Small and mid-size businesses around the world are struggling to choose between the variety of payment methods that have now become available. From credit and debit cards, to app-based payments and smartphone wallets, to good old-fashioned cash, the options may seem never-ending.
In this article, we look at the big picture – because macro payment trends eventually impact businesses on a micro level. This is why we’ve curated 12 stats that help map the CCV market landscape, but we also highlight what is happening in other regions around the world. In addition, you’ll find useful tips and advice for using payments to boost your business, wherever you are.
Cash: An Enduring Presence But in Decline
- Global cash transactions fell from 89% to 77% over five years. (2018, McKinsey):
With the use of cash in decline and electronic payment methods on the rise, merchants should aim to offer a range of payment options in order to stay competitive.
- Global Point of Sale payment methods will change dramatically between 2018 and 2022. (Worldpay):
In 2018, the stats were: 31% cash, 29% debit card, 20% credit card, 16% eWallet, 2% charge card, and 1% prepaid card. Estimates suggest that by 2022, cash will drop to 17% and eWallets will increase to have a 28% share of global payment methods at Point of Sale.
- Despite the prevalence of electronic payments, the value of euro banknotes in circulation has increased (ECB):
Due to economic recovery since 2014, the addition of new eurozone members, and an enduring lack of trust in financial institutions, euro cash circulation continues to grow in Europe.
Summary: It is difficult to wrap up the trends in cash usage into a global package, because there are such vast differences between the regions. Even within Europe, countries like Germany and Czechia maintain a strong reliance on cash, whereas Sweden, the UK, and the Netherlands are all moving towards becoming a cashless society.Perhaps the best example of this is highlighted by Harry de Quetteville in UK newspaper, The Telegraph:
“In Japan, among the most dedicated cash-loving rich countries in the world, 79pc of people use cash every day. In America, 70pc of people use cash every week. In Sweden only 60pc can remember using it – at all – in the last month.”
Business tip: It might be tempting to take cash off the menu and go fully electronic, but with cash remaining popular in many countries around the world, it pays to investigate your customers’ habits and preferences before making a final decision about whether to make the switch.
The Rise of Electronic Payments
- The worldwide use of credit and debit cards as a payment method (combined) nearly doubled from 5% to 9% over five years from 2012 to 2017. (McKinsey):
Debit and credit cards are well-established payment methods, so it’s only natural that they’d become the first port of call for consumers who are looking for a flexible alternative to cash.
- The total transaction value of worldwide digital payments is expected to have an annual growth rate of 12.8%. (Statista):
Between 2017 and 2023, digital payments are forecasted to keep growing.
- North America is the first region to conduct more than 50% of payment transactions electronically. (McKinsey):
The dominance of electronic payments in North America is clear: “At 450 electronic transactions annually per capita, it far and away leads other regions on this dimension.”
- Nearly half (47%) of all European card transactions use contactless (NFC) technology. (Finextra):
But as with cash usage, Europe presents a mixed picture when it comes to contactless cards. For example, 51.5% of all card payments in the Netherlands were contactless in 2018, but countries like Germany and Switzerland are much more hesitant to shift to contactless payment methods.
- In China, electronic payments have increased more than ten-fold between 2012 and 2017, from 4% to 34%. (2018, McKinsey):
This is largely due to skyrocketing mobile payment methods like digital wallets and QR code payment apps such as WeChat and Alipay.
Summary: Electronic payments are on the rise around the world – almost without exception. The rates of adoption differ between nations, but as technology advances and access to banking improves in developing countries, digital payment methods will continue to grow in popularity worldwide.
Business tip: Today, even the smallest business can benefit from a flexible payment solution that accepts contactless payments. This could be a terminal such as the CCV Fly or CCV Mini, which can be integrated into a holistic payments environment for your online and offline commerce.
Mobile Payments: The Future?
- Globally, mobile commerce is responsible for 48% of digital sales, as of 2017. (McKinsey):
Smartphones are a part of everyday life for increasing numbers of people, so purchases in webshops via mobile and in-app payments are becoming more routine for global consumers.
- Global use of mobile payments at Point of Sale is expected to reach 28% in 2022. (Worldpay):
The popularity of contactless mobile payments, using a digital wallet or wearable device, is expected to keep growing as shoppers explore the benefits of going cash – and card – free.
- In Europe, 92% of millennials surveyed in 2017 anticipated they would use mobile payments in the next three years. (Visa Europe):
Millennials are showing more openness to new payment technologies. In fact, worldwide, 28% of millennials have used a mobile wallet at a Point of Sale, compared to 20% of the general population according to Worldpay. The younger generation (Gen Z) is also keen to try mobile payments, and Billtrust reports that 46% of young people pay with digital wallets 1-5 times a month.
- Mobile payments at Points of Sale are already supported by 37% of global merchants surveyed, and 31.4% plan to add or expand this feature. (Kount):
Consumers can only make the most of mobile payments when the facilities are there to use them, and in some regions this is slowing down uptake.
Summary: As we mentioned earlier in this article, China leads the way on global mobile payments with the huge popularity of apps like Alipay and WeChat. There is an appetite for mobile payment methods among the new generation of digital natives around the world, but the growth of this method has been slow in many areas – partly due to lack of infrastructure. This will change quickly over the next few years, and we’ve already seen huge progress in two of our markets: Belgium and the Netherlands.
Business tip: If you accept mobile payments at your Point of Sale, make sure the option is clearly advertised in the checkout area. Customers often need a nudge when they’re not used to a technology.