Digital payments are attracting growing interest, and eye-popping numbers abound, as demonstrated by the US payment processor Stripe’s recent US$95 billion ($128 billion) valuation. Why all the excitement, and why now?

At one level, the reason is straightforward: digital payments allow buyers to pay sellers without physical currency changing hands. Though the technology has been around for a long time, it is finally becoming much easier to use for small-value retail payments. Moreover, the pandemic has accelerated the switch to digital payments, as people have shifted to e-commerce and taken steps to avoid handling currency in ordinary purchases.

Digital payments also generate real-time data on sellers’ businesses, the timing of cash flows, and buyers’ purchasing habits, allowing payment providers to offer credit, savings, wealth management, collections, insurance, and other financial services. Where credit was once the way to draw in customers and offer a panoply of financial services, payments may be a safer channel for such upselling.

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