The last few years have provided a fertile ground for digital payment companies, as a wave of businesses started offering online payment services to a growing number of customers willing to shift from cash into digital options for their purchases.
This secular trend, combined with the increasing penetration of smartphones worldwide, has pushed e-commerce companies to partner with communication service platforms to provide customers with an innovative online shopping experience and launch a new era of “social commerce”.
For example, e-commerce player Shopify has partnered with Facebook Inc. to expand its online shopping business, Shop Pay, by enabling merchants to sell products directly through the Facebook and Instagram pages. Customers need to simply click on a product they wish to purchase from a post on social media. In 2020 more 137 million orders were facilitated by the App, with cumulative GMV sold reaching $20 billion in since its launch in 2017.

More recently Google also increased its efforts to boost their advertisement business through an AI algorithm which shall significantly speed up the rate at which shoppers can find their favorite items online.
The growth of digital payments is global in scale and has been accelerating in countries where traditional banking has less penetration. According to World Bank data from 2017, in Latin America, just over half of the region’s adults have a bank account, while money deposits into digital accounts have been an area of growth, in particular among younger generations. The region’s mobile payments market is forecast to hit $302.7bn by 2025, up from $50 billion in 2016. Large players such as Mercado Pago, the digital payment arm of Latin American e-commerce giant MercadoLibre, has seen transactions on his platform soar in recent years and further accelerate since 2020.
The secular trend supporting Digital Payments is expected to continue, strengthened by growing demand from Millennials which represent the first all-digital generation, and which are entering their prime years for spending.
The information in this article should not be regarded as a description of services provided by Delian Partners SA. The opinions expressed in this article are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product. It is only intended to provide education about the financial industry. The views reflected in this article are subject to change at any time without notice.
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