Digital Payment

Digital payments refer to digital transactions that occur through online digital commerce or mobile payments at offline stores. The global digital payment service market was estimated to be worth $4.9 trillion in 2020 and is expected to grow to $8.1 trillion by 2024.

According to the global research firm Statista, the global digital payment service market was estimated to be worth $4.9 trillion in 2020, a growth of 23.7% from the previous year. Of this, online transactions accounted for 59.3% ($2.9 trillion) of the total market. China had the largest market size at $2.3 trillion, followed by the United States ($910.3 billion), the United Kingdom ($185.3 billion), Japan ($173 billion), and South Korea ($120.6 billion).

Figure 3 Global Digital Payment Services Market Size 2017-2024 /Source: Statista, 2022

In particular, South Africa's fintech industry continues to expand by building a platform using AI and ICT in line with the changing era and the 4th industrial revolution. The steady increase in smartphone and internet penetration in the region is having a positive impact on the fintech industry, and the growth of the industry is expected to continue as the number of users increases. South Africa's smartphone users have recorded a steady growth rate of 15.73% annually from 2014 to 2020 and are showing a continuous upward trend.

With the COVID-19 pandemic, the digital transformation of financial transactions is rapidly increasing as online shopping and telecommuting become more active. According to a survey conducted by McKinsey & Company, 37% of respondents stated that they will continue to use online banking and mobile banking even after the pandemic, while 36% and 27% respectively stated that they do not plan to engage in face-to-face visits or financial transactions using landlines.

Figure 4. Fintech Status in South Africa / Source: Reprocess (Google, Statista, World Bank, 2023)

As digital transformation accelerates across various fields, the actual size of digital financial transactions in South Africa reached approximately $9.1 billion as of 2020, a 46% growth from 2017. The number of digital transaction users is also increasing day by day, reaching about 37 million people as of 2020, a 30% growth from 2017 and representing 64% of South Africa's population. However, although there are many fintech companies operating in South Africa, they only support payment methods for general users without considering the UNBANKED and DIASPORA populations.