'The Third Age of Digital Payments' Will Begin in 2016

As with any new technological movement—especially ones that mark a change from long-established norms—digital payments haven’t made the smoothest transition into the mainstream. But digital payments are here and, if this past Thanksgiving weekend’s abundance of mobile transactions is anything to go by, they’re what the people want. Fortunately, according to the latest Worldpay Global Payments Report, the digital payment market will cast off its growing pains in the coming year.

As the report puts it, 2016 will usher in “the third age of digital payments” during which eWallets will overtake credit cards. It was bound to happen and, with the growing popularity of eWallets—and NFC offerings from major technology companies like Apple, Samsung and Google—it’s easy to believe that the shift to digital payments is nearly upon us.

However, as major players like Android Pay work to address market barriers, banks and brands alike are rolling out their own mobile payment apps, meaning more competition in the digital payments space. Worldpay expects the situation to calm down over the next five years, though, as consumers settle on which payment technologies and providers will dominate the market.

As it stands, Worldpay expects eWallets to officially overthrow credit cards by 2019, at which time they will account for 27 percent of global turnover, as opposed to credit cards’ 24 percent share.

“The first age of digital payments kicked off with the eCommerce boom in the early 2000s when companies like PayPal and AliPay introduced eWallets to the mainstream,” said Kevin Dallas, chief product officer of Global eCommerce at Worldpay. “The second phase coincided with the rise of the smartphone at the beginning of the decade, and we've since seen a proliferation of new mobile apps that quickly raised the bar for convenience in payments.”

Another major factor during the coming age of digital payments will be Alternative Payment Methods (APMs), says Worldpay. This is because the company found that APMs managed to top card payments for the first time ever as of this report, achieving 51 percent market share. This gap is expected to widen in the coming years.