The Covid-19 pandemic has had profound impacts on society in ways that will begin to surface as life tries to normalise.
Reopening has begun but businesses are now all too aware of their vulnerabilities in the event of another pandemic or similar. The prospects of lockdowns, closures and keeping up with changing guidelines for businesses have further accelerated certain trends in the financial sector which were already in motion.
Cash payments have been on a steady decline and in 2020 and 2021 cash payments fell sharply. The rises in secure digital payment methods have accelerated the decline. Last year, the World Health Organisation issued an alert advising consumers to stop using cash payments to avoid contact with the virus. Some retailers stopped accepting cash payments altogether as scientific evidence grew on the transmission of the virus. It suggested that the virus could spread through handling banknotes and coins.
Two Main Drivers for Global Rise in E commerce
- The rising ownership and use of smart phones and other portable devices is enabling more consumers to choose to use payment gateways, be that online payments, contactless, or by using a digital wallet.
- More of our lives are being conducted online and as technology evolve so does what we can do. The mobile payments market is set to quadruple in the next six years.
The UK is the third largest e commerce market in the world. According to the JP Morgan’s 2019 Global Payments report, the UK is well above the European average for online spending. According to the report online purchasing has been driven by widening internet reach particularly amongst the older demographics. These trends have continued to rise more acutely over the last eighteen months as consumers have had to move their payments online. From supermarket shopping to banking, things that many people would not have envisaged doing other than in person have become normal transactions online.
Contactless Payments
According to a Mordor Intelligence report:
‘the global contactless market was valued at USD 13.23 billion in 2020 and is expected to reach USD 51.07 billion by 2026.’
Tech advancements in smart phones, digital payment cards and POS at retail terminals are all fuelling market growth.
“More countries are moving towards cashless economies – For instance in the UK according to a report published by HSBC, contactless card transactions revealed that the volume of commercial card payments both debit and credit, increased by 24% in 2019 and 2020, while commercial credit cash advances slumped by 14% during this period, signalling a decline in businesses’ use of petty cash as corporate make the shift to cards.”
Government regulatory bodies have acted to secure payment transactions over the past few years in the face of rising financial fraud. They have influenced the adoption of POS terminals positively because customers are demanding safe and reliable digital transactions. The need for using secure payment processes has increased and so the uptake of POS is expected to increase.
Amidst the covid-19 pandemic, contactless card limits across Europe have grown significantly as contactless payments were promoted across the continent. Here in the UK contactless limit rose from £45 to £100 from 15thOctober. These findings indicate that contactless payments are rapidly gaining popularity and will be the norm going forward.
Mobile Payments
The technological advancement in smart phones has enabled mobile fund transfer and POS at retail terminals. Mobile payment is such a diverse tool; it used for ordering takeaway food, public transport, retail, in-app purchasing, purchasing movie tickets etc..
“There were 1.6 billion debit and credit card transactions in the UK. Nearly one third of all card transactions were made using contactless cards, a 19.5% increase from the previous year. What is more, banks are integrating with mobile payment apps in the European region due to increasing smart phone adoption.
Digital Payments
Digital or E wallets are mobile apps that are downloaded and which serve as a secure platform to store bank card details that can be used for online purchases using a mobile device like a phone or tablet.
E Wallets also have the capacity to store identity documents, official documents, certificates, tickets making them versatile and convenient and whose appeal is growing amongst all demographics.
A study by Juniper research found that the number of people using digital wallets for example, will rise from 2.3 billion to nearly 4 billion by 2024, pushing wallet transaction values up by more than 80% to over $9 trillion per annum.
The use of wearable devices for payment is also continuing to grow. It works by the use of a wearable device, like a bracelet or smart watch, which has Near Field Capabilities (NFC). There are passive and active wearable devices.
The trends are consumer driven.
Globally, the more consumers use their smartphones to make payments, the more forms of contactless payment methods at POS systems are being developed. Stores and services worldwide are rapidly adopting and are integrating mobile payment applications due to changing lifestyles, daily commerce and rapid growth in online retailing this trend is expected to continue.
If your company is unsure on how to progress forward with digital payments and want some help our team can discuss all the digital payment options with you and help to create a plan that works for your business.
Give our team a call 0300 3035 264 or get in touch with our team who will be able to answer all your questions.