The first bank card was launched in 1967 by Barclays in London, and it started a revolution. People have started switching from paper to plastic all over the world – today, cash payments are at their lowest in history, with debit card payments overtaking them for the first time. Cash payments are expected to continue to be phased out in the coming years – at the same time, mobile payment solutions are seen as the new go-to payment method for the majority of users. Moreover, mobile will overtake cash and debit cards by the year 2022, according to Capgemini and BNP Paribas.
e-Wallets and NFC
Bank cards have already put a dent in the dominance of cash payments long ago. In today’s connected world, in turn, new solutions have been introduced to further reduce the role of paper money in our lives. On one hand, e-wallets, a safe way to pay online, have grown to occupy an important role in eCommerce and online services.
On the other, smartphone-based payment solutions like Apple Pay, Google Pay, and various other similar solutions are now reducing the role of plastic and cash, putting it all on the one device billions of people can’t imagine their lives without their phones.
As more users give mobile and online payment solutions a try, the more merchants think of implementing them. An increasing percentage of merchants either already offer alternatives to traditional cash and card payments or plan to introduce them in the near future. On the other hand, an increasing number of people neglect cash in favor of alternative payment methods.
In countries like Sweden, France, and Canada, more than half of all consumer transactions are cashless, and the percentage is also close to 50% in the UK and the USA. The adoption of these methods is very fragmented across the world – while some countries seem ready to go completely cashless in a few years, other economies are still mostly relying on cash to this day. While the adoption of cashless payments is slow in some areas, it is steady.
How big is the mobile payments market?
The demand for mobile payments is increasing around the world, especially in emerging economies. Globally, around 40% of all respondents to a survey conducted by eMarketer have expressed their preference for paying using their phones – either by e-wallets and internet banking or NFC-based payment solutions or text messages. The highest demand for these solutions exists in China, Mongolia, and Brazil.
According to predictions made last year, the volume of mobile payment transactions will continue to grow in the coming years, reaching a total of $4.3 trillion by 2023. Looking at the numbers, this prediction sounds accurate, especially when it comes to emerging markets. In many countries, the only internet-connected device available to the average user is a smartphone – that is the device they use for everything from listening to music to handling payments.
And with the rise of the number of the connected devices – expected by Newzoo to hit 3.8 billion by the year 2021 – the number of people relying almost exclusively on them to make payments will also explode.