Rise of Digital Payments

 The Rise of Digital Payment Systems

Creation of Digital Payments

Digital Payments have been around for a relatively short time. It is unclear who exactly made the first digital payment but since 1994 PizzaHut has been selling pizzas online. Amazon also started in 1995 but in its original form where it was an online book store. However when PayPal was created in 1998 it was revolutionary, giving users the ability to transfer money to others securely. In 2000 PayPal already had over 1 Million users, which according to PayPal was largely thanks to eBay, as before PayPal eBay users would have to use checks and money orders via US mail to send each other the money. 

Companies would then begin to launch Mobile sites and by 2003 over 95 Million people had completed a transaction using their mobile device.

Fast forward some years to 2009 and we see the next big step in Digital Payment evolution, the creation of bitcoin which is a cryptocurrency. Cryptocurrency is a digital form of money that allows users to send to one another, they are not tied to any bank or anything else, they are just worth what people pay for them. in 2010 we have the first noted payment where 2 pizzas were bought from Papa John's for 10,000 bitcoin, which was worth around $40. This amount of bitcoin is now worth $621,598,839. 

Popularization of Digital Payments

Around this time we also see the introduction of contactless credit cards by Barclaycard, making it extremely easy to make small purchases in shops. According to paymentsense by 2014 over 249 Million cards were used for contactless payment.

Along with the rapid rise of smartphones we see the introduction of digital wallets such as Google Pay, Apple Pay etc in the early to mid 2010's. These digital wallets mean that users can have their payment information on their phone and do not have to carry any cash or cards as they can use their phone to pay. 

These digital wallets rely on a technology called Near Field Communications (NFC). This allows communication over a short distance between devices and enables people to pay with their phones on card machines. 

This brings us to present day where more companies have popped up such as Revolut, which allows users to send money instantly to one another in any currency and is giving loans and allowing stocks and cryptocurrency to be bought through the app.

According to Statista the total transaction value in Digital Payments is projected to reach $11.53tn in 2024 and according to McKinsey & Company more than 9/10 consumers say they use some form of digital payment during 2023.