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Today’s world of payments and trading would look odd to ancient merchants. Instead of trading physical goods for one another (e.g. textiles for livestock), humanity has moved to a new stage of economic behaviour. Whereas, for centuries, individuals and governments used gold, silver and copper coins and then paper cash, in 2021 we are witnessing the proliferation of digitally based payments. Perhaps the epitome is the growing use of cryptocurrencies like Ethereum, Bitcoin and others to make payments. Yet even without these new “coinless” currencies, the worldwide burgeoning of the internet has led to fiat currency largely being used online. From mobile banking to platforms such as PayPal and the likes of Alipay and WeChat in China, the world is entering an exciting new frontier – with exciting opportunities for investors.


Digital payment systems: definition & market share

The market capitalisation of digital payment systems is widely accepted to be large, albeit hard to precisely measure due to different definitions of the term. According to Statista, the “Digital Payments Market” refers to “products and services which are made over the Internet as well as mobile payments”. This includes the likes of mobile payments at point-of-sale (POS) but would exclude B2B payments and bank transfers initiated online (i.e. those not connected to a product or service bought over the internet). Here, the market capitalisation in 2021 is $6,685,102m with an expected annual growth rate (CAGR 2021-2025) of 12.00%. Grand View Research, Inc. is even more optimistic, projecting a market cap of $236.10bn by 2028 and CAGR of 19.4%.


The power of digital payment systems

Whatever your definition of a digital payment system, almost all agree that it offers advantages over traditional payment methods. Firstly, there is the potential for huge cost savings. A report from the Better Than Cash Alliance and the Inter-American Development Bank, for instance, shows that Peru’s government could save $96m (USD) if state payments were moved to the widely-available digital payment options on the market. Secondly, digitally-based payments are much more transparent and less prone to corruption than physical cash, since there is a clear “digital paper trail” for authorities to follow. In the UK, moreover, there are schemes like the FSCS (Financial Services Compensation Scheme) which guarantees up to £85,000 in bank savings, should the institution fail. Cash hidden in your attic or under your bed, however, may be vulnerable to theft or a fire.

Another clear benefit of digital payment systems is their global reach. Paper cash is limited by its need to be physically handed from one person/business or another, requiring close proximity. Digital payment platforms can send fiat currency across the world almost instantaneously. The systems also increase financial inclusion, allowing more and more people to access services like savings accounts, credit and insurance products. Finally, digital payment platforms present investors with exciting opportunities for returns and high growth potential.


Digital innovations for investors to note

The digital payments landscape is hardly standing still, and new technologies and ideas keep surfacing to offer faster, better and cheaper solutions to global customers. These accompany a continual emergence of promising startups – here in the UK and overseas – driving the changes. Here are some exciting areas of note for investors in 2021:

  • Contactless payments. Commonplace in many parts of the UK now, contactless tech continues to grow in developing and middle-income countries to make easy payments for customers with a simple “tap” of their card. One of the first companies to offer a unified package was iZettle, founded in 2010 and now boasting over 486 employees.
  • Open Application Programming Interfaces (API). Open APIs let new providers build services on top of existing infrastructure – a great feature for startups!
  • QR codes. Quick Response (QR) bar codes offer users a square-shaped code holding data. Scanning it with a smartphone or other device is a quick way to exchange data and enable efficient payment. 
  • Biometric Payments. Fingerprints, retina/iris patterns and voice waves are increasingly used as ways for technology companies to authorise and verify payments. 
  • Distributed ledger technology (DLT). A shared, synchronised database held by consent across multiple sites and countries. This allows all members of the network to share a copy of the ledger and so decentralise digital payments.


Case study: Filecoin

As we conclude this industry report, we offer a case study to illustrate the latter point above: Filecoin. Described as an “open-source, public cryptocurrency and digital payment system”, this innovative business enables users to rent unused hard drive space. This blockchain-powered solution allows deals to be registered and data to be stored in decentralised fashion across the world. Transactions are made in FIL – the technology’s native currency – and aims to compete in the cloud storage space against the likes of AWS and Cloudflare, which use a more centralised approach to data storage. At present, Filecoin’s market cap is ranked 16th and the system has expanded significantly since its inception in 2014 – representing $10,879,551,554.



Digital payments are the future – even setting aside the question of how far cryptocurrencies will penetrate global markets. Governments are already noting the trend and many are making their own preparations for a “cashless society” (albeit for their own reasons). Only time will tell how this evolution of human payments forms, but investors would do well to not miss the boat.

If you are interested in expanding your portfolio into these kinds of exciting spheres of investing, then we invite you to get in touch with us here at Bure Valley and to consider joining our exclusive investor network:

+44 160 334 0827

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