Mobile payments are driving the cashless revolution among the younger generations
By Gaia Lamperti
Covid-19 has further accelerated a trend that was already picking up the pace quickly: the shift towards mobile payments, ditching both cash and cards.
According to Statista, the UK is leading the way in mobile payments with more than six out of 10 people using Apple Pay for point-of-sale transactions in 2021, more than any other country in the world. In particular, Gen Zs are the ones adopting them more confidently, as over three quarters (77%) of UK Gen Z surveyed by Marqeta, a modern card issuing platform, leave their wallet at home and just take their phone when they go out.
Furthermore, Marqeta’s research, the 2022 State of Consumer Money Movement report, found out that for the 42% of UK respondents it’s been so long since they used anything except contactless, that they can’t even remember their PIN anymore – a figure that rises to 54% of those aged under 24. 63% of them are so used to using contactless that they find it really irritating if they have to enter a PIN.
“The age of the bulky physical wallet might be moving behind into the rearview, confidence in mobile wallets is growing, and people feel increasingly comfortable that their mobile phone can handle their payment needs and not leave them stranded,” commented Anna Porra, European Strategy Director at Marqeta. “While the shift to digital payments was born out of necessity, many are happy to completely step away from in-person banking. And it’s easy to see why – with long queues, inconvenient opening hours, and hygiene concerns particularly during the pandemic creating the perfect storm to shift consumer appetite away from in-person experiences that weren’t very popular to begin with. With physical branches closing at unprecedented rates, banks must ensure they adapt their products and services to operate online seamlessly.”
Even small businesses are jumping on the bandwagon, with only 5% of businesses in the UK accepting cash today, according to the data, published in a new white paper, Less Cash, More Possibility, by embedded finance provider YouLend and payment service provider Dojo.
Already, almost half (48%) of businesses have adopted digital payment methods, with female-owned businesses taking the lead, at a 51% adoption rate, relative to 42% for male-owned businesses. This is largely driven by today’s digital-first society, where mobile devices have become a one-stop-shop for daily admin for consumers – particularly post-Covid, when national lockdowns forced people to spend more time inside their homes.
“While the pandemic was the catalyst for the shift to contactless and mobile wallets, it is the convenience, security, and speed of these payment options that have made them sticky,” continued Porra. “As contactless limits continue to rise and more merchants welcome contactless payments, banks and fintechs must work harder than ever to provide a smooth digital experience for their customers that provides them with security, giving consumers the digital convenience they crave.”
“Both business owners and consumers are embracing new payment methods,” Jon Knott, Head of Customer Insight at Dojo, said. Customers are continually seeking innovation from their banking providers, fuelling the shift away from in-person banking experiences. For instance, there is increasing appetite for invisible payments, and till-less stores are rolled out more widely across Europe.
But as well as fulfilling digital-native target demographics’ desires, there are wider benefits for businesses to going cashless – including improving cash flow. Good cash flow is key for the health of any business, especially in today’s challenging economic climate. And businesses, regardless of payment method acceptance, rightly cite improving cash flow as critical.
“What we hear from our over 40,000 customers across the UK is that accepting card and digital wallet payments as part of their payment mix gives them unique benefits, including speed, security and reconciliation, giving them time back to run their business. To lean into the shift shown in this research, business owners should be thinking about providing the right mix of payments based on their customers’ needs,” Knott added.
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