Digital economy is a trending mode of creating value using digitalization. At the moment, it can be seen as a main consumptive approach around the world. In western countries, tap pay is one the most common way to checkout while consumers primarily scan QR codes in eastern countries. As Asian Development Bank (2018) reported, the transformation of Asia’s digital economy has positively made a tremendous influence.
Digital economy makes people’s daily life more convenient and brings business opportunities to each one.
Contactless Payment Facilitates Everyday Life
Digital economy benefits both individuals and business. The innovation of contactless payment greatly makes people’s life safer, easier and accelerates the development of economics. It works though near-field communication (NFC) that prevents the direct touch. By using contactless payment, people are able to get rid of physical wallet, prevents the loss of it and reduces weight of the bag. According to research (Liébana-Cabanillas et al., 2020), the convenience of contactless payment can motivate people’s consumption. Moreover, it prevents the circulation of counterfeit money. After COVID-19, the public started to reduce using the paper currency to avoid viral infection. Nowadays, Apple Pay, Google Pay, Alipay etc. are highly used in everyday life due to the convenience and security even if some physical card is equipped with functions of contactless payment. Because a fictitious card number will be generated every time to avoid the information theft while private information is presented on the physical card (Hollington, 2023). This year, Apply Pay Express Travel Pass has been launched and come into use, which Samsung users have already used it for a while (Transport NSW, 2023). It is available all the time even when iPhone or Apple Watch is out of charge. In New South Wales, it can be used to replace the physical Opal Card. This method shortens the time of traveling. Passengers do not have to top up their transport card and check the balance regularly. They just need to simply put the phone close to the card reader, even without turning on or unlocking the phone.
Digital Economy Brings Challenges
However, digital economy also brings concerns and risks, aggravates the disparity among different classes, and changes the consumptive habits. The possibilities of information disclosure still exists when users choose to manually enter the card information rather than directly using Apple Pay. It may lead to the platform information leakage, which the frequency of receiving online fraud may be increased as well. People who feel anxious about these may keep using the traditional way of consumption. It can affect the benefits of digital economy.
The inappropriate uses of digital wallet may lead to irrational consumption. The high-speed payment takes off the processing time for consumers to seriously think about the purchasing decision, which impulsive consumption is more easily to happen. According to World Economic Forum (2023), there are still 2.7 billion populations have no access to digital space. Particularly, the difficulties of the elders to learn about using digital technologies and distinguish online fraud to integrate into the current society is a huge social problem. The transition from traditional form of living to digital lifestyle needs to be adapted. Furthermore, the increasing globalization raises some issues remaining to be solved about digital economy. For example, it is difficult for tourists who are not Chinese citizens to complete the authentication of Alipay and WeChat Pay because it only accepts Chinese ID number. It can be a reason to abandon the trip to China, which affects the tourism economy.
In digital economy, the roles of individuals and business are becoming vague. Digital space allows individuals have their own business. The platform economics also enables the switching roles of the users (Mansell & Steinmueller, 2020). For instance, individuals are allowed to act as potential customers and influencers earning advertising fees at the same time. Nonetheless, business owners should be super acute about the pain points of the users to promote the business. They have to possess the ability to quickly learn new skills to be able to success. Thus, the differences between these abilities will widen the gap between the rich and the poor. As predicted (World Economic Forum, 2023), approximate 70% of future value will be created through digitalization. Nevertheless, the emergence of the smart store may result in unemployment crisis, which enhances the gap of wealth.
All in all, digital economy makes people’s life more efficient and creates new opportunities to the business but brings potential threats to the society at the same time. Even though it has already created numerous values, there are still gaps remaining to be fixed.
World Economic Forum. (2023). Digital Economy. Retrieved October 6, 2023, from https://intelligence.weforum.org/topics/a1Gb0000001SH21EAG
Mansell, R. & Steinmueller, W. E. (2020). Economic analysis of platforms. Advanced introduction to platform economics (pp. 35-54). Edward Elgar Publishing Limited.
Visa. (n.d.). How to pay with your mobile phone. [Image]. https://www.visa.com.au/pay-with-visa/featured-technologies/mobile-payments.html
Liébana-Cabanillas, F., García-Maroto, I., Muñoz-Leiva, F. & Ramos-de-Luna, I. (2020). Mobile Payment Adoption in the Age of Digital Transformation: The Case of Apple Pay. Sustainability, 12(13), 5443. https://doi.org/10.3390/su12135443
Munandar, A. I. & Khoriyah, S. (2020). Retail in the digital era: Case study of a modern store and a smart store. In Anggadwita, G. & Martini, E. (Ed.), Digital Economy for Customer Benefit and Business Fairness (pp. 14-20). Routledge. https://doi.org/10.1201/9781003036173
Asian Development Bank. (2018, February 22). Understanding the Digital Economy: What Is It and How Can It Transform Asia?. https://www.adb.org/news/events/understanding-digital-economy-what-it-and-how-can-it-transform-asia
Hollington, J. (2023, June 13). What is NFC? How it works and what you can do with it. Digital Trends. https://www.digitaltrends.com/mobile/what-is-nfc/
Transport NSW. (2023, July 14). Express Mode for Apple Pay now available on the Opal Network. https://transportnsw.info/news/2023/express-mode-for-apple-pay-now-available-on-opal-network