The digital economy is an economic activity that uses the internet and other digital technologies. It includes the production, distribution and consumption of goods and services that are created, delivered and consumed using digital technologies.
The digital economy encompasses a wide range of activities such as e-commerce, online banking, financial services, digital media and entertainment, cloud computing and the Internet of Things (IoT). It also includes the infrastructure and platforms that enable these activities, such as data centers, networks and software.
The digital economy has transformed many aspects of modern life, including the way we work, communicate and interact with each other. It has also created new business models and opportunities for economic growth and innovation.
It is not easy to accurately quantify the size of the digital economy as it encompasses a wide variety of activities and industries that are constantly evolving. However, it is widely recognized as an important and growing sector of the world economy.
According to a report published by the World Intellectual Property Organization (WIPO), the digital economy accounted for about 4.9% of global GDP in 2016, and this figure is expected to continue to grow. The digital economy is also an important source of employment as many people work in fields related to technology, e-commerce, digital media and other areas of the digital economy.
In addition, the digital economy has had a significant impact on traditional industries, with many companies using digital technologies to improve their operations and reach new customers. For example, the use of digital technologies in manufacturing, healthcare and retail has led to increased efficiencies and productivity as well as new business models and revenue streams.
eCommerce and mobile are driving the expansion of the digital economy
PYMNTS’ latest exploration of the growth of the digital economy, Digital Economy Payments: November 2022 US Edition – The Rise of Mobile eCommerce, notes that “in Q3 2022, mobile devices were used by 15% of consumers for non-grocery purchases and 9.8% of consumers for grocery purchases. When it comes to payment, personalization is still important for consumers. Buy now, pay later (BNPL) – another way to customize payment experiences – has seen a fourfold increase in adoption, although credit and debit cards are still the payment methods of choice for most consumer purchases.”
Mobile commerce and eCommerce are the channels and devices powering the digital economy on a global scale as billions of people in developed and emerging markets connect, shop and pay in a variety of new and innovative ways.
It’s a seemingly unstoppable force, as the report notes: “Despite rising inflation and lingering public health concerns, the shift toward more online and less brick-and-mortar retail has continued, and e-commerce’s role in driving retail sales remains intact considerably. According to PYMNTS Quarterly Payments Survey and Bureau of Economic Analysis (BEA) data, eCommerce currently accounts for 21% of total retail sales. According to the US Census Bureau’s Retail Sales Volume Record, e-commerce accounts for a seasonally adjusted 15% of all US retail sales — which is 1 percentage point higher than pre-pandemic predictions.”
Get the report: Digital Economy Payments: November 2022 US Edition – The Rise of Mobile eCommerce
There are many tools to support the digital economy that are widely used by consumers and businesses. Some of the most common are:
- SMS and Email: Email is a commonly used digital tool for communication and collaboration. It allows users to send and receive messages, attachments and other information electronically. The same is increasingly true for text messages.
- Web browser: Web browsers are software applications that allow users to access and navigate the Internet. Some of the most popular web browsers are Google Chrome, Mozilla Firefox, and Microsoft Edge.
- Social media: Social media platforms are digital tools that allow users to connect with each other and share information, photos, and other content. Some of the most popular social media platforms are Facebook, Twitter and Instagram.
- Productivity Software: Productivity software like Microsoft Office and Google Workspace are used by businesses and individuals to create documents, spreadsheets, and presentations, as well as to manage tasks and schedule appointments.
- Cloud storage: Cloud storage is a digital tool that allows users to store and access their data and files online rather than on their local hard drives. Some popular cloud storage providers are Google Drive and Dropbox.
- Mobile apps: Mobile apps are software applications that can be downloaded and installed on a smartphone or tablet. They are used for a variety of purposes including communication, entertainment, and productivity.
How consumers pay online with saved credentials
Convenience is prompting some consumers to store their payment information with merchants, while concerns about security are causing other customers to pause. For How We Pay Digitally: Stored Credentials Edition, a collaboration with Amazon Web Services, PYMNTS surveyed 2,102 US consumers to analyze the consumer dilemma and how merchants can overcome resistance.
See more in: Connected Economy, Consumer Spending, Digital Economy, Digital Economy Payments: November 2022 US Edition – The Rise Of Mobile eCommerce, Digital Payments, E-Commerce, Economy, News, PYMNTS Study, Retail, Retail sales
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