giving way to the old strip swipe method, card security has been enhanced. Other digital payment options include:

• E-Commerce payments
• Mobile wallets
• Point of sale (PoS) transactions
• Online banking channels
• Digital currency

The digital currency movement, which is expected to sweep the world, is likely to form the basis of cross-border payments. The most recent announcement by the Reserve Bank of India that banks will be directed to adapt their systems to ensure compatibility with the QR codes used for mobile wallets is expected to make a positive difference. India is hoping that other countries follow its lead and roll out digital currencies. If this happens, digital currency can be a major form of cross-border payment.

Many countries have undertaken the changeover from conventional payment systems to digital options on a war footing. Some of these initiatives by European nations are:

• Spain

We can say that Spain is at the forefront of implementing instant payments with “Iberpay,” which connects individuals, banks, and businesses. It is claimed that Iberpay is the overwhelmingly popular choice in Spain for financial transactions.

• The United Kingdom

The change to digital forms of payment is progressing rapidly in the United Kingdom. Faster payments, operated by Pay. The UK surpassed 3.4 billion payments in a single year, a record.

• Portugal

The government of Portugal and the central bank, Banco de Portugal are actively supporting the shift from conventional to digital forms of payment. The SIBS Instant Payments Solution platform, introduced in 2018 has been a huge success and was, in 2020, connected to the European system, enabling users to remit money to other countries in Europe, in addition to payments within Portugal

International digital money transactions depend on a few crucial factors to achieve compatibility.

• The acceptance by countries to adopt IS 20022, the messaging language that is recognized across the globe
• Developing instant payment systems, which are smart, instant, and transparent
• Adaptability: For the payment systems to work, systems across countries should be able to “recognise” one another.
• Technology advance: Adapting to the technological advances that characterize the payment platform is essential

It may be noted that the US does not have a unified digital payment system, though efforts are on to synchronize the various operating networks. The sluggishness, if we can call it so, is because credit and debit cards continue to have the lion’s share of the market. With different strong lobbies at work, change is difficult.

Summarising, we can say that, despite difficulties, there is no way, but forward in payment systems. And the way forward is digital. The intent is apparent and the day is not far off before seamless money transactions become a habit with people, businesses, and merchants across the world.