2020 saw a fundamental shift in consumer behaviors. It’s clear that banks should not underestimate the power of consumer choice when it comes to payments. Established existing payment choices (like cash) have proven resilient, trusted and secure for centuries and will continue to be used going forward, alongside digital payments.
Prior to 2020, contactless payments were available, but in some countries (like the U.S.) they hadn’t gained significant consumer traction. In other places, there were significant restrictions on payment limits—but COVID-19 changed all of that. As Payment Source reported in March 2020, Mastercard almost doubled contactless transaction limits across 29 different European countries. And Canada’s contactless payment limit was raised to CA$250 (from CA$100) for safer ways to pay.
In the UK, Poland, Estonia and Ireland, those limit increases are now permanent, with the UK moving to a £100 limit later in 2021 (it was just £30 pre-pandemic). For FIs and business owners, it means contactless payments are not just here to stay but will also increase; consumers will expect you to have the ability to accept them.
But cash still has relevancy. While cash use did decrease during the last year, it’s important to recognize this was heavily influenced by lockdown restrictions. With stay-at-home orders teasing, cash usage will rise again.
Deutsche Bank’s research, for example, made it very clear that cash will stay, with more than 60 percent of those surveyed in countries like the US, UK and China agreeing cash will remain relevant.
There’s compelling data to confirm this:
- $5.2 trillion – the global transaction value of digital payments in 2020. (Source: Statista Market Outlook, 2021)
- The mobile wallet market was valued at EUR900 billion in 2019 and is projected to reach EUR6,400 billion by 2027 (Source: CapGemini)
- 82% of millennials say they’re more likely to have used a new payment option since the pandemic (Source: Global Payments)
- Euro cash in circulation – Up 11% YoY (Source: European Central B)
Globally, payment methods are being reshaped at a faster pace due to consumer demand. Cultures, preferences and habits will influence country-based payment differences. In emerging markets, for instance, many customers are transitioning directly from cash to mobile payments without ever owning a plastic card. And let’s not forget rising interest in cryptocurrency.
So ultimately, payment choices continue to expand and evolve. Digital and cash will continue to be used side by side, with the self-service channel continuing to play a vital role in enabling customers to withdraw and deposit their funds.