The digital payment is not a new luxury; it is an epitome of the future economy. Mobile wallets and integrated payments within daily services are some of the ways that come with the demands of quick, simple, and cashless services. The more the innovation becomes fast, the faster are the consequences on the consumers, businesses and regulators.

Mobile wallets and super apps are reshaping consumer expectations with speed, convenience, and security features.

Mobile wallets like Apple Pay, Google Pay, as well as local providers in China, India, and the Philippines like Alipay and the GCash and M Pesa, persistently gain momentum. Fintech makes buying frictionless by tweaking the speed, convenience, and security advantages offered by devices that customers can use in their own security in many ways, including biometric authentication and tokenization. Super apps such as WeChat and Grab in many developing economies offer a combination of messaging, social network, ride hailing, and payment functions, making smartphones a living wallet. The combination of these experiences is increasing consumer expectations on the global scale, forcing its competitors to redesign the user experience.

COVID hit contactless cards and NFC payments, which are still a widespread phenomenon. Today, people demand tap and go services at stores, cafes, and on the transit. The ease will be augmented by the reduced restrictions of transactions and the improved perceptions to the population health. Merchants are still buying up terminals to accommodate the possibilities. Wearable payments, smart watches, rings and even fitness trackers with NFC functions are another growing niche. With their gradual spilling into the mainstream, everyday cash transactions in most cities might go obsolete.

Consumer credit has been disrupted in the explosion of Buy Now, Pay Later services such as Klarna, Afterpay, and Affirm. These websites provide an easy experience of checking out through easy and interest free instalment plans that are also short term. Increasingly younger generations are turning to BNPL, being fearful of using conventional credit cards. The conversion rates of merchants and control over payments by the consumers increase. Nonetheless, authorities are now examining the fee-based system that BNPL works, beginning to ensure that its clients do not end up in debt and proposing the need to license the services or limited their use.

Invisible commerce is growing, blending payments seamlessly but raising privacy and consent concerns.

The invisible commerce is still surging upward: ride share apps will automatically compensate the drivers, streaming sites will automatically charge subscriptions, and smart gadgets will automatically reorder necessities in response to a single command. The invisibility of commerce taking over the form of embedded payments makes it everywhere and nowhere, which occurs as more internet connected devices take advantage of embedded payments. The created convenience dissolves the historical line between purchase and utilization. On one hand, the convenience that the consumers would have is unquestionable, however the privacy, consent and control would be questioned, considering that where payments occur without direct user involvement.

Cross border remittance is still very expensive and time consuming, however the new fintech enterprises are eliminating this disadvantage with the help of blockchain based rails and stablecoin transfer. Money transfer services by Ripple, Stellar, and some non-cryptocurrency transfer exchanges have low-cost and take seconds to transfer, finding adoption with expatriates’ workers and small-medium enterprises. Even the piloting of central bank digital currencies (CBDCs) took place in some directions, e.g., the eNaira or the Digital Yuan practice in Nigeria or China, respectively. It is the sort of progress that would point towards a future in which digital sovereign currencies and token-based settlement are used alongside, or replacing, their old-fashioned analogues. However, there is still regulatory uncertainty, volatility issue, and adoption barrier.

Since digital payment becomes more widespread, so are the attempts at fraud. Users and platforms are targeted in skimming attacks, phishing attacks, account takeover attacks, and deepfake attacks. Technology is opposed by technology, ML driven fraud detection and behavioural analytics, robust two factor and biometrics and tokenization are now the must have. However, the need to prevent frauds at times results in friction between security and convenience. The regulators are insisting on standardized mechanisms of secure authentication and are making the task more challenging worldwide.

Financial inclusion is one of the strongest points regarding digital payments. Mobile money services have brought millions of people out of the unbanked position with low-cost digital accounts and payment instruments. Mobile banks and payment apps are ensuring the entrepreneurial capability, small traders, and rural communities in other countries such as Kenya, India, and Bangladesh. Digital inclusion should not, however focus on inclusion as it might leave behind those that do not have smartphones, have good connections, or cannot use digital technologies. Infrastructure investment, simplification of the process of onboarding, and inclusivity are the tools that bridge that gap.

Financial inclusion has expanded via mobile money but requires infrastructure and accessibility improvements to bridge digital divides.

Another less described but a more pertinent evolution is the impact of payments on the environment. There is a carbon cost of manufacturing and moving coins, printing paper bills as well as maintaining ATM networks. Digital payments, such as mobile or p2p are decreasing the cash flow and the physical footprint. Other fintech companies even have carbon offset characteristics on the purchase. With increased levels of environmental awareness, sustainability is also emerging as a marketing point and enabler of policy by the people supporting the case of digital transition.

Technological change usually takes place more rapidly than regulation. Governments are rushing to establish regulations on data sovereignty, Know Your Consumer/Anti-Money laundering compliance, consumer credit limits, and cross border capital. New privacy regulations such as the GDPR or the new data protection bill by India will have a serious impact on payment providers. There are ethical concerns regarding surveillance, monetizing data and bias in algorithms which should be answered. According to this, regulatory clarity may have a positive impact leading to trust, and things may go wrong when over regulated leading to inhibition of innovation.

In the future, payment system interoperability is essential. Consumers would want to send, store and allocate their money without any disturbances regardless of wallet or bank. Personal finance apps, lending marketplaces and new financial services grow on open finance initiatives, APIs to third parties, that open access to bank accounts and transaction information. European PSD2 and the Open Banking regimen in the UK were the first, but similar models are popping up in other jurisdictions around the world. Openness also tends to promote more competition and innovation as well as creations that need high order of consumer consent mechanisms.

Regulatory clarity is crucial to balance innovation with security, privacy, and consumer protection.

The trend in digital payments is changing our purchase, sale, savings, and remittance patterns. The next generation of mobile wallets, contactless and wearable payments, BNPL, invisible commerce, crypto and CBDCs, security approaches, inclusive finance are all rewriting expectations and standards. The potential of efficiency, inclusion, and innovation are boundless yet so is fraud, digital exclusion, data privacy, and regulatory gaps. The most winning ecosystems will stand between the leading-edge experience and trust, accessibility, and ethics oversight. With the normalization of digital payments, we enter a new world that businesses and policymakers must enter considerately, so the gains can be distributed widely.

Disclaimer: The opinions expressed in this article are solely those of the author. They do not represent the views, beliefs, or policies of the Stratheia.