Every cloud has a silver lining
While the whole world has been struggling with the Covid-19 pandemic for more than a year now, we can only acknowledge this crisis has triggered a great leap forward for the payment industry: contactless and mobile payments, and more generally digital payments have been adopted a lot faster than we all expected.
UK, contactless transactions reached a record 88.6% of all in-person card payments in 2020, this means nine in ten eligible card transactions, face-to-face credit or debit card payments up to GBP 45 (EUR 51) were contactless, according to Barclaycard records. These results represent a 7% increase between 2019 and 2020, an effect of the pandemic according to the credit card brand. Each user in the UK made an average of 141 payments in 2020, worth a total of GBP 1,640 (EUR 1,870). A consequence of these positive results is that UK Finance, the British banking and financial services trade association, is asking the Treasury to raise the contactless threshold to GBP 100 (EUR 114).
On the other side of the Channel, 68% of the French use the contactless payment option of their banking card, according to a poll by OpinionWay for Veracash. Moreover, 57% of survey participants consider they have increased their use of mobile payment during the pandemic. On the other hand, mobile wallets are still far from global adoption in France, as only 11% of the interviewees use mobile contactless payments. At the same time, coins and cheques are also on the decline.
We all know the Germans used to carrying cash and to prefer Euro banknotes over plastic money. These times are over! In 2020, for the first time, more payments were performed through card than cash in Germany, according to a research conducted by Euromonitor International. According to this research, the appeal of convenience and hygiene is the key factor supporting this change.
While the pandemic has triggered evolution in preferred payment means worldwide, the effects widely differ place to place. In Southeast Asia, digital payments, including digital wallets, touchless interbank transfers, mobile-based payments and QR codes overtake card transactions. For instance, a Visa survey found that 66% of Singaporeans were developing cash-free payment habits during their lockdown, while 78% of the city-state residents said they would prefer using digital payments once the crisis is over. Techwire Asia anticipates that cards will remain strong in Singapore, Thailand and Malaysia, but alternative digital payments like e-wallets and microcredit platforms are expected to dominate the fintech scene in sizable cash-heavy markets like Indonesia and the Philippines. Also throughout the Region, consumers are increasingly likely to have a mobile-based payment method on their mobile phone and retailers are expanding the acceptance infrastructure.
This is a global move and trends are here to stay, as demonstrated by Fingerprint Cards, which just published a survey on the evolution of consumer choices for payment means. This survey establishes that, in 2020, consumers have continued to move away from using cash (22%), and the bank card is now the dominant way consumers make in-store payments (73%). France (60%) and the UK (57%) are the countries with the highest penetration, and the contactless card is also used frequently, with over three quarters (77%) using it at least weekly. The majority of consumers (63%) think they will use contactless cards even more in the future. The main reason for consumers’ affection for the card is trust: it is easy to use (78%), it works everywhere (70%) and it is secure (68%). Unsurprisingly, Fingerprint cards concludes that biometric payment cards, where users authenticate themselves with their fingerprint on the card instead of entering a PIN code, is a desirable innovation when one asks the consumers.
Visa research goes into the same direction: in their “Visa Back to Business Study – 2021 Outlook,” the payment scheme establishes that the global rise of contactless payments in 2020 will not go down. In June 2020, only 20% of SMBs surveyed in the 9 covered countries had offered contactless payments for the first time, while now, 39% report they have started to accept new digital forms of payments. On the cardholder side, 65% of surveyed consumers would prefer to use contactless payments as much as, or even more than, they are currently. On the merchant side, 74% of SMBs expect consumers to continue preferring contactless payments even after a vaccine is widely available.
In terms of forecasts, RBR, a London-based analyst firm, estimates that the worldwide transaction volume in card payments will jump from US$ 37 trillion (EUR 30.7 trillion) in 2020 to US$ 65 trillion (EUR 54 trillion) in 2025.
To conclude, there is only one thing analysts agree upon: the future is bright for the card and secure transactions industry!