Digital Payments: a growing trend with a focus on Customer Experience

Published in
8 min readNov 28, 2018


Digital Payment market is booming thanks to the introduction of new technologies that continuously converge with others and encourage the emergence of innovative payment methods and consequently creating business opportunities. Currently the most advanced solutions such as Mobile Payment and Contactless Payment exceed € 46 billion in payments, a 21% of total digital payments by card, according to the Mobile Payment & Commerce Observatory of the School of Management of the Milan Polytechnic.

Until a few years ago, the digital payments market was one of the cornerstones of technological innovation driven by traditional financial institutions. Then the OTTs arrived — Over The Top (Paypal, Amazon, Apple, Alibaba, WeChat, Google and now also Facebook) and the FinTech, entered a tense leg in the sector so as to deform it in no time, a true disruptive innovation that made lever on a single very clear element: the customer experience.

PSD2 and new opportunities in the digital payment field

The arrival of the PSD2, the legislation that officially came into force in January this year, has undoubtedly contributed to the market transformation. In fact, this legislation has introduced some significant changes, first of all the concept (and model) of Open Banking, an ecosystem that sees the user at the center, for the benefit of a new multi-channel customer experience. The consumer must be free to choose payment services in an offering that can not only be banking: an opening towards “third parties” who can manage and offer digital payments services even if they are not financial institutions. As we know, BigTech did not miss this huge opportunity.


The PSD2 has decided to put the user and his experience at the center of the whole regulatory system by imposing a complete revision of the rules related to digital payments: more freedom and more choice are the two pillars of this great change. People must be able to use any digital tool (online sites, smartphones, ATMs and cards, apps, wearable devices, etc.) to make transactions and payments. The same applies to companies.

Digital payments: a market that shows no signs of stopping

A revolution that boosts the market. The digital payments market is expected to grow at an average annual growth rate of 18% between 2018–23, with a turnover expected to reach $ 87 billion by 2023, according to a ReportLinker report (in this 2018 that is about to end, the estimate is to reach already $ 38 billion globally).

The factors that are pushing the accelerator on the growth of the market include national and international initiatives taken to promote digital payments (for example the Irish Central Bank which opens its doors to Facebook to allow the transfer of money in EU countries on its platform social without having to ask for other authorizations from individual member states), the high rate of smartphone adoption and the need to provide better customer service even at POS terminals.

The increase in digital transactions is then another trigger factor that will lead to additional services in terms of digital payments: Capgemini’s World Payments Report 2018 reveals that in the period 2015–2016 the volumes of non-cash transactions have touched 482.6 billion and are expected to grow by 12.7% by 2021.

According to the analysis there is a particular phenomenon to which we must be paid attention, namely the rise of e-wallets: in 2016 the so-called “electronic portfolios” accounted for 8.6% of non-cash transactions (a volume of 41 , 8 billion), 71% of which was favored by the OTTs and the BigTechs, whose core business is not to offer financial services but who have sensed that this proposal can improve the experience towards the purchase of other services.

To testify that the digital payment market will be less and less “playing field” of the banks are the same realities of the traditional financial sector: from the World Payments Report 2018 shows that only 38% of bank executives say they have plans to become a point of reference within the new payment ecosystems.

Omnichannel: technology at the service of a new relationship with customers

What emerges from the World Payments Report 2018 is not a totally positive framework for banks and financial institutions that, even following regulations like the PSD2, are facing a fierce competition from new players.

However, the glass must always be half full: this is the perfect time to redefine the relationship with customers, provided that they know their needs and habits and build communication, interaction, engagement services (and of course services such as payments digital) that have the user and technology at the center.

Customer experience, technology, services are the three pillars on which an omnichannel strategy should be based, as expressed in a recent article published on Bancaforte by our CEO Fabio Lalli who, reporting the data of a survey conducted at global level by CGN Research & Advisory Group, underlines the fact that by 2020, 68% of customers in the banking sector will be “omnichannel consumers”, people who tend to prefer the use of digital services and platforms designed with a customer experience that reminds one simple, intuitive, technological but also extremely customized by giants like Apple or Amazon.

A scenario that must also take account of the new generations: the Taylor Nelson Sofres Institute (TNS) last year carried out a survey on Millennials and their “relationship” with the financial world; it emerged that as many as 46% of them do not believe that they will remain loyal to their bank in the coming years. The new generations are much more likely to use financial services or digital payment systems from brands they know and trust, even if they are very young companies or startups. The reason is once again in the customer experience: young people are more easily linked to brands where they recognize where the combination of technological innovation and ease of use make the difference on the competition.

If we look around, even in Italy, we note that it is not just young people who prefer innovative digital services, now in any context.

Digital payments: 4 trends to monitor

Taking into account the changes in place, also in terms of legal regulation, and the habits of people now inclined to use digital services of any kind, we have identified some trends, also useful for those who do not deal with financial services such as retailers.

1) Payments and apps for mobile devices in-store

The development and use of mobile POS options will increase exponentially with increasing demand and use of mobile devices. People are already getting used to the idea of ​​paying with their smartphones instead of pulling out a plastic card. According to Forrester Research, in 2019 consumers will make purchases in store with mobile devices for over 34 billion dollars, using digital payment methods or through the smartphone (text messages, apps, cards and virtual accounts) or using the mPOS in store (mobile POS with NFC technology — Near Field Communication).

The in-store payment apps like PayPal Beacon and Apple iBeacon are also becoming more and more important. They simplify the payment process (without having to wait for the line to complete the transaction) as each transaction has its own unique code that allows people to pay through a simple app.

2) Digital currencies and cryptocurrencies

Digital currencies are emerging in the world payments system (bitcoin, for example, is just one of the many cypsalutes now available on the market) and will revolutionize the whole ecosystem of investments and monetary financing due to the characteristics of technological innovation, immediacy, security and even simplicity that represent the “raw materials” of services that appeals to new generations of consumers and professionals.

The popularity of digital money comes from the instant and borderless nature of transactions. Essentially, this payment method can be used anywhere without barriers.

3) e-wallet and mobile payment applications

Electronic wallets are simply software solutions that allow you to perform money transactions using a PC or mobile device both online and in physical stores.

Generally it is a circuit (often accessible and manageable via app) through which you can manage your own money account by doing transactions such as: transferring money to other users using the same circuit, reloading the e-wallet account through different systems and payment instruments, receive or make payments using simply the app in any currency.

The best known e-wallets are now Apple Pay, Ali Pay, Google Pay, Paypal, which also recorded significant growth figures in Italy. According to data from the last Mobile Payment & Commerce Observatory of the Milan Polytechnic School of Management, contactless card payments (€ 18 billion, + 150% on 2016) and Mobile payments (€ 6.7 billion, + 60%) together are worth over half of the New Digital Payment market. In this framework, the so-called “Mobile Proximity Payment”(payment at points of sale through mobile phones) recorded in 2017, in Italy alone, more than 70 million transatlantic transactions mainly driven by the arrival of Apple Pay.

4) Payments via social network

Social media networks are expanding their business by including payment solutions such as money transfer from one user to another (peer-to-peer) or direct payment within the network.

Social payments are divided into two categories:

  • purchases “on the spot”, ie directly within the social platform without having to exit the app or the site to close the transaction on that of the retailer or brand;
  • peer-to-peer money transfer services: SnapChat a few years ago for example released SnapCash, a fast money transfer channel that allowed users to exchange cash from one account holder to another in real time. This system is slightly different than mobile payment apps because in this case the money is transferred directly from one bank account to another without the need for it to be stored in a separate wallet, e-wallet or app account.

In this context, digital and mobile technologies have become real strategic assets capable of fostering the multi-channel nature of the services offered to consumers. The sectors involved, such as banking and finance, must continually be able to grasp the opportunities offered by new technologies, aim at a new relationship model, continuous and personalized on the needs of its customers, and develop a business model that values and privileges the digital experience in order to offer an integrated and complete customer experience at every stage of the customer journey.

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