Why should we switch to digital payments?
Once upon a time cash was king. Then came cheques. And now we are finding ourselves using digital payment methods more and more.
This is a trend that has been facilitated by the ever-increasing number of options that are now available to us. Beyond the debit and credit cards that are easy to use online, there has also been an explosion in e-wallets.
Most people are familiar with the very first of these to come on the scene, PayPal, that has been with us since around 2002. But now this has been joined by a plethora of others including Neteller and Skrill. It also seems like the next big thing is set to be cryptocurrency.
Digital payments are becoming more popular
Up until now the focus seems to have been the desire to buy bitcoins as an investment opportunity, and a seemingly very good one given their recent boom in value. But the announcement by PayPal that they will now accept them as payment is set to launch a new era for the cryptocurrency.
To appreciate just how popular digital payments have become, one only has to look at the stats. On a global perspective, in 2017 there were around $3.1 trillions worth of digital payments made. But by 2023 this figure is set to more than double to $6.7 trillion.
Looking at the UK, the number of transactions has also seen a steady increase up from 1.6 billion in 2017 to well over 2 billion in 2020, with the country also becoming responsible for around 25% of all digital activity across Europe.
The stats that lie behind this figure are equally surprising. 98% of all adults have a debit card of some kind and 16% of the population also have a payment method such as Google Pay or Apple Pay on their phones.
While you might expect it to be largely the younger generations who have embraced digital payments, 61% of the over-65s also use contactless payment methods while cash payments have dropped to an all-time low of just 28%.
How online retail has helped boost digital payments
There are multiple reasons for this explosion of digital payments and the first is the sheer amount of retail activity online. This has also steadily risen over the years and currently stands at a little under 40%.
The figure has been greatly boosted by the COVID-19 pandemic with many people shopping online either from personal preference or because they have been unable to visit shops themselves. Anyone who tried to book a supermarket home delivery in the first few weeks of lockdown will have witnessed this firsthand with slots being quickly snapped up.
In any environment, making digital payments has shown itself to be a very convenient way to buy goods and services. It saves the risks involved with carrying, and possibly losing cash, and there are other security measures in place that make it more secure.
That said, it has opened up many more potential opportunities for fraudsters to try to commit crime but these are being countered by more thorough security measure such as the use of biometric identity checks and ever-stronger encryption of personal data.
So many today are looking forward to the possibility that cash will one day be a thing of the past. At the moment this is just a theoretical possibility. But given the digital momentum, it may well arrive much sooner than we anticipate.