According to a new global payments report by FIS, the fintech company also known as WorldPay, the use of mobile, or digital, wallets exceeded the use of cash for the first time in in-store payments during the pandemic.
In fact, the use of cash has fallen significantly, with data in the report finding cash usage dropping 10 percent in 2020 worldwide and by at least half across Canada, the U.K., France, Norway, Sweden and Australia. In the U.S., cash payments dropped to $1 trillion of in-store payments in 2020 from $1.4 trillion in 2019.
To that end, the use of digital wallets has accelerated across all regions in 2020 and now accounts for nearly 10 percent of payments in North America. In its report FIS projects that by 2024, cash will account for less than 10 percent of all in-store payments in the U.S. and just 13 percent of payments worldwide.
“Our new research shows that the world is entering a new phase of adoption of digital payment methods,” said Jim Johnson, head of merchant solutions at FIS. “The global pandemic has brought a cashless future closer on the horizon. The implications for merchants are profound. They must be building technology-centric strategies to meet the diverse preferences of consumers’ rapidly changing habits and do so in a way that drives financial inclusion for underserved communities around the world. For those businesses that are savvy enough to embrace smarter commerce and invest, the growth opportunities will be huge and potentially game-changing.”
Further, as e-commerce continues to grow a highlight of the report was on the rapid acceleration of BNPL in Europe and North America. FIS predicts that the BNPL market will grow 43 percent annually over the next three years, effectively doubling its market share. Moreover, in North America, as providers expand, FIS expects growth to jump 181 percent from 1.6 percent in 2020 to 4.5 percent by 2024.
At the same time, as brands and retailers update payment options and methods, FIS stated in its report that companies are able to gain loyalty in new ways as consumers look to embrace reward programs that are more in sync with current shopping behaviors. In fact, 42 percent of Millennials told the company that they want brands to “actively track their spend” and 47 percent said they are encouraged to join a loyalty program if they can use technology like an app to collect points and rewards.
For More WWD Business News: