Governments have been promoting digital payment solutions for years. That is for a variety of reasons, ranging from further developing the e-commerce industry, to preventing money laundering and more control over the formal economy, including to avoid tax evasion.

Specific strategies, regulations and regulatory sandboxes have also been developed in many countries to foster innovation and development in the fintech industry. These trends in the fintech industry have seen a global acceleration in 2020, including as a response to new public health challenges in the time of the COVID-19 pandemic.

According to Cullen International’s new research, the apparently unstoppable trend to use digital payments shows very diverse levels of use of cash and electronic payments across the world. Unsurprisingly, specific digital payment solutions tend to be especially popular in their country of origin.

Nevertheless, government authorities have adopted initiatives to facilitate entry and foster competition in the market for digital payments. For instance, most countries oblige banks to share financial data with third parties following consumer consent, although the take-up of ‘open banking’ in practice is still at the early stages. As the adoption of innovative services often depends on building consumer trust, government authorities have also promoted trust in digital payments by establishing specific requirements to protect financial data or against fraud and security vulnerabilities.

The use of digital payment services offered by big tech groups, including highly popular e-commerce or social media platforms, has also been gaining traction. That regards not only emerging markets characterised by low financial inclusion among the population. High transaction costs and the rigidity of national banking systems in some countries have facilitated the take-up of low-cost alternatives.

As a response, many national banking systems around the world have started updating their banking infrastructure in recent years. Updated payments infrastructures allow supporting the development of innovative, secure and interoperable payment services offered not only by the banks themselves, but also by third parties.

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