Mobile wallet transaction volumes overtake cash payments in stores

Digital wallets are now the leading payment method in the five largest European e-commerce markets: France, Germany, Russia, Spain and the U.K

Contactless in-store payments made with a mobile wallet worldwide exceeded in-store cash payments for the first time during 2020, new research reveals.

Overall, cash usage fell by 10 percentage points, accounting for 20% of all face-to-face payments globally, the Worldpay from FIS Global Payments Report 2021 states, while the number of contactless digital wallet payments at the point of sale is also growing faster than the number of those made with physical cards.

In Canada, the UK, France, Norway, Sweden and Australia in-store cash payments fell by 50% or more in 2020, while the total value of cash payments made in store in the USA dropped from US$1.4tn in 2019 to US$1tn this year.

The Worldpay from FIS report predicts that, by 2024, cash will account for less than 10% of in-store payments in the US and 13% of payments worldwide, while digital wallets will account for one in three in-store payments globally (33%).

“The Asia-Pacific region continues to lead in the use of mobile wallets at point of sale, with about 40% of in-store payments in that region now being done through contactless payments,” the report says.

However, use of mobile wallets accelerated across all regions in 2020 and now accounts for about 10% of payment methods in North America, 8% in Middle-East-Africa, 7% in Europe, and 6% in Latin America.”

Digital wallet-based ecommerce transactions also grew by 7% during 2020, the report adds, predicting that, by 2024, “digital wallets will account for more than half of all ecommerce payments worldwide.

Conversely, usage of traditional payment methods such as cards and cash-on-delivery are quickly losing share and are expected to account for less than 40% of ecommerce transaction payment methods by 2024.”

 

EUROPE PAYMENT TRENDS mobile wallet

Europe’s e-commerce market grew 14% annually on average between 2016 and 2020; we project the 15 European countries in our survey will sustain average annual growth of 10.1% through 2024.
Though the digital gap is rapidly closing, economies within Europe reflect great diversity. There are e-com markets with high internet penetration and high growth (Spain and Sweden), high internet penetration with moderate growth (U.K. and Scandinavian countries), low internet
penetration but high-growth (Russia and Turkey), and low internet penetration, lower growth countries (Poland, Belgium and Ireland).

European e-commerce projects robust overall expansion through 2024: from a low of 7.4% CAGR in Belgium to a high of 22% in Turkey.
European payment methods are diverse, with five different methods ranking highest in at least one country surveyed. Digital wallets are the leading e-commerce payment method in Europe, accounting for 26.4% of payments.

Debit and credit cards both capture nearly 19% of payments for e-commerce in Europe, contending for a second-place ranking of European payment preferences. Debit cards are the e-com payment method of choice in Belgium, Denmark and Ireland, while credit cards reign in countries as diverse as Norway and Turkey. BNPL is the leading e-com payment method in Sweden, helping boost the 7.4% share of regional transaction value for buy now, pay later.

Bank transfers represent a robust 13% of regional transactions, sharing strong leadership positions in The Netherlands and Finland.

The popularity of bank transfer among European consumers goes beyond even the strong direct share of payments, as digital wallets linked to bank accounts continue to gain share. An emerging variant on bank transfers, direct debit is broken out capturing 4% of European e-commerce payments, mainly driven by Germany.

Looking ahead through 2024, we see a market that continues to reflect Europe’s diversity, with digital wallets, credit and debit cards, bank transfers and BNPL all earning double-digital share of e-com payments.
Digital wallets and BNPL will gain additional share, with digital wallets rising 13.3% to maintain the category lead, approaching 30% by 2024.
The popularity of BNPL will make the largest gains, nearly doubling its share by 2024 to account for 13.6% of e-com spend. Advances by digital wallets and BNPL options will come at the expense of more traditional payment methods, with charge cards, cash on delivery and pre-paid services seeing steady declines through 2024.

Cash rapidly declines amid POS contraction As was the case globally, European point-of-sale merchants felt the impact of COVID-19’s economic challenges most directly. 2020 POS
transaction volume fell 10.2% across the region to U.S.$6.76 trillion.
Modest annual growth of 4.2% is forecast for POS transaction volume through 2024. European POS volumes are expected to expand sufficiently to regain 2019 levels during 2022.

 

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