The global economy is going through a digital-payment revolution. Accelerated by the effects of the coronavirus pandemic, countries across the world have been forced to modernise their payments systems with touchless and contactless payment options in order to keep commerce flowing and sustain economic growth.

The Economist Intelligence Unit’s latest report, ‘Going digital: payments in the post-Covid world’, provides guidance on what companies can do to benefit from the digital payments revolution, and how governments and regulators can nurture innovation in the sector.

Key findings from the report include:

• Governments in countries with a low level of digitalisation and unsatisfactory financial inclusion must recognise that an enabling policy framework and public investment are keys to the successful widespread adoption of digital-payment services and systems.

• Payment-platform providers must become digital payment-platform providers. They must create additional capacity to prepare for greater demand for digital-payment services, as well as opportunities to migrate customers to financial services that yield higher margins. They must also prepare for the rising costs and complexities of compliance with regulatory requirements for digital payment types.

• Firms and service providers in adjacent areas must rapidly transform their businesses to benefit from these developments. Their strategies should include improving the interoperability of their digital platforms and deploying application programming interfaces (APIs) to allow the use of embedded-payment systems.

• Regulators must adopt a proactive, multi-level approach to technological changes when formulating new standards, as well as closely monitoring any financial risks within digital payments systems.

The pandemic has sped up the adoption of digital payments, particularly in cash-dependent developing economies. Mobile payments for e-commerce have been particularly popular in countries with high smartphone penetration, and consumers and retailers are reluctant to handle cash for fear of spreading the virus. Governments have also given a boost to digital payments by using this route to deliver cash handouts and support economic growth.

SWARUP GUPTA, INDUSTRY MANAGER AND AUTHOR OF THE REPORT

Download our report ‘Going digital: payments in the post-Covid world’ to find out more and contact The EIU for more information.