Global digital commerce transactions are set to grow 73% by 2024, with emerging markets the biggest drivers.
The rapidly growing digital transaction volume will soar from 641bn in 2019 to 1.1tr in 2024 and emerging markets, rather than developed economies, will be the major driving force behind the speedy climb.
The data is from a study by Juniper Research, which found however that North America and Western Europe will still account for a sizeable 77% of global digital transactions in 2024.
The QR code payment system
A major impetus for the projected growth of digital commerce is the QR payment system, particularly suited for use in emerging economies.
QR code payment is a contactless payment method where payment is performed by scanning a QR code from a mobile app. This is an alternative to doing electronic funds transfer at point of sale using a payment terminal.
The system does not require a lot of the infrastructure traditionally associated with electronic payments such as payment cards, payment networks, payment terminal and merchant accounts.
To use a QR code payment, the consumers scans the QR code displayed by the merchant with their phones to pay for their goods. They enter the amount they have to pay and finally submit.
The system is a more secure card-not-present method than others.
A godsend for emerging markets
Research author Nick Maynard explained: “QR payments will gain popularity as they are fundamentally suited to use in emerging economies. Its low infrastructure requirements make QR the best fit for digitising previously cash-based economies, making QR approaches vital to established financial players seeking new markets”.
The QR code payment system will be the most commonly used payment mechanism everywhere in the next five years, the researchers predict. The system will account for 27% of all digital commerce transactions in 2024.
Its popularity is notably rising in China, which will account for more than a quarter of global QR payments by 2024.
Also contributing to the growth of digital commerce is the displacement of cash in emerging countries.
Africa & Middle East: Up-and-coming markets
Digital commerce in Africa and the Middle East will become increasingly important, as services rapidly diversify beyond money transfer.
In that region and elsewhere, mobile channel will be crucial to market development, making partnership with mobile network operators highly beneficial in the coming years.
The research authors recommend that established pursue local partnerships with key stakeholders as early as possible. Those who fail to get a foot in the door to these growing markets risk being outdistanced by local fintechs.