Digital Payments Industry ESG Thematic Report, 2023

Environmental, Social, and Governance (ESG) in Digital Payments Industry

The current trend of investments is impacted by the introduction of policies in areas of Environment, Social and Governance.

The inadequacy in the conventional banking system has led to the development of the digital payments industry. The key leaders of the industry have aimed at reducing the inadequacies in the conventional banking system, where no frauds or crimes related financial transactions take place.  However, the main challenge for the market in terms of ESG arises in the aspect of social pillar, where the access to technology is still a challenging issue among communities that are underdeveloped or do not have the infrastructure to support the system. This could hamper the growth of the industry in terms of social inclusiveness.

The Covid-19 pandemic has led to a new increase in the usage of the digital payment methods, where consumers preferred contactless payments.  Since then, governments of international states have increased the limit of the transactions of the digital payment methods, further increasing the usage of such apps.

ESG Trends

Despite the impact of the pandemic on the digital payments industry, which led to steep increase in the usage of payment apps and the expansion of technology, the lack of access to technology among underdeveloped infrastructures is a large hurdle to social inclusiveness in the market i.e., lack of access to technology to the potential customer. 

According to a report, around 2.5 billion people in the developing countries are still relying on the hard currency or cash to carry out day to day business, despite the spike in the usage of the technology. It has been reported that due to the lack of access to digital payment technology a series of challenges in terms of wealth inequality, increased transaction costs as well as corruption may crop up. The United Nation’s Sustainable Development Goal 9 aims at the access to technology of communication and internet to least developed and developing countries by 2020.  Since digital payments technology has benefits of reducing the cost and time as well as the contact that occurs due to the transaction, access to such technology is beneficial to people when it is inclusive in nature. Thus, companies in this sector have significant challenges in addressing this issue and attaining the SDG.

It is further iterated that the access to digital payments technology can also give access to the savings, insurance, and other financial benefits to vulnerable people of the society. It further creates an awareness about such financial benefits, leading to reduction of financial barriers. Therefore, this market can also help in hastening service providers to develop infrastructure to reach countries with social barriers and contribute significantly to SDG 4 – quality education. Notwithstanding, there are a few companies in the digital payments industry that are contributing to access to education through various initiatives within their ESG priorities.

One of the key players of the market has made Diversity, Equity, and Inclusion initiatives to create a positive impact, expanding social inclusiveness through giving access to technology. This has been done by incorporating a much cost-efficient technology to their payments app, which decreases the disparity of the access to digital payments technology. As of 2020, the leading company has impacted around 3.5 million consumers contributing to positive social and community development.

Growth of the Digital Payments Market

As of 2021, the digital payments market was valued at USD 68.61 billion at global scale and is forecasted to grow at a CAGR (compound annual growth rate) of 20.5% from 2022 to 2030. Customer preference for real time payments is reported to be one of the key driving factors of the market. In the year 2020, India has registered 25.6 billion real time payments, an increase of 70% from the year 2019. Despite the challenges for the market in terms of social inclusiveness, the key leading players are making technologies much cheaper and creating an entry door for potential customers to access the technology, reducing the disparity.

Key Companies in this theme:

    • Paypal Holdings Inc

    • Global Payments Inc

    • Wirecard

    • Aliant Payments

Scope of the Digital Payments Industry ESG Thematic Report

    • Macro-economic and ESG-variable analysis of the industry, including regulatory, policy, and innovation landscape

    • Key insights on infrastructure developments and ESG issues affecting the theme

    • Identify key initiatives and challenges within the industry

    • Identify ESG leaders within the industry

    • Understand key initiatives and the impact of companies within the sector to fuel an informed decision-making process

    • Analysis of industry activities based on multi-media sources, including significant controversies and market sentiment

Key aspects of the Digital Payments Industry ESG Thematic Report:

    • Offers a global perspective of the industry and the policies and measures taken by the players, for overcoming the challenges faced in terms of Environment, Social and Governance.

    • Key insights into the sustainability practices of major players in the market.