The Most Popular Payment Methods Around the Globe
In today’s digital society, we take speed and convenience in everything we do for granted. Whether it’s browsing the internet, keeping in touch via social media and instant messaging or using lightning-fast software and hardware for everyday items such as computers, TVs and mobile phones, it’s all hassle-free.
The internet has created two giant industries that are inextricably linked: internet shopping or e-commerce and online payments. Both have not only been disruptors, but they’ve turned the business world upside down. We all know we can buy anything we want online; the sector has come a long way since the mid-1990s when Amazon, now the world’s largest online marketplace, started shifting a few books.
But have you considered how finance companies have had to change to accommodate this extraordinary new technology? While once we paid everything by cash or a cheque, now we can pay for goods and services, or send money immediately from one account to another electronically. Payment processors have emerged as one of the biggest players in finance, and they all want to innovate to improve customer experience.
Of course, we all still use our banks, and we use our credit cards and debit cards to pay for goods, now with the added convenience of contactless payments for sums under £30. Last year, 45% of online purchases in the UK were still made by debit cards. And the use of credit cards continues to grow, with the UK Cards Association recording an 8.7% rise in card numbers in 2017.
However, you can see that this leaves a massive gap for other players to fill the online payments void – around 50%, in fact. This is where giants such as PayPal have dominated. After starting out life in 1998 in Seattle in the US, PayPal is now used in more than 200 markets worldwide, operating in 60 currencies. In the UK, it accounts for a spectacular 23% of all online transactions.
The system is ideal for online use. You can link your PayPal to your bank account or choose to deposit funds into your PayPal account in other ways. Then, you simply use your account to pay for items online, simply by logging into your PayPal account at checkout.
Receiving payments is just as easy, and users soon forgive the 3% transaction fee because the convenience is second to none. As soon as you receive the money you can then ‘withdraw’ it straight into your bank account.
It’s why PayPal has become a firm favourite not only for shopping sites like Amazon but for trusted financial services sites, too. Take financial trading on Forex, where tech and financially savvy investors appreciate the convenience of using PayPal financial trading accounts. Why? Because payments can be made or withdrawals received faster than traditional methods, including credit and debit cards.
In an image that those financial traders will understand, this shows the steady rise of PayPal Holdings’ share price on the London Stock Exchange over the last five years. Clearly, things continue to go well for the business.
PayPal’s success sparked a whole raft of new online payment processors. Many have come and gone, but some of the big names include Stripe, GoCardless and Skrill, which emerged from the former Moneybookers brand and is owned by the Paysafe Group, which also has Neteller and the Paysafecard under its umbrella. According to the latest accounts, the Paysafe Group made extraordinary transactional volumes of $85 billion in 2018. That’s a lot of goods and services.
Technology doesn’t stand still, however. New kids on the block take advantage of the extraordinary speed in which mobile phones have developed. Apple introduced Apple Pay in late 2014, now widely adopted all over the world. Users simply use their Apple smartphone or Apple Watch as they would a contactless card. It’s essentially a digital wallet within your device. Samsung naturally wanted a piece of the action, too, and launched Samsung Pay in the summer of 2015.
We should also look at what the future holds for popular payment methods. While debit cards will continue to link straight to our bank accounts, and payment processors like PayPal will always thrive, a new kid on the block will be chipping away at their foundations. That’s cryptocurrency.
Big players in the global digital coin space are well known – Bitcoin and Ethereum, for example. Yet they hardly scratch the surface when it comes to the number of people using them to buy and sell goods and services.
It needs a big player to enter the space, and that’s what happened last month when Facebook, the global social media giant, unveiled plans for its own cryptocurrency called Libra, which Facebook co-founder Chris Hughes claimed could shift financial power from the central banks.
The possibilities of crypto, which can be traded instantly with very small costs, and is said to be bulletproof in terms of security, are so enormous that even traditional banks are considering using their own versions.
It’s as though the whole payment method wheel has turned full circle.