Princeton,NJ/ 360prwire/ November 3/
Consumer spending is predicted to bounce back to pre-pandemic levels in the next year.
According to a new report by technology service company Capgemini, digital and ‘next generation’ mobile payments are largely expected to lead the way.
For the first time in years, non-cash payments didn’t grow by double digits in 2020, with only an 8% increase.
Compared to 2019, the increase has halved from a 16% rise, due to COVID-19 causing lockdowns, business closure and reduced spending.
With uncertainty about the world economy and their jobs, consumers prioritised savings and paying down debts in 2020 and early in 2021.
With this, people decided to keep their wallets closed.
After the global economy contracted by 3.5% in 2020 it’s expected to rise by 5.6% this year and 4.3% in 2022 as customers come out again.
This growth is expected to settle at around 3% between 2023-25, according to Capgemini’s report.
But are we shifting to a digital society?
A contactless & digital payment driven recovery
When businesses reopened after the recent lockdowns, many shoppers felt wary of getting or passing on any germs.
This wasn’t just touching things on the shelves or any door handles, it also meant the transfer of cash and touching keypads on a card machine.
Because of this, digital and contactless payment methods were encouraged.
In 2018, around 600 million contactless payments were made.
Many people were new to contactless during this time, so could have had reservations about using forms of tech they’re not used to.
The more they used it, the more comfortable they got with it, making it more likely they’ll continue to use it in the future.
Towards the end of 2020, 992 million transactions were made using contactless, due to the government and various health organisations have urged customers to use these ways of paying to limit the risk of spreading any germs.
Digital payments and e wallets have benefited from the change in consumer behaviour.
In 2020, 32% of purchases in the UK were made using a mobile wallet like Apple or Samsung pay.
And according to Capgemini’s report, mobile payments on e-commerce are expected to go beyond 400 billion transactions by 2025 across Europe.
Examining the growth of mobile wallets
Mobile wallets are a relatively new method in the payment world.
They involve having your bank card registered onto your phone in a digital wallet, allowing you to make payments from your phone.
They’re quick, easy, and more convenient for the customer.
Since their debut, mobile wallets have become more and more popular, with the help of big companies like Apple and Samsung creating their own versions in 2014.
Between 2016 and 2020, there has been a 5.5% increase in the use of eMoney payments.
With this, Capgemini have predicted 25.2% of non-cash payments will be made using a digital wallet on a smartphone.
What about online payments?
Online payments are favoured by customers, due to how convenient they are.
In 2020, 87% of Brits made an online purchase, contrasting to the 60% ten years before.
Philippe Gelis (CEO and Co-founder of Kantox) revealed that “during the pandemic, companies offering online payments experienced accelerated business and growth. The massive switch of customers to e-commerce – both domestic and cross-border – will drive the rapid upswing.”
Capgemini found that businesses who adapted to ecommerce and built an online presence experienced faster growth than other businesses.
But will this always be important in business?
All we can do is predict what will happen in the future, especially after the recent lockdowns, it’s hard to have an understanding on trends and spending habits and how they’ll change.
Capgemini is predicting a big swing towards more e-commerce when it comes to shopping, so having online payment processes available is going to be really important.
Customers expect an easy experience when it comes to online shopping.
A changed payment landscape
The e-commerce ‘boom’ during the pandemic made drastic changes to the way we shop.
Shoppers realised they could get everything they needed from the comfort of their own home, and didn’t have to mess about with cash in physical stores.
Modern ways of payment don’t seem to be going anywhere.
In 2021, the amount of people using mobile wallets to buy something doubled to 45%.
These payment types are so convenient, customers are used to using them regularly, and don’t think about using cash or entering their pin.
All of this has changed customer behaviour and engagement, with no signs of it going back to a pre-pandemic state.
As mentioned previously, the amount of people in the UK who shop online has increased by almost 30% in the UK.
10% of this increase happened in the last two years, due to the pandemic causing a change in customer behaviour and engagement.
Businesses who are waiting for things to return to how they were are going to struggle.
For any company, no matter what they’re selling, it’s important that they meet the needs of the customer, including a variety of payment options.
Instead of waiting for things to go back to what they’re used to, these businesses should figure out where the holes are in their payment options.
Whether it’s getting a card machine to take contactless and ewallet payments in store, or building an ecommerce presence to supplement their physical store, it’s important that they give customers as many options as possible.
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