The Rise of Digital Commerce

May 2021

Fintech & Payments

Nick Maynard

VP of Research

The pandemic has brought an acceleration in the adoption of digital methods of money transfer, with regulatory changes being introduced to encourage the use of digital payments. The rise of digital payment adoption in emerging markets has led to a significant uptake in eWallet payments instead of cash. Whilst many players have seen overall revenue declines as a result of the fall in remittances, all the major international remittance players, both traditional and digitally native, reported growth in digital revenue in 2020.

Thanks to the strong growth of digital-only remittance providers, established players such as Western Union and MoneyGram have been forced to invest heavily in their digital offering. With the additional pressure applied as a result of the pandemic, these players have struggled to see top-line growth, despite the success of their digital offerings. As a result, there is potential for these non-digitally native players to seek to forge partnerships to strengthen their capabilities, grow user bases and increase transaction volumes. In addition, potential mergers and acquisitions are being mooted. 

With this rise in the adoption of digital payments and in an increasingly crowded international money transfer market, comes the question of how digital players can differentiate themselves and further erode the market share of traditional cash-based money transfer providers. Many digital-only players, such as Azimo and WorldRemit, are adopting aggressive pricing strategies, as well as offering referral discounts or money back to be used against a future transaction. Others, such as Remitly, also offer promotional discounts on fees or exchange rates to new customers. Pricing does, however, vary across sending and receiving corridors.
One result of the pandemic has been a widespread increase in contactless payment limits around the world. Indeed, contactless has been chosen as a way to accelerate the transition from cash, at a time of crisis of confidence in cash’s safety. Contactless is well positioned to succeed as a result.

Much has been made of the impact of the COVID-19 pandemic and the boost digital payments have received. However, when examining the pandemic’s impact on QR payments, it is important to look at what has happened with the overall QR code during the pandemic. 

The pandemic has seen an embracing of QR codes in many functions across the world, in both developed and developing markets. This has included checking in to public locations for contact tracing, as well as for use in international travel. QR codes have been used widely for other purposes too. Many restaurants have added menus as scannable QR codes at tables, to avoid the touching of paper menus. Therefore, as a result of these initiatives, QR codes are now front of mind for many users across the globe.

However, despite the current success of digital commerce, reactive digital commerce strategies built in the pandemic by merchants need to turn into proactive, long-term strategies that offer the best user experience, as competition in the digital commerce ecosystem intensifies.