By David Maisey, CEO of MultiPay Global Solutions
The death of cash has long been predicted. Now thanks to the pandemic we are seeing it in action, as while cash is unlikely to completely die, for most consumers, it is not the chosen way to pay. Data from Finance UK shows the scale of the decline. Back in 2009, over half (58%) of payments were made via cash. 10 years later in 2019, this number had dropped by more than half to just 23%. The drop in usage has naturally left a void that needs filling by other payment solutions and led to the rise of credit and debit cards.
As cash disappeared, consumers quickly switched to card payments due to the convenience, ubiquity, and ease of use that they offered. Debit cards in particular, have seen rapid growth making up 42% of all payments in 2019 alone. Yet, the success of cards and their position as the number one option could be short-lived as consumers look to switch to mobile payments.
While not a new form of payment with Apple Pay arriving in 2014 and Google Pay in 2015, they are now growing at a great pace in adoption and usage. With global smartphone penetration at around 78% and well over 99% in many developed countries, it has emerged as the new wallet for younger consumers. Already over 10 million UK adults have registered for mobile payments, with much of this adoption coming in the Gen Z and millennial demographics. Representing one of the largest groups of consumers with disposable income, their influence on payment trends is already having an impact, and will only grow in the years to come. The payment and finance sector then need to respond and quickly to these changes if it is to help clients in the retail, hospitality, travel, and tourism sectors meet consumer demands.
The fact is that the growth in mobile payments is good news for consumer-facing businesses as it creates new opportunities to interact and understand customers and their habits. For instance, by combining payment with apps that can be used in stores, pubs, bars, and restaurants, businesses can gather additional information on preferences and habits. Using this information, restaurants for example can offer customers new features such as one-click ordering. This feature then allows customers to quickly reorder their last food and drinks choices, reducing the time it takes for them to order and boosting the customer experience.
Retailers too have looked to take advantage of the increasing desire for mobile payments by combining them with self-service apps. Sainsbury’s is one business that has been quick to adjust to this emerging trend with its new scan and shop app. By removing the need for a specific scanning device, Sainsbury’s has made it easier and with COVID, safer too for customers to shop in-store. Going a step further though and connecting scanning apps with mobile payments and loyalty cards, retailers can provide customers with useful insights and suggestions on products or offers they might be interested in. Then when it comes to making payment, these apps can automatically recommend a customer’s preferred mobile payment method and limit the number of clicks needed to complete a purchase. Offering this type of experience has the advantage of both speeding up and increasing the level of personalisation customers experience. As a result, they are more likely to return and stick with the business that offers them the best experience.
This is just the start too. In the future, we can expect to see apps that not only include scanning and payment processes but also act as a guide for customers when in store too. For example, an app can take customers around a store in the most efficient route possible based on their shopping list, reducing the time spent walking around hunting for a particular product. Once they have filled their trolly or baskets, customers can quickly and seamlessly pay in the same app too. This is an experience that would be impossible however without businesses focusing on mobile payments.
Focusing on mobile payments will require a review of existing payment infrastructure. Imagine, if a particular payment method was left unsupported or required a customer to use a payment terminal and not the app experience. This change will immediately take them out of the experience they have been enjoying and risks denting the enjoyment of interacting with a particular brand. Businesses consequently need to ensure they have payment solutions that provide a seamless experience and can accept any payment, anywhere a customer decides to pay. With payment technology now available that can be tailored to a business’s unique requirements, shifting towards a mobile payment first approach is easily achieved.
While the death of cash has been a long time coming, businesses now need to begin preparing for what comes next. Cards may currently be the leading payment method, but their days to are numbered. Instead, businesses must shift to a mobile payment first approach and begin to leverage it to create new and improved experiences for customers. Those that plan and get ahead of this change now, will be best placed to win and retain customers in the future.
Published: Finance Derivative
