The payments industry has been remarkably vibrant for a few years now: skyrocketing valuations, double-digit growth rates, and an ever-increasing speed of technological advancement on a scale barely known in any other industry. We’ve seen the coronavirus completely transform consumer buying habits, drive retailers to the brink of bankruptcy and shine a light on the value of digital capabilities, which have all served as a huge catalyst in an already rapidly evolving payments industry.
The future of mobile payments in a post-COVID-19 world
A lot of people think that everything has changed now, but we have no reason to believe that this new normal is here to stay. However, the changes will only progress, with far-reaching implications for the business strategy of players along the payments value chain.
Consumer payment methods are evolving at a rapid pace, reshaping payments around the world.
This was especially evident during the COVID-19 pandemic, as transactions gradually moved online as stores were forced to close. Overall, our payment methods are affected by our cultures, habits, innovations and the technology at our disposal.
Faced with the COVID-19 pandemic, the digital payment industry is booming and fundamentally changing. The crisis has changed the way people think about payments and financial services, with a decrease in the use of cash and the adoption of contactlessness promoted by several countries. This shift to a cashless society affects all aspects: retailers, traders, consumers, governments, financial institutions and service providers.
According to Market Research Future (MRFR), the global mobile payments market is expected to reach USD 3.3 trillion at a CAGR of 32% from 2017 to 2023 (forecast period). In the current market, the mobile payments market is expected to have high growth potential.
For everyday transactions, mobile payments are a cashless medium.
A technology that allows users to make instant cashless payments using their smartphones. According to the study, the determining factor for the mobile payments market is the technological advancements occurring in today’s world. The adoption of advanced technologies such as near field communications (NFC) is increasing its popularity.
NFC allows users to connect two electronic devices, such as smartphones, by simply moving them closer to each other. In addition, other driving factors include ease of use, safe approach, speed and the offerings associated with it.
According to the Worldpay Global Payments study, the growth of mobile payments will continue to be the main driver of consumer payments in 2020, making shopping easier than ever and already leading ecommerce payment preferences with 42% of spend in 2019, up from 36% in 2018.
Personalized service for customers
As we all know, in addition to innovation, the commerce and banking sectors are working hard to have a plethora of payment methods tailored to the needs of consumers, both online. and in store.
Will the money continue?
Although Deutsche Bank assumes cash will continue, the next decade will see rapid growth in mobile payments, leading to a decrease in the use of plastic cards. Over the next five years, m-payments are expected to account for two-fifths of in-store transactions in the United States, quadrupling the current amount.
Mobile payments, which range from retailer-specific applications to wallets provided by financial institutions, device manufacturers and technology platforms, offer convenience and protection to customers and businesses around the world. In 2020 alone, more than a billion buyers used mobile payments.
Similar growth is expected in other developing countries; However, different countries will experience varying levels of cash and plastic card reduction. In emerging markets, the impact can be felt much sooner. Many consumers in these countries switch from cash to mobile payments without ever having used a plastic card.
Generation Z – today’s children and young adults – would also have a huge impact on the future of payments.
This tech-savvy generation, born and raised in a mobile-driven world, represents nearly 26% of the world’s population. Learning to navigate the world in the era of ‘fake news‘ and bombarding their digital lives with messages of questionable quality and authenticity, Gen-Z wants more personalization, better quality and better performance from businesses. .
Brands that want to conquer Gen Z must also appeal to their digital, flexible and mobile-centric payment preferences. The ubiquitous smartphone is quickly becoming the new portfolio of choice for this generation. Many customers choose to store their favorite cards in their phone rather than carrying physical cards. This is driving major changes in the global acceptance of point-of-sale payments, which increased from 16% in 2018 to 22% in 2019.
China is the market leader in digital wallets
We can learn a lot about the future of payments (especially during the pandemic) from developments in China, which is building a world-class mobile payment infrastructure. There the value of online payments accounts for nearly three-quarters of GDP (71%), almost double the proportion in 2012. Today, just under half of all in-store transactions in China are made using a phone mobile, well above levels seen in other developed markets (25% in Germany and 24% in the United States).
Mobile payments now account for 22% of global point-of-sale spending in 2019 and is expected to account for almost a third (30%) of customer payments over the next five years. The growing share of mobile payments adoption will be driven primarily by the continued decline in the physical use of credit cards, debit cards, and deferred direct debit / debit.
Impact of the COVID-19 pandemic
COVID-19 is expected to have a major impact on the mobile payments industry. Contactless payments are considered more hygienic and safer. This trend is driven by players in the commerce ecosystem who claim that contactless transactions improve safety and health. Compared to pre-COVID-19 projections, global contactless adoption is expected to increase by 6% to 8%, and an additional 110 million contactless payment cards are expected to be launched in 2020.
Mastercard’s global transactional data
In addition, global transaction data and market analysis from Mastercard shows a substantial increase in the use of mobile payments. According to survey results, the number of mobile payments in supermarkets, grocery stores and pharmacies during the March 2020 lockdown as a proportion of all face-to-face card payments increased by 25% from the previous year .
It’s cleaner to use contactless – that’s obvious
Mobile payments are now used by 79% of people globally and 91% in the Asia-Pacific region, citing protection and cleanliness. The data reinforces the way people search for alternatives in stores, choosing a secure and fast tap to check in rather than dealing with cash, pens and keyboards.
Even now that the coronavirus pandemic is starting to abate, contactless cards and mobile payments are on the rise in the United States and Canada, according to the results of an April 2020 survey.
During the pandemic, nearly a third of U.S. customers used mobile payments for the first time, and the majority intend to continue using mobile payments after COVID-19. Mobile payments in the United States are expected to more than double between 2020 and 2024, and contactless card payments are also on the rise.
The COVID-19 pandemic has had a huge effect on our social and economic well-being. Nonetheless, it is also true that he has been one of the most powerful forces in global digitization.
Digital payments, especially mobile payments, have become a reliable way for businesses and businesses to operate in the new post-COVID-19 normal.
After discussing the effect of COVID-19 on all payment industries, one thing is clear: If a business is to survive the pandemic – and all the other “things” that may fall on “the pipeline of existence. human – it must use mobile means of payment.
All businesses need to provide their customers with easy, convenient, and social distancing-friendly payment methods.
Image credit: tim doubles; pexels; Thank you!