The Intertwining History of Digital Payments and E-Commerce

Shopping online and using digital payment methods are parts of everyday life for most people nowadays. Thousands of businesses operate on the Internet, offering a variety of products, from basic everyday items to highly specialized and luxury goods. The convenience that e-commerce and online payments have brought to our lives has permanently changed our shopping habits. Let's examine the past few decades of online commerce and digital payments. See how their development has influenced the global shift to web sales, and learn what may await us in the future.

The Early Days of E-Commerce

Even though the Boston Computer Exchange established the first online marketplace in 1982, it wasn't until the 1990s that e-commerce experienced its first significant growth spike. The beginnings might have been humble, but it was the current online retail giant Amazon that started the revolution. Founded in 1994 by Jeff Bezos, the website quickly grew from just a bookstore to much more in just a few years. At the same time, eBay has grown into a bustling online marketplace.

The early online payment systems were nothing like the ones used today; connections were far less secure and often unreliable, leading to worries about user privacy. Paying with your credit card via the Internet in the 90s was a risky endeavor, but it did not stop thousands of people from taking advantage of the convenient opportunity to order products from the comfort of their homes.

When PayPal introduced its online money transfer services in the late 90s, it was a sign of change that was about to take place in the online sales world. Certification companies like VeriSign and Symantec helped ensure that transactions were more secure than ever before. Internet retail was changing into a more trustworthy and increasingly safer environment.

The 2000s: Online Retail Revolution

Despite quite the pessimistic take on online sales that The E-Commerce Times had in the year 2000, the new decade has proved to be full of surprises. By the end of 2010, PayPal reached an impressive number of 100 million users and allowed 30 different currencies to be transferred and used for online transactions. Being able to pay in more than just dollars, online shoppers became delighted with the possibilities of international purchases. At this point, e-commerce was truly a global phenomenon and seemed to gain more traction every year.

The osCommerce platform, introduced to the market as an open-source solution in 2000, has grown slowly, but steadily, and gave the base for many online businesses to thrive. It was this platform that inspired the 2007 creation of Magento, a more advanced set of tools for online retailers that still remains popular today. Magento took off quite quickly due to its extensive array of features and has gained a worldwide reputation as one of the top e-commerce platforms.

At the same time, a simpler platform Shopify made it easier for people with no technical experience to set up their own online stores, expanding the market even more. The official Shopify app was introduced to the Apple store in 2009 and allowed users to manage their shops from their iOS smartphones.

Hundreds of businesses chose to become more mobile-friendly, causing an increase in eCommerce software development services.

The 2010s: A Modern Era

In 2013, reports informed that China had become a world leader in e-commerce, surpassing the United States in total online sales. This has shown how much the industry has grown over the past two decades and how global Internet commerce has become. By the mid-2010s, shopping online and making digital payments were possible in most parts of the world, with mobile shopping starting to become increasingly popular.

Contactless payments (like Apple Pay, Venmo, and Google Wallet) began to gain traction as people sought even more convenience in their shopping experience. Online payment providers Square and Stripe have also experienced great growth ever since their inception. The statistics have shown that more and more people chose digital payments over traditional cash transactions, largely thanks to the wide variety of options available and the ease of use.

The number of global online sales has tripled during this decade, and Amazon has become a dominant player in e-commerce, claiming over 50% of the US market share. The Chinese retailer Alibaba and its service Taobao have also experienced significant growth, thanks to its introduction of Alipay, an online payment platform that was quickly embraced by millions of buyers in Asia.

2020 and Further: The New E-Commerce Normal

When the coronavirus hit the news in late 2019, no one expected the effect it would have on all aspects of human life. Online transactions were not an exception; in fact, it was a field that has actually benefited from the extreme situation. As people have experienced lockdowns and mass store closures, the e-commerce industry was booming.

Just in 2020, the volume of online sales in the US has increased by over 40%. Such numbers have never been seen before, and it was clear that changes were needed to adapt to this new normal. Many online businesses had to expand their infrastructure to accommodate more traffic and orders. People who have never paid for anything through digital means had to adjust their payment methods and become more comfortable with digital payments.

As of 2024, online retailers that have not adapted to the changes may struggle to sustain their business as the market got more competitive than ever. Not offering different digital payment options on your website is considered a major disadvantage turning customers away.

Customers are used to high levels of convenience now, and are not willing to go back to the limited choices of the past.

What Can We Expect in the Future?

Projections done by experts indicate that there will be no decline in online payments and digital transactions. More and more businesses will offer mobile wallets and cryptocurrency payments to accommodate their customers' new preferences.

E-commerce site migration and development remains a big deal, as online retailers continuously seek better, more secure, and easier-to-use platforms. Payment gateways implemented in online stores are here to stay and will likely never leave, instead developing and transforming the field of Internet transactions even further.

If you have an online store or are considering moving your business to the Internet, consider the changing nature of the industry and keep an open mind about adopting changes as they come. Staying up-to-date is crucial if you want to be relevant and successful in the market, so be sure to read the e-commerce news and stay educated about the trends and developments in the field.