Digital Payments Lead March Toward a Cashless Society

The digital payments industry continues to mature at an accelerated pace. Shoppers will see new options with more features in 2021 as the retail industry prepares for the arrival of a fully cashless society.

Merchants who were already providing buy online, pick-up in-store (BOPIS) channels prior to Covid-19 saw an increase of 70 percent by volume and 58 percent by value this year, according to a recent report by real-time payments provider ACI Worldwide.

This channel has to be watched closely for fraud, as these same benefits appeal to fraudsters. BOPIS saw a 7 per cent fraud attempt rate compared to 4.6 percent with other delivery channels.

The report shows a significant increase in global e-commerce transactions since the 2020 holiday period. The retail and gaming sectors are leading the digital charge. The gaming sector transactions increased 84 percent from January to December 2020 compared to the previous year. The retail sector increased 48 percent by last year’s end compared to 2019.

Dating site transactions, however, decreased by half since last year.

–

Researchers at CouponFollow wanted to determine if people still use cash and checks. Their report also embraced cashless payment options like digital wallets such as Apple Pay and Google Pay (GPay), and other apps like Venmo.

The results show that nearly half of all Americans (49 percent) are worried about using cash due to the potential risk of Covid-19 transmission. Thus, 41 percent started using cashless payments because of Covid-19. Venmo, PayPal, GPay, Apple Pay, and others show a lot of promise for future growth.

–

Generationally, it is mostly Zoomers and Millennials that are the driving force behind the rise of cashless, digital, and app-based payments.

But, Baby Boomers and Gen Xers were the groups that started accelerating their adoption rates in 2020, according to CouponFollow’s research. Almost half (46 percent) of Millennials started using mobile apps like PayPal in 2020. 26 percent of Baby Boomers began using mobile apps such as PayPal in 2020.

Mobile payment adoption has accelerated due to contactless payment methods becoming so crucial during the pandemic for apparent reasons. But also because they are secure and incredibly convenient.

–

The pandemic has accelerated the trend of cashless and contactless payments. We are closer to living in a cashless society as a result. However, consumers nevertheless agree on cash because it is safe from fraud. Only 32 percent of shoppers can see themselves giving up cash in the future.

As consumers realize the value these technologies bring, and as the technologies improve, adoption will continue to grow. SMBs and in-store merchants must be ready to meet the growing demand from consumers for cashless/contactless payments.

Global mobile payments rose to a historic high of 46 percent in 2020, up from 40.6 percent in 2019 and 18.9 percent in 2018. Mobile wallet usage is set to double in 2021 and continue at a double-digit growth pace through 2024.

Zelle recently found that 75 percent of millennials are using P2P. Of those, 49 percent use P2P at least once a week.

A recent study by Visa showed overall usage of contactless payments in the U.S. has risen 150 percent since March 2019. The U.S. is now the largest market in the world for contactless cards (175 million). Visa expects 300 million Visa contactless cards in the U.S. by the end of 2021.