Estimates from ResearchandMarkets.com suggest the digital payments industry grew from $5,058.96 billion in 2020 to $5,872.89 billion in 2021 at a compound annual growth rate (CAGR) of 16.1%. Payment avenues such as the internet, mobile, QR payments, online delivery and other new channels have surged in popularity as the world came to grips with the challenges of COVID-19. The need to make purchases remotely and a desire to reduce physical contact have taken digital payments into the mainstream.
However, what for some was a reaction to the practical challenges of the pandemic, may have become the new normal, with many of the measures and the technologies which became prominent during the pandemic set to retain their popularity into the future. That’s because the pandemic wasn’t so much the transformative force it appeared – it merely accelerated channels and methods which were already well in development.
As a survey from Mastercard in 2020 shows, seven out of ten consumers believe digital payments would replace cash with half of consumers saying they plan to avoid using cash altogether. These solutions are faster, easier, more convenient and mean that people don’t have to deal with fiddly pieces of change. What’s more, as digital uptake has increased, they are proving to be relatively secure.
This is crucial because prior to the pandemic, the biggest stumbling block to digital adoption – both for consumers and businesses – was the uncertain and unfamiliar nature of these technologies. Concerns about security, and usability overshadowed the many benefits digital payments could bring. Adoption was growing, but it was a gradual rather than sudden process, as people became used to new forms of payments.
Related: Why accepting online payments in a digital-first world is a must
What the pandemic did, therefore, was push those developments into overdrive. Suddenly it didn’t matter so much whether a business or individual was comfortable with the technology – it became the only way of doing business.
Restaurants, for example, got around the lockdown restrictions by switching to online ordering and delivery mechanisms. Retailers processed fewer cash transactions and more contactless and mobile transactions. Bars used table service and apps which allow customers to place orders and make payments online without having to call a waiter or go to the bar. In other words, processes and trends which were already in development moved on a step with the arrival of the pandemic.
That they proved to be so successful shows that, despite genuine and understandable concerns about security, the benefits have outweighed the risks.
This has therefore led to a very different payments landscape in which businesses of all kinds are having to get to grips with a much wider range of payment options.
- Credit and debit cards: A long established staple for customer facing business credit and debit cards continue to be the most popular form of payments. However, the pandemic has seen this change. Cards with near field communication (NFC) technologies have become the norm meaning they can interact with card machines without having to make physical contact. Mobile phone apps such as Apple Pay also allow people to use these cards virtually by scanning the card into the app and allowing a smartphone to act as a digital extension of the card.
- Mobile payments: Millions of people are now choosing to pay using their phones rather than their cards. It allows them to manage much more of their lives through one single device. Using the same NFC technology as debit cards, they can hold a user’s details making payments digitally.
- QR codes: The distinctive QR codes are becoming more common. All users have to do is to scan the code of an establishment and make a payment.
- App payments: Businesses of all kinds have been developing apps which allow them to take payments. The user can download an app, upload their details and make payments. They have been especially popular in the hospitality sector, where reduced contact can alleviate the strain on staff and reduce the risk of disease transmission. In many cases, these apps came in as part of a business’ response to COVID-19, but they have proven to be extremely popular and convenient.